PwC reveals risks in Dart deal
(CNS): After months of waiting to see the controversial deal between government, the NRA and Dart Realty Cayman Ltd (DRCL), as well as the value for money report undertaken by local consultants PricewaterhouseCoppers, the question of who benefits remains in the air. Although PwC has claimed there is value for money in terms of face value, the reality is that there are many more issues to consider and it seems clear that the minority government was trying hard to get more because at present, with the abatements and far reaching concessions, Dart appears to be the greater beneficiary. PwC points out that, except for the proposed hotel on the site of the former Courtyard Marriott, the deal does not oblige DRCL to undertake any other development.
There are no guidelines regarding timing or scope of future developments and there are no restrictions on where Dart applies the generous package it has been given regarding duty concessions and its 50% share of the tax dollar from accommodation fees .
PwC warns that if Dart directs all of its new concessions towards Camana Bay and there is nothing in the deal to prevent that, the result would be “significantly lower economic benefits than those estimated from the hotel/tourism focused projects”.
The management experts warn that the economic benefits to the Cayman Islands could be significantly below those on which it bases its value for money findings and recommend that the “shortcomings in the potential application of the $24m Abatement need to be addressed to ensure that the CIG obtains VfM”, indicating that, as the deal currently stands, the Cayman government and in turn the Cayman people are not getting value for money.
PwC also warns that the hotel tax rebate could trigger demands by owners of existing hotels adn other potential investors could seek similar rebates, at a cost unknown to CIG. The auditors note that this tax rebate may not provide VfM to the local government, as it has little control over its application to new hotels or to existing hotels and because of the unknown impact it might have on other current or future hotel developers and owners.
Clear rules should be developed, PwC states, concerning eligibility of projects for the hotel tax rebate, including a demonstration of the project’s economic benefits for the Cayman Islands.
The consultants made several recommendations to improve and modify the deal. However, since the talks between Dart and CIG collapsed last week, the deal as it currently stands — a deal that has already been signed — there are clear risks that the benefit to the wider Caymanian population will be very limited. In some cases the loss will be significant, including the West Bay Road and access to one of the last underdeveloped stretches of Seven Mile Beach.
PwC recommended that the $24 million abatements should only be available for projects that are predominantly hotel/ tourist resort oriented and built on DRCL property adjacent to the WBR closure, the ETH or the New Barkers Road.
It also notes that the definitions of "renovate" and "acquire" need to be refined when it comes to the 50% tax rebate to avoid the risk that CIG could end up subsidizing existing activity rather than gaining additional benefits.
The consultants further state that the stamp duty rebate provided to Caymanian purchasers of DRCL properties could potentially distort the local real estate market to the disadvantage of competing developers. As such, it is recommended that CIG consider whether any stamp duty concessions to Caymanians should be offered under a wider programme, rather than one targeted solely at DRCL properties.
The government will also need to track all claims made by DRCL, its affiliates and sub-contractors under the $24m abatements and the hotel tax rebate program to ensure claims made do not surpass the limits set out in the agreement and waivers are awarded only for qualifying parties and qualifying development.
PwC also raises the alarm regarding procurement on the project and potential conflicts of interest.
“In light of the inherent reputational risk of CIG outsourcing major construction to a private developer, it is recommended that CIG provide DRCL with guidelines around identification, management and disclosure of any actual or perceived conflicts of interest in their procurement process,” it stated, while allowing Dart discretion in its choice of suppliers and subcontractors.
The report recommends that the tax rebate be linked to Caymanian employment metrics as at present there appears to be no specific obligations by Dart to employ Caymanians.
PwC warns that there are areas of the agreement in which the obligations on Dart’s part remain vague and do not appear to fully reflect both parties' understanding of their agreement in principal, such as the New Barkers Road. Although Dart has said it will cover the cost a new public road in Barkers, there is no obligation to do so and while Dart has also stated that it will meet the cost of providing road access to the land for the new Sunrise Adult Training Centre, there is no provision in the deal for it to do so.
Among the many other issues raised by the release of the extensive documentation released on Friday afternoon is the question of how value for money is being defined and what risks the CIG has exposed itself and Cayman to with the generous concessions package.
Following the release of all of the documents, Dart released a statement in which it accused the interim government of seeking more last minute changes after elements of the third amendment were agreed following several months of negotiation, “at which point negotiations broke down,” Dart Realty Chief Operating Officer, Jackie Doak said. Dart also said it has concerns about the methodology used in the Independent Review as Dart’s full comments were provided to PwC but were not included as part of the documents being released.
“Meanwhile, Dart Realty confirms it is committed to continuing to fulfill its obligations under the NRA Agreement, which includes work on the Public Beach Park, completion of the ETH Extension to Batabano and continued design, demolition and construction work on the hotel which began in September 2011. Dart Realty looks forward to Government also fulfilling its obligations under the executed NRA Agreement,” Doak added.
Given the current circumstances, with the third amendment no longer agreed, the question is whether the window of opportunity for CIG to recoup something from the deal as it stands is lost and what exactly the next administration will face.
See CNS story for all documents relating to the NRA deal.
Category: Politics
Wait a second….there's risks?! No shizzle shernizzle.
What did anyone expect from somone who overspent by $500,000 on a financing deal in return for a ride home from the Bahamas in a private jet?
I am a great grandson of the late Amon Ebanks who owned a chunk of property on the North Sound side in the Barkers area that was eventually sold to Government as a measure to preserve this area as Crown land for the future generation of Cayman. Needless to say, the former Government (McKeever – you may say) has turned this land over to Dart who is now in control of it and will dictate/decide as to what will be done with it, whether it be something that will benefit us Caymanian or West Bayers if you may, but as you can see, according to the PwC report, there is no such agreement/obligation of Dart do what is being said that will be done with it. There we go again, "LOSERS".
We all must remember, that GOD is not sleeping and as God fearing people, he will deliver us from the hand of the wicked and restore these blessed Islands once again..
God may protect us on heaven, here he epxects us to do the right thing. which if what you write is true, means go to court, and secondly vote for repsonsible politicians who are going to really look after Cayman and not themselves.
Whilst I understand what you are saying and I agree with your comments, the fact that you think that God will rectify this situation is simply unrealistic. I am not sure why most of my fellow Caymanians continue harping on God to deal with everything in time. As we all know from the many moons we have been on this earth, everything is dealt with by humans here on earth. So sitting waiting for God to sort all of our problems is just silly. Two hands working can do more than a million clasped in prayer – I have had enough of the God talk. Life happens and there are means and ways of dealing with everything here on earth. Maybe that is why so many things go wrong, everyone believes, well except for me, that a prayer or special prayer service is the only fixer.
It is tragic beyond belief that we have/have had a supposed God fearing gowernment that acknowledges God only to the extent of giving away millions of someone else's money for a handful of wotes. This is the problem we have in this country today. Our leaders desperately need to STOP worshipping this kind of God. This is precisely what these very same "leaders" have publicly accused the Cayman public of being, "dewil worshippers". It is our leaders worshipping this kind of god that is sending us to hell faster than we can say "For Cayman".
God helps them who help themselves. Dart has been helping himself to our country while we sit around proatying for god to help. it is time he is stoppped before it is too late. ( It already may be,sadly.) And we can Blame it on Bush.
Actually you're on your own – God called in sick for the Cayman Islands. The fact that Mac keeps getting elected just made him puke and puke and puke…
You go ahead and just pray. That'll keep you out of the way of the corrupt so they can go about their dirty dirty business. It's exactly what they want you to be doing, because it is the exact same thing as doing nothing at all, and that's what they need their victims to do: nothing. So carry on helping the corrupt destroy the Cayman Islands, and you can deal with what's left after the resulting failure of Cayman is complete. You literally will have earned it.
Detect the sarcasm? Good – now get off your ass and get involved in electing honest people and stop wasting time. The election's danm near here!
McKeeva Bush
Juliana O'Connor-Connolly
Rolston Anglin
Cline Glidden, Jr.
Mark Scotland
Mike Adam
Ellio Solomon
Dwayne Seymour
Eugene Ebanks
You should all be brought in the middle of the capital and be whipped in public for agreeing to saddle Cayman with this "For Dart Steal".
XXXXXX
The most amazing part of all of this is that these same politicians who have created this unfair deal – still has the audicity to get up on the political stage and ask for our continued endorsement of their political careers…
Ever had the feeling you've been taken to the cleaners?
For some reason I do not feel "clean" by this deal. It feels more dirty than "clean".
I hope the new government make a clear stance with mr. Dart that he should and must be taxed on all income he earns globally being he is now a permanent residence on the island. I say let anyone who earns over $250k per annum must be taxed to get us out of this mess!
OOps, looks like dart used all five of his computers on you.
Listen people, you cannot get something for nothing, Dart has expended 500 million dollars at Camana Bay is going to take him 20 years to get his money back if ever, let the man build a resort and make a money nuh?
You know it’s going to be nice and classy,
Dart has a big vested interest in Cayman doing well, Cayman does well Dart does well, let the man do his thing he did not become a billionaire by being stupid.
total non-story…..the pwc report would have came to the same conclusions about any public-private development…..
the bottom line is cayman would be much worse off with dart's investments…..
Freudian slip? LOL "cayman would be much worse off WITH…." true dat.
Wasn't this contract frustrated by the FFR? Worst deal in Cayman's history, why do I get the feeling that Caymanians will end up paying the hotel taxDart is getting?
What most of you are missing is that we are in a worldwide recession and to bring investors here we will have to do what all other countries are doing…giving concessions. In his climate we are lucky to find someone that has cash to invest here. Getting a 50/50 deal right now for any country is out of question. Getting Dart to commit to Cayman and not Bahamas is a good enough deal to begin with. Folks lets look more objectively at the situation. Dart does not have to invest here right now. But our government and we sure need the economic activity. We do not have the royal flush hand of cards right now.
Dart is doing a variation on a previously tried-and-tested theme, which he used to great advatage in Greece and Argentina, to name just a FEW; he takes control of national assets of countries in financial peril under the guise of "investment". Many of us strongly suspected this was the case, needing only the documents that have until now been withheld. I don't believe the former Premier had the legal right to obligation our nation to such a shoddy, one-sided deal without the consent of the FCO or the support of the financial and legal sectors of the CIG. I hope that's true, because if not, we are completely and legally screwed.
Totally unrelated. In the case of Argentina and Greece, Dart (and many others) purchased the debts of the respective govenrments and did nothing more than expect them to come good on their obligations. The equivelant is the current Cayman debt holders expecting the same.
We can't have it both ways – do we want derelict hotels and no jobs or not? For those complaining, put your money where your mouth is and invest in Cayman.
Don't expect the ignorant to understand basic logic and common sense…
According to a previous CNS report, US$2 billion was remitted to Jamaica in 2011. Of that, 6% (or US$120,000,000) came from Cayman. That, divided by the number of Jamaicans on work permits in Cayman (8,000) seems to indicate that the average Expat Jamaican on a work permit sent US$15,000 to Jamaica in 2011. If those figures are correct (and I have no reason to doubt them) then either the average Jamaican in Cayman earns US$125,000 a year (12% of which would be 15k) or PWC have made a fundamental error in the assumption that only 12% of expat incomes are sent overseas.
This makes an incredible difference as to how positive the impact of any development is on our economy, and should have more scrutiny than that which appears to apply to it. 12% only just covers the expats pensions they take with them when they leave, as 70% will do with rollover.
PWC? I know I am not an accountant. Where is my math wrong on this?
Oh Oh, now you've done it. No one was supposed to tell the truth that in the modern Cayman, the positive effects of development are gained overseas, rather than here – particularly given that foreign nationals control much of the economy and that even the Caymanians in control send their profits overseas. Do you even know what fronting is and how prevalent it is in our economy?
This is the result of backward thinking Elected govenment whom should be beaten into next year with Mr. Bodden's cowcod.
Why can't a multi billion dollar corporation carry out fair and balanced business without always taking advantage of others or making sure they get the upper hand in everything they do. This is really sad and what is more than sad is that they do ot care that they are actually crapping in their own backyard and have absolutely not consideration for the country or its people as they rape and pillage the peoples earnings and the country's economy all for an advantage. XXXX
Cayman is dying! Cayman needs new infrastructure, new airport – new cruise ship landing – new roads – new hotels – new schools (got those now at great cost) but everything costs BIG money.
CIG cannot afford to make investment into our future, our people. CIG needs investment to come from the private sector. So, think about this for a minute……… an investor wants to build a big hotel and give employment and improve Cayman's tourism product and make some money from his investment. CIG says – sure go ahead and build the hotel, but you will need to relocate the road and build a new road and improve the public beach etc. All this costs a huge amount of money and we (CIG) cannot afford it. So the private investor says – I will pay for the road and public beach and other stuff too. You give me some concessions and in 20 years from now maybe I make some money.
Can you seriously not see the risk that the private investor is making? The HUGE cash investment he is making without getting a penny back for years and years. Now CIG want to break their word and go back on a deal and people want to go back to the way it was before!!!!! Talk about looking a gift horse in the mouth and kicking it up the backside at the same time! No wonder investors are going to other islands and giving Cayman a wide berth.
WISE UP PEOPLE – NO INVESTMENT = NO FUTURE
Can you not see that the investment is actually why we have no future?
The Cayman Islands screwed by McKeeva again.
What baffles me is that these islands are in need of other services and what we got of this deal were new roads and a less than favourable beach. Also, wasn’t Barker’s Crown land and a preservation area in the first place? How is this deal promoting tourism when the government would not gain anything from it – where are the incentives to drive up tourism for all of these hotels? Hotels are suffering because we don’t have many tourist who are visiting the islands, but we need 4 more hotels? Who exactly can benefit from these real estate developments when the majority of Caymanians can hardly afford to pay their bills much less a “Dart” home?
Basic point missed – Hotel Development means short term and long term benefits to Cayman, an outcome of the new road as it allowed part of West Bay Road to be closed. Don't know how it is a less favourable beach, still the same beach right — beach has not changed, in fact much improved by bigger public beach are and safer as no cars zooming by.
Put on your bigger thinking sunglasses and go to that favourable beach!!!
Wow is this legal? Considering the public was not privy to the deal, we should be able to challenge in court? This was the people’s land which was basically given away to mr. Dart. How can we explain this to our children?
Mckeeva, UDP and all existing politicians you all should be ashamed of yourselves. Honestly this is the best you all could have done for cayman?
What a disgrace!
Obviously it is the best that the best representatives of the Caymanian people could do. If they were at least competent they would have enough money to do it themselves but they spent, gave away, and lost it all. Hence the need to have private business do what they can not. O wait! Now they have screwed that up too. O well, nothing for nothing is the new something. Caymanians should be ashamed of themselves.
I'd bet that was CG's campaign speech……good luck with that CG !
Another knee-jerk diatribe from someone who never read the documents.
How is it that with a company such as Dart, there are so many 'unkowns'? I would think they would know exactly how to structure a deal so that everyone knows what is expected of them. Or is that the idea? Dart needs to come clean and own up to what it needs to do for this deal. It is a sweet one for them…
Read the Agreement…..Dart's responsbilities are in there!
Wider concessions to other hotel operators (including foreign-owned) would be fair and appropriate if other development groups have the land to swap, and/or theintention to invest in Cayman Islands infrastructure on the scale that DRCL has agreed to.
The reality is that the public purse has no surplus, has cripling debt service obligations, and will not be in a position to borrow more for perhaps a decade or longer. This is the new normal.
Therefore, no infrastructure can be discussed without securing outside investment capital. It is essential going forward that we elect some seasoned financial intelligence to the helm to negotiate the best concessions on our behalf, or we risk becoming the fritter that gets lost in the oil.
Couldn't agree more with 15:04. That post should be the Executive Summary to PWC's report.
The public purse does have a small suplus and its debt service obligations are not crippling at this point. If we adhere to the FFR we should be in a position to borrow in another 5 years.
PwC could have labeled their report "The Greed and Theft Report". Unbelievable!!!
Ezzard and Arden were right and the only ones with the courage and integrity to stand up and fight for the country and future generations. They told us this was happening. That is leadership and integrity. PPM and C$C not going to say a thing about this for obvious reasons but expect they our votes
Don’t forget Arden was PPM. He only left because he couldn’t get to head party.
He left because he was frustrated with the lack of leadership in the party and because supporters in his constituency indicated they would no longer support him if he remained with the PPM.
We MUST rise above the dart ideology that Cayman cannot possibly do without him exactly like we have done forever. And we MUST STAND UP to the threat that he will haul his backside and his money if he is not allowed to take advantage of us from the bottom of his precious heart. This very bad deal which was effectively written by dart and the affiliated legal team shows the intent that dart has for these islands.
The very very bottom line is that Dart is in Cayman because it suits DART tremendously to be here, NOT because he loves our people from the very bottom of his heart. And he should be treated exactly like every single other foreign or local investor in Cayman, or haul his backside, along with his money! Dart has taken advantage of our cayman kind and the incompetence of those elected to represent all Caymanians.
So true and so to late!
Thanks a million CNS.
It is A sad, sad day for Cayman. The list of ways Dart benefits is shocking. No limit to the XXX Dart Management Team who negotiated this smorgasbord of self serving gimmes. No DOUBT about McKeeva's incompetence as Minister of Finance. Value for Money?!!! We legalized Dart's monopoly status.
Where was Rolston?! McKeva got what he wanted, gave the Dart team eveything. Did they even read the documents? does the attorney general or cabinet secretary have no obligation to the Caymanian people? Dart own us!! They can dictate all development from harbor front to Batabano. They even control what West Bayers will look at on that ETH!!
The new Govt must take out a loan, pays them back for the road. A new Govt, led by competent, successful real Caymanian professionals must look Dart in the eye and say " not today bobo!" take back the power for this country and start over with Dart. It is far better to be broke and independent than fat and indentured to Dart! This entire deal and manipulation of our people stinks.
########### No need to pay him back for the road, all developers have to build their own infostructure on their property at their costs. he did not give us a road, but instead the politicians gave him our road, future taxes and on and on they give him.
An educated person without commomsence and an ego is a danger to us all, an uneducated person with an ego, dictator traits and a mind of a gambler with followers will deliver nothing and make all of us loose what little we have worked hard for.
Wake up cayman, TIME FOR CHANGE N O W, THEY ALL MUST GO, break up the gravey train now, this is our last chance.
We the voters are the ones that have the power of change and can put this country back on track if we vote for country. ****************
Yet again another disastrous deal for the people of the Caymans.
Further evidenced by the Cayman Islands Government and DRCL fully understanding the immediate need to add additional items to the 3rd Amendment in order to make it a fairer and more palatable deal for people to understand and live with.
Dart is ALWAYS the greater beneficiary. Cayman is just another piece of candy in his Global Candy Bowl. A Paradise Plum, if you will.
It truly disgusts me how pro-Dart and unobjective the Caymanian Compass is.
Every report that they write on Dart and the For Cayman Alliance is firmly pro-Dart – ignoring and marginalizing all criticism and objections.
e.g. Headline: 'Dart Deal, gives value, makes concessions' (they do identify some of the negatives – but a purely positive sounding headline). They almost never covered the numerous rallies against the Deal, and trivialise all objections.
Thank you CNS for your reporting. Even if you may swing on the side of the people, the downtrodden, the environment etc at least you put all the information out there for the public and are not affraid to take on the powers that be.
The Compass was also always amongst Michael Ryans biggest fans.
And CNS gives negative headlines and bury the positive paragraphs below.
I thought dart owned the compass?!
This is why Mark and CG ran away..We need professional people to negotiate these things? It is too much for these guys to understand and they won't ask for help. Always hasto be their way. We are literally screwed!!! DART has his high priced lawyers negotiating for them and we have Slokey and Walda negotiating for us…to be honest if they were still alive they would have had more common sense than these two…
Please BT and WB…do not put an X for these or any of them that got us screwed.
I don’t think Mark got hurt in this deal too much either. After all, most of the machinery paving the new roads are for his company. Who says he wasn’t one of those that closed his eyes and helped signed the deal be because the pot was sweet for him?
Is anyone suprised by this at all??
You were warned. Blame UDP.
Was this agreement read and signed in the dark.. were the lights on?? True, an agreement is an agreement, but it is beginning to appear as if this agreement was put together solely by the Dart Corporation. Lacking any due diligence or close examination on the part of CIG. Meaning at that point, McKeeva Bush. Further it was cleverly worded by glancing over, leaving to the imagination, or completely ignoring, key elements. Which should have been included as CIG’s part of the agreement. This was done by I assume, a roomful of lawyers and accountants. Not lawyers and accountants hired by CIG, but rather by the Dart Corporation. The carrot was there. And so was the donkey. It appears from these documents that it worked! It also appears the former premier approached this as he did the tables in Vegas, and elsewhere. But I’m not sure if with this approach Cayman will succeed in breaking even. It doesn’t appear so. You have to hand it to Mr. Dart though he picked the right opportunity. And he knew who to deal with “Give him a cigar, make him feel important. Sign here.”
Selling the country out once again! Let’s vote them out & get this country back on it’s feet again!
BRACKA
On its feet with what money??? We better thank god dart was here since 2005 having invested 1billion dollars here. The only feet we would be on now is our feet going to dig cassava to eat or on our feet going overseas to look a job.
Absolutely….food for thought CAYMAN: How many of our millionaire caymanians you see investing for the people of cayman, how many???? You wana know??? ZERO. They keep their money in their families and for themselves…they do not WANT to give back anything to me or you.
Down arrow all you like, troll button all you like and laugh but the truth hurts my friends. Lets not forget the 2-3 months DART paid ALL government salaries and expenses. 3 MONTHS! OK??? Give credit where due! Please!
Let me summarise the report : "You're being ripped off". (I'll assume any "thumbs downer" is working for/has an interest in DRCL.)
To be fair and balanced, there are risks as well to Dart. They are investing close to half a billion into this project.
hmm.. report doesnt say how,where and when they would make their "investment". it does detail their concessions… so until you see massive growth and spending done to enhance "cayman" not dart(no one comes to the cayman islands, to hang around caymana bay) inc, I'd hold my breath.
I believe that is only the tip of the iceberg.
ahh well, I think that expat tax is sounding good now. lol
pocket change!
Yet another McKeeva disaster. Honestly, it baffles me why any sensible person is still supporting him.
It's not just Mckeeva…Mark and Cg tried it and got turned down. Watch and see if the next bunch doesn't go to the piper again…Follow the money trail..He who has the most wins…everytime…His name is DART