Sunday 29 March, 2020

Daryl Vaz maintains he did nothing wrong in beachfront property sale

Daryl Vaz

Daryl Vaz

Minister without portfolio with responsibility for Economic Growth and Job Creation, Daryl Vaz is hitting back at former Contractor General Dirk Harrison who has accused him of interfering in the divestment process that saw a prime beachfront government property in Ocho Rios, St Ann being sold for at least US$4.6 million below market price in 2016.

Stung by the criticism that he meddled, Vaz has slammed the report, rejecting it as being “false, disingenuous and without evidence.”

The long-awaited report which was also highly critical of Prime Minister Andrew Holness and the state-owned Urban Development Corporation (UDC), was tabled in the House of Representatives on Tuesday. It was effectively a report from the Integrity Commission in which the former Office of the Contractor General (OCG) and two other anti-corruption agencies have been subsumed. The damning report described the negotiation process in which Vaz allegedly inserted himself, as “farcical”.

According to the report, the prime real estate, the UDC-owned Rooms on the Beach which was valued at US$13.5 million at its highest valuation and US$11.8 million at its lowest, was sold to Puerto Caribe Properties Limited, the operators of the adjacent Moon Palace Jamaica Grande for US$7.2 million. This was after the UDC had valued it at more than US$9 million. The beach which was valued at US$3.5 million was given to Puerto Caribe free of cost.

The report asserts that Jamaican taxpayers were not given value for money and suggested that Vaz undermined the UDC by inserting himself in the negotiations.

However, Vaz, in a statement to the Integrity Commission, said the claim by Harrison that the UDC was unable to negotiate freely and from a position of strength because of his direct involvement and that of other state agencies, was false. He said he was advised by the UDC and agreed that the country stood to quickly gain value for money along with additional lasting benefits from the deal which was arrived at.

Harrison had noted that the negotiations were done at the ministerial level and his report highlighted the extent of the alleged interference of Vaz who reportedly told a meeting of the UDC board that any matter that needed to be dealt with urgently should be brought to his attention and he would address  it. This, the report said, pointed to the pivotal role played by Vaz in the sale of the property.

However, Vaz has brushed aside the criticism. He said Harrison’s “curious decision to equate a reported offer by the Minister to assist if significant issues arose in the push to conclude the major potential investment with the UDC being unable to negotiate freely, is a loose, unfortunate and baseless conclusion.”

Vaz said he “unequivocally supports the decision of the Board of the UDC and the Cabinet in approving the terms and conditions of the sale.” He reiterated that he “acted honourably and further to his mandate to intensify the Government's growth push while both expediting and facilitating the influx of this and all significant investments.”

Specifically, Vaz said he stands by the view that the deal was in the interest of the people of Jamaica and that the government would quickly recover revenue gains on the investment. Revenue gain arising from the investment was projected to amount to approximately US$30-millions in tax revenues over a three-year period he said.

According to Minister Vaz he was advised that in agreeing to the sale price, the UDC took the following into consideration:

 

1.    That the project involved the construction of a five star hotel along one of Jamaica's key tourism belts and is consistent with the government's pro-local and Foreign Direct Investment (FDI) and economic growth push.

2. The project involved an investment valued at US$225 million in the first phase and US$270 million in the second phase. The investment was earmarked to create 2,200 direct jobs during the construction phase and 600 permanent jobs afterwards. 

3. During phase two where it was agreed that US$270 million would be invested, that phase was projected to create an additional 1,500 jobs during the construction phase and 3,000 indirect jobs.

4. Investors had agreed to pump millions of US dollars into the redevelopment of Ocho Rios which would make the area more conducive to other investments while creating other local business opportunities.

5. The government was projected to receive over US$9 million in revenues during the first year of the concluded investment, US$10-million during the second year and approximately US$11-million during the third year.

6. As part of the deal, the investor had committed to pumping US$1 million into the beach nourishment of a significant section of the government-owned beach to which the public would have full access. The beach nourishment is already underway.

Vaz argued that the potential revenues and other gains projected for the government over a reasonably short period of time far exceed, and are in no way comparable, to the incentive the UDC provided to the investor to conclude the crucial investment which was earmarked to create thousands of jobs while securing the long talked about upgrade and redevelopment of sections of Ocho Rios.

The minister said he now has reason to be concerned about the future of the crucial investment “given the unreasonable and naive conclusions arrived at by the former Contractor General and the vulgar politicking by a representative of the Opposition who used the cover of parliament to make false innuendos.”

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