A $400 million Sandals Resorts International construction project in Barbados may come to an abrupt halt because the Mia Mottley-led administration contends that the hotel chain is asking for more than an already generous agreement sealed with the last government.
Since 2013 the Caribbean tourism giant, world renowned for its holiday all-inclusive accommodation, had wrapped up a deal with the government of former prime minister Freundel Stuart granting it 40 years of concessions from various forms of taxation.
There is a straight 25-year tax holiday with waivers on imports of hotel equipment along with consumables such as food and beverages.
Included are duty importation of vehicles and household items for hotel executives.
At the end of that quarter century of concessions, the hotel chain would for the next 15 years be paying only half of all taxes that apply.
Based on this agreement Sandals had injected millions of dollars in acquiring and refurbishing one hotel property and building another on the island’s south coast, naming them ‘Sandals Barbados’ and ‘Sandals Royal Barbados.’
It then proceeded to acquire another property on the premium west coast and had begun preliminary work for the $400 million construction project of ‘Sandals Beaches.’
But things appeared to have fallen apart when Mottley — who had severely criticised the concession when in opposition — announced during her 2019-2020 budget speech that the Beaches project is in doubt because Sandals was asking for more than what it already got.
Explaining that she is bound by agreements of the last government, Mottley said her administration is unable to grant the world-famous brand hotel any sweeter deals.
She said last week that her government and Sandals had, “reached a difficult moment in the negotiations that may result in the project being pulled or stalled.”
Making clear that her administration was prepared to honour the agreement signed by the past government because governance is a continuum and failing to uphold such deals would have “destroyed our reputation as a country that follows the rule of law,” the PM who is also the minister of finance, said the added requirements were a no go for Barbados.
“If you are simply asking for what was promised then there is no issue. I have stood here and I have stood elsewhere and said that the government of Barbados remains committed to the two agreements signed by the previous minister of finance, we don’t like what he did, we abhor what he did, but by the rule of law, by a country governed by the rule of law that we stand by it.”
Local media reported Sandals Chairman, Gordon ‘Butch’ Stewart, responding to Mottley’s statement by claiming, “we were not asking for more concessions … It was not anything more than what we already have as an agreement.”
This prompted the PM to cite, during another parliamentary presentation this week, documents from Sandals’ attorneys in Jamaica pointing to legal ‘gaps’ in the agreement that may make the hotel subjected to taxes in laws that the country may amend.
She said that attorney had written the Barbados government indicating that the tax stabilisation clause in the existing investment agreement was “based on the proper theory and is a good start, but there are two other critical gaps.”
According to Mottley, those gaps that Sandals wanted closed included protection from any new tax law parliament may enact. The other is a request for a guarantee that if any other company obtains a sweeter deal, the Sandals agreement must be upgraded to match.
“I cannot as leader of this country in all conscience sign any further agreement to close two critical gaps,” the prime minister said.
“I simply have a duty to tell the country that we are not mad people, and that if all that was being asked is all that was promised, then it [the project] should have started,” she said, indicating that the deal is not dead once Sandals sticks to its original agreement chockful of concessions.
“Barbados welcomes Beaches, but it can’t be at any price. I hope that we can find an understanding . . . but there is a national interest to be protected here for the people of this country.”