No sign of $6.2M in Ritz deal

| 13/01/2014

(CNS): The owners of the Ritz-Carlton, Grand Cayman have settled their legal dispute with the former owner, Michael Ryan, the developer of the resort, but the hole in the public purse to the tune of $6.2 million remains as the missing duty is not part of the deal. Five Mile Capital Partners LLC, the company which acquired the five-star resort following the loan default by the former companies owned by Ryan, said the obligation still lies with the former owners. Finance Minister Marco Archer told CNS that it appears there is little recourse for the Cayman Island Government over the missing cash. The debt relates to the remaining balance of a more than $10 million duty waiver given to Ryan during the development of the hotel.

Following a closed door settlement between Ryan, the former owner of Cesar Hotelco (Cayman) Ltd, one of the companies he created which owned the hotel, the new owners made it clear they were not responsible for the balance of the outstanding duty.

“The obligation to pay the deferred duty to the Cayman Islands Government was solely the obligation of the former owner Cesar Hotelco (Cayman) Ltd,” Five Mile said in a statement to CNS Friday. 

“It is not an obligation which created any lien on or otherwise encumbered the hotel or associated properties. The role of the receivers was to act as agents for the companies over which they were appointed and to collect monies owed from debtors to those companies.  If any recoveries were made by the receivers they would be used to defray the costs of the receivers and the debt owed to the lender as secured creditor. They had no responsibility for collecting any monies owed to the Cayman Islands Government,” the company added.

Two lawsuits were filed in 2012 by RC Cayman, one of Five Mile's firms, against Ryan and the various companies related to the development and ownership of the resort. They were looking for US$234 million over the loan default and other funds from the companies they acquired as part of the default. The new owners had accused Ryan of taking money from those companies without explanation, which he had denied, claiming the transactions were all legitimate.

Speaking to the Caymanian Compass last week, Ryan said he was “very pleased” with the outcome of the secret deal between him and Five Mile but he still denied owing the duty.

This debt to CIG came about as a result of the former UDP administration’s decision to allow Ryan and the companies that owned the Ritz to freeze the payments being made to government in 2009. The former owner was paying back the cash up until March 2009 following the opening of the hotel in 2005. However, with the tourism slump and other problems, Ryan had requested time and tied the debt with other possible development proposals and stopped paying, when more than $6 million remained outstanding to the cash-strapped public purse.

In the end, other debts to the hotel’s financiers caught up with Ryan and as a result the hotel was acquired by the creditors before any new agreement had been made between him and the CIG over the debt.

Archer, who became finance minister in the PPM administration last year, has criticized the random and inconsistent waivers that had been given by the previous government on duty and other financial obligations. Having inherited this problem, he said that the Ritz deal does not appear to have changed anything for government, which will remain out of pocket. The minister said that there does not seem to have been any legal opinion sought by the previous government over the issue relating to any possible recourse it may have.

McKeeva Bush, who was premier when Five Mile Capital acquired the Ritz at auction, questioned at the time the value of that sale and how it was acquired by the creditors. He has also insisted that, as the new owners, they were and are responsible for the debt. Bush confirmed to CNS this week that his position on the issue had not changed and said that Five Mile Capital and their related companies "should pay".

Category: Politics

Comments (50)

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  1. Anonymous says:

    Limited liability companies.  Read up about them before you post on this topic. 

  2. Anonymous says:

    The Cabinet members who agreed to these concessions or deferred duty should be held personally liable to pay Govt what they allowed Ryan to get away with not paying since they were elected in 2009.

     

    C'mon UDP (now CDP) and ex-UDP (aka PNA), let's hear what you have to say:

     

    McKeeva Bush

    Mike Adam

    Rolston Anglin

    Mark Scotland

    Juliana O'Connor-Conolly

    Ellio Solomon

    Dwayne Seymour

    Capt. Eugene Ebanks

    Cline Glidden Jr.

     

    any other mouse missing?

  3. Anonymous says:

    What about the letter sent directly from the lawyers of the new prospective purchasers to government offering a settlement amount to the UDP government BEFORE the property was transferred.  It was reported inthe press at the time that a settlement letter (i.e. money for government) was sent on at least two occasions but was IGNORED by McKeeva's UDP government so the prospective buyers "gave up" on their offer.  We all know that the property transfer was proved legal so the new owners were given title and the original offer to pay some of the deferred duty was totally lost.  Ryan and Bush should be hld accountable.

    ps to cns….you reported extensively on these matters at the time, but you failed to mention any background of this in the current article.  

  4. Anonymous says:



    Tell me again, what purpose does our Attorney General serve?  Is it not to protect Cayman's interests?  Who is not doing their job here?

  5. Sea Urchin says:

    I recently had an issue regarding a stamp duty matter where by I was charged  additional stamp duty on a property I purchased. I wrote to mr. Archer to consider  my situation that I had no other savings to to afford to purchase the property. I never withdrew from pension nor did I want to requst for the stamp duty waiver which I would have easily been qualified  for.  I believe  that every man should stand on their two feet. I am aware government is seeking by all means to collect revenue but after reading this, I realize cayman has the mentality that the rich can get away with all types of crimes yet a hard working caymanian gets the shaft. What future do we have when we encourage laziness and hand outs once you are on the right political team?

    I never did received a response from Mr. Archer and I lost the sale of the property. For now I will continue to rent with the intentions of one day hopefully owning my own home from the sweat of my brow.

     

  6. Anonymous says:

    Why do we keep giving the Civil Service a pass? We like them so much we don't hold them accountable?

    Nobody expected more of McKeeva. What role did the Chief Officers earning nearly ten thousand dollars a month have? Financial Secretary Ken Jefferson; Chief Officer for Tourism and Economist Stran Bodden; Chief Officer Alan Jones; Attorney General Sam Bulgin; Cabinet Secretary Samuel Rose; Registrar of Lands, Deput Governor Franz what did you personally do to try to collect some of this? All that brain power and nobody had the sense to put a lien or caution on the property to prevent its sale before collecting all or *just some* of the monies owed to Government? 

    The sale was publicised. Still, no lien, no caution. This is basic stuff people. Was there a single email or memo from a senior staffer to The Premier or Minister in charge? Is there proof ANY civil servant tried to collect the money? CNS – do an FOI please! 

    XXXX

    Negligence. Several heads should roll for this $6M negligent act on the part of so many in Government. Instead, the Civil Service will circle the wagons and close ranks, one protecting the other because they ALL have such negligence in their portfolio. And politicians will do nothing because they are afraid of the Civil Service voting block.

    While those civil servants take home their full pay, all sorts of fees go up to make up the shortfall. And Mike Ryan is laughing all the way home. 

    • Anonymous says:

      They all receive their marching orders from the Minister of Finance on this type of issue.

      • Anonymous says:

        Yes, the the new owners took title within a week of the current Minister of Finance being installed in his position. Same old same old.

      • Bean Counter says:

        The FS does not answer to Minister of Finance since 2009 Constitution.

        PNA dropped the ball on this and allowed this to happen before they left office in May. Ex-Premier O'Connor's reward for such incompetence is the position of Speaker of House.

        • Anonymous says:

          Ummm… There was no position of Minister of Finance before the 2009 Constitution. It is only since the 2009 Constitution that the FS was demoted and falls under the Minister of Finance.

          Dropped the ball? Incompetence? What are you talking about?

  7. Anonymous says:

    When the PPM was in power, Ryan was paying, as soon as the UDP took back over, the payments stopped. Make no mistake who is the blame in this – McKeeva Bush and Michael Ryan.

  8. Anonymous says:

    All governments are jokers & cowards to stand up for what’s right! You’re setting the standards for your people to be followers & not leaders! Gt voter

  9. Cheese Face says:

    Close the Turtle farm for 9 months Voila! $7.5 Million.

  10. Anonymous says:

    Hopefully CIG has learned thir lesson on this and will place a lien on property for all future similar deals.

    • Anonymous says:

      Ultimately, no one learns lessons in the CIG because no one is held accountable, especially civil servants. They just collect their paycheques and move on to the next blunder.

  11. Anonymous says:

    For a banking center, some people who moan about the $6m understand very little about limited liability companies.  Maybe the powers that be will introduce a directors' disqualification procedure?  No, I didn't think so, might curb the style of some of our politicans' influential friends.

    • Chris Johnson says:

      Thank you for this sensible comment. A Directors Disqualification is long overdue and Directors' indemnities should be made illegal like other offshore jurisctions. Cayman is lagging far behind.

    • Anonymous says:

      That is hardly the point. Any prudent lender would have taken security for a debt of that size including a personal guarantee from the principal.

  12. Anonymous says:

    Cayman compass in its editorial makes 2 interesting points: a) Ritz is laying the way for Dart's Kimpton just like Hyatt did for Ritz and ( b) the amounts owed by Ritz to govt ( 6.2 million) is a pittance. Read the full editirial and also the ones written about the Dump/ Mt trasgmore by Compass.

    The tone of the editorials over the last 2 months is very suspicious. Who really owns the Compass and what is the agenda here? What used to be Cayman's main newspaper seems to offer a very slanted view of late. Or maybe I am reading too much?

  13. Wined & Dined says:

    Michael Ryan certainly took the name Cesar to another level. César, the grape in this case, leaves that bitter taste. Thank you Michael… for leaving the Cayman Islands out of pocket. I’m sure karma will catch up soon.

    • Chris Johnson says:



      The fault clearly lies with Bush and his Government in allowing the loan in the first instance. No sensible banker would have done that without proper security. but there again Bush was a banker, just not too sensible as noted in the demise of First Cayman Bank. The problem I have is why other politiians were not montioring the Bush activities. It is said that no man is an island. Only in Cayman is that incorrect, or rather, was incorrect.

      • Bean Counter says:

        What about the reign of PNA and Ex-Premier O'Connor they are as culpable and signed off on the non payment of duties whilst in office

        • Anonymous says:

          There was nothing to be done at the point, knucklehead. The companies were insolvent and the debt to govt. was an unsecured debt. and ranked below the secured debt. If you are a qualified accountant you should know this.  

    • Anonymous says:

      If he didn't build, you would have got zero.  He built and you got some duty, as well as economic development.   Or would you prefer a swamp there and the Westin being our prime hotel?

  14. Anonymous says:

    Why on earth would the duty ever have been part of the deal?  This is a non-story.

    • Anonymous says:

       Why on earth would the duty ever have been part of the deal .Look at names in the deal , thats the people that made the deal. Do you own a suite in Ritz?

      • Anonymous says:

        Why would they pay the debt of another company they were under no obligation to pay?

      • Anonymous says:

        Huh? Nowhere did I see CIG as part of the deal. The $6.2m is a debt owing to CIG.  

  15. Anonymous says:

    Wht should they pay if Ryan ws the one that made the deal, The person at fault was whoever made this deal without a lien..

  16. Anonymous says:

    The parties than entered into the origional agreement shouldl be held responsible for the $6.2 Million.  Mr Ryan pay up, or Mr. Bush get it from under your matress!

  17. Anonymous says:

    Sue Mac for the 6 million…plus interest.

    It's soooo infuriating that Politicians and other high level officials continue to have little to no responsibility / accountability when they make inept XXX decisions….often multiple times!

    While the rest of us pay for it all by ever increasing cost of living.

  18. Anonymous says:

    you make it out as if Ryan owned the Ritz directly. He held it through various companies which are now defunct….so nothing will ever be recovered. MOVE ON…..the new buyer paid duty to the government on the transfer. This would not have happened if Ryan still held the property. To make it out that the government got robbed is a bit extreme when it was the government who gave the concessions and did not collect when it had the chance to do so.  

  19. 345 born says:

    When you buy a car, you are responsible for the problems you buy it with, you have to pay to fix it. The same should go for this! But typical Caymanians trying to shoot down someone or something that done any good for their country. Have a blessed Monday morning. 🙂

    • Anonymous says:

      So by your logic, when you buy a house you would become responsible for any debt the previous owner had outstanding. Wow. In that case I have a property I would like to sell you. Just give me a few months to run up some electric, water, gas, gardening debts.

      p.s. me born here too.

    • Anonymous says:

      Ok then. If I sell you my car and before I sold it to you I had $1,000 worth of repairs done to it, but I still owed the mechanic for the repairs, you would happily pay my mechanic after you bought my car?  If that's the case, will you please buy my car?

    • Anonymous says:

      oh dear 09.49, oh dear oh dear.

      When a tax liability is assessed, it is on the owner at that moment in time. You cannot go passing it to the new owner (who had to pay his own tax/stamp duty when he bought it), as it was you that originally incurred the debt, and you are responsible for it.

    • Anonymous says:

      Bad analogy. Nothing is wrong with the car in this case. It's just that the previous owner racked up his own bills and there was no lien on the car to cover them.

  20. Anonymous says:

    As  I understand it the lawsuits were between RC Cayman and Michael Ryan for the payment of obligations allegedly due to RC Cayman under Ryan's personal guarantee of his company's loan obligations since his company did not have sufficient assets to meet its obligations. It had nothing to do with whatever sums Ryan or companies may owe the government.