Fifteen months have passed since Her Majesty's Privy Council allowed the Government of Antigua and Barbuda to expropriate the Half Moon Bay Resort, a private property developed and owned for over thirty five years by a group of American investors.
This exercise of eminent domain was allowed on condition that full and fair compensation be paid to the owners within a reasonable time.
Within five weeks of the Decision handed down by Privy Council, the Government had taken physical possession of the property. Ten months later, the owners had to file an action in the High Court of Antigua and were granted a mandamus order requiring the Government simply to initiate negotiations on compensation.
To date, an Assessment Board has been appointed. It met twice, "for purely administrative purposes", once in July and again in September 2008. It is now debating the proper date at which the value of the property is to be established. This debate may continue for months, although the existing laws are as clear on the subject as are the facts in the matter.
The Board is comprised of a High Court Judge, appointed by the Governor General; a representative of the Government, also appointed by the Governor General; and a representative appointed by the owners of the property in question. A majority decision of this Board establishing the value of the property can be appealed in the Eastern Caribbean Court system, all the way back up to Privy Council.
This process, which will only establish the value of the expropriated property, is likely to take a long time.
This suits the Government of Antigua very well.
For reasons of personal interest transcending two opposing administrations, the expropriation of the Half Moon Bay Resort was never intended to include payment for the property. Previous expropriations that occurred on Antigua have involved local property-owners, some of whom have never been paid, while others have received partial compensation, decades after their property was taken from them.
Half Moon Bay Resort is the first expropriation of a foreign-owned investment property and it is a milestone in Antiguan history, as well as in Caribbean behaviour, to follow.
The Land Acquisition Act, which fuelled the process of "forced acquisition" of private property, requires such acquisition to adhere to a specific protocol in the pursuit of a specific goal.
The protocol of steps leading up to the expropriation was simply ignored. As for the goal, "public interest" was allowed to include the transfer of a privately-owned property from its legitimate owner to another private entity, for the same purpose, but with putative financial consideration for the "people of Antigua" and definite ones for its Ministers.
This is a staggering breach of international business practice. The fact that the language of the Land Acquisition Act of Antigua causes the Lords in Privy Council to legitimise this action should be a matter of grave concern to anyone considering investment in Antigua and Barbuda.
Nevertheless, once such legitimacy is bestowed, a conundrum is created, which the Government of Antigua is not going to resolve any time soon.
The Government has stated that it does not intend to develop or manage the Resort and that it will select the best possible entity from those which have expressed interest.
The Minister of Tourism has assured the public that "not a single cent would be paid out of the Treasury" in compensation and that the next developer will have to negotiate a settlement with the legitimate US owners and pay them the compensation as Antigua cannot afford this sum.
That process has no basis in the Land Acquisition Act. The Government has been instructed by Privy Council to pay the owners for the expropriated property. There is no lawful role for any third party to pursue, nor do the owners intend to deal with any third party with regard to compensation owed by the Government for the forced acquisition of their property.
Nevertheless, it is curious to see how the Government is dealing with the matter. For its own local consumption, as well as in response to international questions, it must be seen as dealing with the process. This is what it has presented to the public.
For years, Texan financier R. Allen Stanford and British businessman Peter De Savary were presented as primary contenders for the property. In a political move following the Court-ordered appointment of the Assessment Board, the Government announced its choice of a group led by an Antiguan-born American citizen to develop the property, "in cooperation with the Antiguan Government and for the benefit of the Antiguan people."
It is hard to determine the basis for this choice, beyond its political merit. No architectural or business plans have been presented or even discussed. The announced value of the development was pegged at US $2 billion by the Government in the press. In a radio interview the following week, the developer dropped the number to between US $250 and 350 million, saying that nothing is gained by exaggerating the scope of the project.
In the same interview, the developer supported his ability to carry through his "winning bid" by the financial contacts which his firm has established during its years of successful developments in the USA, primarily in the state of Georgia. Its specialty is middle to low-income housing and mixed-use facilities.
The Integral Group LLC is located in Atlanta, Georgia and has financed its domestic projects through various U.S. banks and pension funds.
Unfortunately, American Banks did not lend to projects being developed in Antigua, even before its government expropriated American-owned property. It is hard to see any pension funds taking that risk.
As for the World Bank, by expropriating U.S. owned property, the Government of Antigua has breached the covenants of MIGA, of which it had only recently become a member. By its own rule, the World Bank cannot assist the Integral Group with its development anywhere on Antigua and that is before the irony is recognised that the loan would be collateralised by the very property that has already been expropriated once before and which the borrower will be developing in a joint venture with the offending Government!
One could easily conclude that the announcement of the Integral Group LLC as developer of the Half Moon Bay Resort is intended as a smoke screen, the main purpose of which is to carry the current Administration through its remaining six months of power.
With elections looming in March of 2009, the Half Moon Bay hot potato is not an issue which is likely to be advanced.
When the Government controls the process, this should not prove difficult at all.