Executive Summary
For an Island with reported debts of over US $2billion dollars and tourism offering possible salvation, Antigua’s expropriation of Half Moon Bay Resort gives no comfort to prospective foreign investors and the international community.
Though the illegal expropriation was committed by the former administration, the new UPP Government has been slow to meet its pre-election promises to abandon the forced acquisition of the US-owned property and return it unencumbered to its rightful owners.
Conventionally, expropriation is for public use to enable the building of important infrastructure such as roads, bridges and airports. It is not a State mechanism to transfer assets to another private entity. Such was the action of the former Lester Bird-led Antigua & Barbuda administration, which claimed in the country’s Parliament to have secured the blessing of the International Monetary Fund.
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Expropriation is the forced acquisition of private property by the State. Normally, this form of action is for public use to enable the building of important infrastructure such as roads, bridges and airports. It is an instrument which must be used with extreme caution and circumspection for it deals with the cornerstone of all democracies – the Government’s constitutional duty to respect and protect an individual’s right to ownership and enjoyment of private property.
In Antigua, the Half Moon Bay Resort has been owned by H.M.B. Holdings Limited since 1971. For twenty five of those years from 1971 -1975, the Company developed, maintained and managed its property, building an enviable reputation for service and business practice.
The Hotel sits on a white coral sand beach, consistently ranked amongst the top ten in the world. Included in the Resort's 108 acres are a private 9-hole golf course, complex of tennis courts and miscellaneous guest amenities, private estates and additional land earmarked for further villas and guest accommodation.
Half Moon Bay Resort has made significant contributions to Antigua's economy and international profile. The guest roster and the number of repeat guests provide valuable testament to its reputation.
Over the years, many offers to purchase the property have been made to its owners from private sources claiming to have been directed by the Government but none was accepted as the owners’ sole interest was to maintain standards and develop their asset. That goal is still unanimously supported by the shareholders. A dozen individual shareholders, all citizens of the United States, currently own the Company.
In September of 1995, Hurricane Luis arrived on Antigua at Half Moon Bay. The property was demolished. The Hotel was insured but the insurance proceeds were pledged against a small loan from Barclays Bank Plc. It emerged that Caribbean Hotel Management Services, the hotel management company responsible for hotel operations had failed to properly insure the property for full replacement value in accordance with its terms of engagement. The Bank collected the modest insurance funds to repay part of the outstanding loan.
The owners began to look for replacement funding. Meanwhile, members of the Kluge/Querard family, who together hold a majority of Company shares, provided loans to the Company to commence re-development, secure the property and ensure its survival.
However, the Government of Antigua & Barbuda has turned this survival into a severe challenge.
Initially, Prime Minister Lester Bird offered to broker a sale of the property to "a friend of the Government". The owners responded by declining this offer and stating their intention to rebuild and redevelop.
Sabotage and harassment by the former Administration began immediately. Re-financing attempts were repeatedly undermined. An initial attempt at sequestration of the property was made and rebuffed in 2000.
Between December 2001 and February 2002 two more attempts followed. Announcements carried by the press declared an imminent take-over of the property by R Allen Stanford, who emerged as the "friend", as part of a US $40 million loan package made by him to the Government. "Eminent domain" was cited as the vehicle of transfer of ownership by Mr. Stanford in his interview with the Wall Street Journal. (1)
Eminent Domain is the power of government and its agencies to acquire property for "public use" as long as the government pays "just compensation." A key attribute of eminent domain is that a government can exercise its power even if the owner does not wish to sell his or her property.
Following unanimous Lower House approval of a bill to seize the Half Moon Bay property, Mrs Querard, Managing Director of HMB Holdings Limited informed the Opposition, (The United Progressive Party - UPP), led by Baldwin Spencer. Mrs Querard provided hard evidence of the lies and deceptions presented by Lester Bird and his Cabinet as a basis for the proposed sequestration.
The Opposition recognized the sham and abuse of power. Baldwin Spencer spoke to the Nation announcing the reversal of his and his party's position. As their remonstrations fell upon deaf ears, Opposition Members left the Parliamentary Chamber on three different occasions while the Majority voted to expropriate Half Moon Bay Resort. (2)
Appropriate legislation was then enacted to sequestrate Half Moon Bay Resort. Compensation has never been offered. The property owners immediately initiated the appeal process.
Although, many U.S. Congressmen and Senators wrote to Prime Minister Lester Bird, warning him of the political and economic fall-out that would likely occur should sequestration be pursued, Bird claimed that the Land Acquisition act gave the right to compulsorily acquire private property for public use.
He then coupled this legal non sequitur with a claim that the International Monetary Fund had authorised expropriations followed by privatizations of the then State-held property to offset the global economic downturn. (3)
Another disturbing illustration of the "public good," was offered by Prime Minister Lester Bird in the presentation to Parliament of his Budget for 2003. Here, he suggested that the seizure and resale of the Half Moon Bay property could balance the Nation’s Budget Deficit.
To protect its property, H.M.B Holdings Limited applied to the Eastern Caribbean High Court for a Judicial Review of the Government's action.
Significantly, Baldwin Spencer of the UPP supported this application by Affidavit, stating that the Government's decision to forcibly acquire the Half Moon Bay property "is fundamentally flawed. The decision must not be allowed to stand. The decision is pregnant with bias unreasonableness and maladministration. The Court must intervene."
On the other side of the Parliamentary aisle, "You are an enemy of the State -- no white woman can be allowed to own such property!" screamed, Senator Asot Michael, the Antigua Labour Party Leader of Government Business in the Senate. The distinction between the political parties became clearly established over this issue. Justice Mitchell granted the Judicial Review on March 16th, 2002. His order also included an Undertaking given by the Attorney General and the Cabinet’s legal representative that no action would be embarked upon to either seize or dispose of the property until the final legal decision.
Since that time, the Government has opposed the hearing of the case. Its Application in 2003 to strike out the Judicial Review was duly denied by the High Court. The Government then appealed to the Eastern Caribbean Court of Appeal. There, the Judges, many of whom reside on Antigua because Bird gave them houses, vehicles and free power for the remainder of their lives as "payment for their services as judges," reversed the Antiguan Court’s decision, replacing the High Court Judge's discretion with their own. This is not a proper basis of reversal of interlocutory motions.
For almost a year, the Government sought to block the owners' right of appeal to Her Majesty's Privy Council, the highest court governing the judicial process of Antigua & Barbuda.
During this time, the Government repeatedly breached the Court Order by negotiating the sale of the Half Moon Bay property with a number of potential buyers, which it advertised for sale both in Parliament and in the media. (4)
By the time the right to appeal was finally granted, Antigua & Barbuda’s five-yearly elections were imminent.
In March of 2004, the United Progressive Party, headed by Baldwin Spencer, finally swept aside forty well-documented years of malgovernance by the Antigua Labour Party and the Bird dynasty.
The winning platform promised the righting of wrongs, the eradication of abuse of power and a shift from ministerial handouts and servitude to support for education, self-motivation and initiative. The new "Government in the Sunshine" would act transparently, stay out of business and act as a facilitator for all legitimate enterprises.
Now, six months later, the Administration led by Prime Minister Baldwin Spencer is beginning to dig Antigua out of the deep hole of fiscal and physical devastation, created through many years of government fraud, maladministration, ruthless manipulation and chicanery. To do so, it needs the support of the legitimate governments of the world to assuage its massive US $2 billion dollar debt mountain and secure new financial and political life-lines.
The Finance Minister is doing his best to convince the representatives of the world's financial sector that this Administration is prepared to "clean up" its predecessor's act. The Minister of Tourism and Foreign Affairs appears equally determined to bring in new investment. The Prime Minister has met the owners of the Half Moon Bay property and has expressed his desire to stop and reverse the steps taken by the previous Administration to forcibly acquire that property. To that end, he has authorized and deputized certain members of his Cabinet to deal with the matter of Half Moon Bay.
This is where intentions for change clash with cultural habit and precedent. It appears that the simple righting of a wrong has provided an opportunity to extort demands, characteristic of the previous Establishment.
No longer is it sufficient to return stolen property to its rightful owners, conditions have become appended.
The Minister of Tourism has stated that such conditions include the presentation by the owners of a projected time-line during which the Company will obtain the requisite financing, failing which the Company must now agree to a Joint Venture partner, to be determined at a later date, possibly the Government itself.
Furthermore, the new Attorney General has demanded that not only must the Company first present a feasibility plan for the proposed development for government approval, but the Government must be "satisfied with reasonable assurance in respect of ...the Company's financial ability for short-term liabilities and projected goals" before undertaking any reversal of the process of forced acquisition.
Independent observers agree that the Government is well aware that the Company will not accept any conditions to the unfettered return of its property. Those observers also recognise that the Government is portraying its concerns about the Company’s ability to re-develop its property in an effort to distract attention from the very real and dangerous issue of sequestration.
It is universally accepted that in a democratic society conditions cannot be attached to the return of stolen property and that to do so, adds complicity to the theft.
Given the facts of the case and the support given to the Company by the present Prime Minister, the Government’s willingness to continue the legal action appears to be a mockery of the judicial and political processes.
Without any reasonable expectation of winning the legal battle, the Government appears to have embarked on continuing the effort to wear down the US owners, under siege for the last nine years, into making concessions which are tantamount to giving up goals, efforts and, ultimately, their property.
As such, this extortion erases much of the difference projected between the two Administrations. The image it conveys of continued abuse of power has a negative effect on the ability of the new Antiguan representatives to build a new, positive and respectable, credible environment for political and economic cooperation.
In practical terms, by practising expropriation, Antigua & Barbuda will find itself increasingly adversely mentioned in the registers of supranational international agencies, such as the World Bank, IMF, Multilateral Investment Guarantee Agency, OECD, World Trade Organisation, United Nations and their Member countries. Country files, news agencies, human rights groups and, most importantly, finance ranking agencies such as Standard & Poors, Moody’s and other credit worthiness assessors would be compelled to take account of its behaviour.
In any case, by expropriating foreign-owned property Antigua & Barbuda reduces its attractiveness to legitimate and mobile foreign investors, whose initial inquiries will receive high country risk assessment from any of the above sources. Such investors would naturally choose another jurisdiction for their investment which did not place capital at risk and which would allow investment leverage from legitimate banking sources.
Whilst the attempted expropriation is still perceived to be the result of the actions of the previous rogue Administration, the legal mechanism to abandon the expropriation remains available to the new "Government in the Sunshine". Should the process of expropriation be continued by the new officials, the present diplomatic niceties currently afforded it would certainly expire.
Once the reputation of this Administration is undeniably merged with that of its predecessor, Antigua & Barbuda will find itself open to increased scrutiny and derision. The economic and financial vacuum thus continued will probably be filled by providers of criminal and dubious funds, requiring land and other payment in kind for their "assistance". These "benefactors", like predators, just stand and wait….. Antigua & Barbuda’s last forty years bear testament to their heritage and stand as a warning against continuing down the same road.
The people of Antigua & Barbuda elected a new Government to protect them from such a future and the international community stands ready to confirm and support the change. The Half Moon Bay debacle could be corrected in an instant and this resolution would provide a powerful declaration from the Government in the Sunshine that it is indeed what it says: ready, willing and able to effect that change.
- Throughout a history rocked by numerous serious scandals, ranging from trafficking in arms, drugs and passports to international money laundering, the Bird regime had always managed to find a prominent benefactor to stave off financial disaster. It would eventually surface that certain financial interests were shared by the benefactor and a small group of ministers of government, but no action has ever been taken to deal with that knowledge. R. Allen Stanford is the latest addition to that group. As single shareholder of the Texas-based Stanford Financial Group, Stanford claims to handle a portfolio of US $17 billion for clients in 79 countries, employing over 2000 people in USA, Mexico, Venezuela, Switzerland, Ecuador, Panama, Antigua and several other Caribbean nations. He also operates two major Antiguan banks, the domestic Bank of Antigua and the Stanford International (Offshore) Bank. It is widely believed that the British Government invited Stanford to leave Montserrat because of his financial activities. During his 7 February 2003 press conference, Prime Minister Bird himself admitted that he had received stark warnings about Stanford from the US and UK. Nevertheless, Bird still encouraged Stanford’s tremendous influence. Amongst other ventures, Stanford interests control the Bird International Airport, the Caribbean Star Airline and the new Caribbean Sun Airline, which offers "seamless service" between South America, the Caribbean and the U.S. He also owns the Island’s largest newspaper. Stanford has "loaned" funds to the Government and made large financial "gifts" to its Ministers. In return, he has amassed a large amount of real estate, which has been turned over to him after forceful ultimatums in which he threatened withdrawal of further financial support unless his demands were met within 24 hours. These demands were all met – with the exception of Half Moon Bay…, a point not lost in the history now being written.
- The Government’s application of the concept of "public use," stems from the contention that "hospitality/tourism" is the predominant, if not sole contributor, to the country’s GNP and that, therefore, no "hospitality/tourism" property can be allowed to remain unproductive. Bird extended the syllogism by leaping to a conclusion that if the current owners could not or would not develop the property then the Government had the right to seize that property and place it in better hands, "for the public good." The fact that the Government had sabotaged the owners’ efforts to refinance redevelopment was not disclosed either to the public or to Members of Parliament, who were asked to approve a Parliamentary Declaration allowing forced acquisition for the public good. "Public good" and "public use" are both used in the Antiguan Constitution and the Land Acquisition Act, a fact frequently decried but never corrected.
- Public Information Notice (with links to the Staff Report) "IMF Concludes Discussion on the Eastern Caribbean Currency Union".
- On "On 11 April 2003, Bird claimed in his Budget Speech to Parliament that the sale proceeds of Half Moon Bay would help balance the nation’s deficit. He added that the Government was actively pursuing potential buyers of the property naming R. Allen Stanford, Saul Kerzner of Sun City, South Africa & Atlantis, Paradise Island and William B Johnson founder of Ritz Carlton Hotels. Bird later added another name to this list and declared the buyer to be British entrepreneur, Peter de Savary.
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