ANTIGUA - HALF MOON BAY: INCREASING COMMON GROUND;

C O N F I D E N T I A L BRIDGETOWN 001706 SIPDIS SIPDIS WHA/CAR FOR ROBERT COLLINS EB/IFD/OIA FOR JAMES ROSELI L/CID FOR MARGUERITE WALTER L/WHA FOR DAVID SULLIVAN EB/CBA FOR NANCY SMITH-NISSLEY SOUTHCOM ALSO FOR POLAD E.O. 12958: DECL: 09/21/2016 TAGS: EINV PGOV PREL PINR CASC ELAB OPIC KIDE AC XL SUBJECT: ANTIGUA - HALF MOON BAY: INCREASING COMMON GROUND; RESOLUTION ATTAINABLE? REF: A. BRIDGETOWN 995 ¶B. BRIDGETOWN 487 ¶C. BRIDGETOWN 287 ¶D. BRIDGETOWN 18 Classified By: DCM MARY ELLEN T. GILROY FOR REASONS 1.4 (b) AND (d). ¶1. (C) SUMMARY: On September 20 Ambassador Kramer and legal counsel to the Half Moon Bay property's Amcit majority shareholder met with Antigua and Barbuda Attorney General and Minister of Tourism to revitalize efforts to resolve differences surrounding the 11-year-old expropriation case of the Half Moon Bay (HMB) Resort. The meeting, regarded as productive by all participants, increased the common ground on which to build future cooperation, identified issues that need additional clarification, and produced concrete "next steps." Although underlying issues require further negotiation and the MOU needs some wordsmithing to ensure acceptability and compliance by both parties, this session produced more positive momentum than has been evident in quite some time. Cautious optimism would not be inappropriate. End Summary. ¶2. (C) Ambassador Mary Kramer and William D. Rogers, representative of Half Moon Bay (HMB) Holdings Limited majority stockholder Natalia Querard, met with Antigua and Barbuda Attorney General and Minister of Legal Affairs Justin Simon and Minister of Tourism Harold Lovell in Antigua on September 20 to expedite resolution of the HMB expropriation case (reftels). PAO and PolOff (notetaker) accompanied the Ambassador. During the meeting Ambassador Kramer noted that she would like to see this chapter in bilateral relations closed before she leaves post later this year. She also emphasized the importance the resort, once fully functioning, could play in boosting Antigua's tourism industry. AG Simon echoed the Ambassador's sentiments, thanked the Embassy for its continued support, and welcomed all participants in the spirit of negotiation, declaring his interest--even anxiousness--in seeing the matter settled swiftly. BACKGROUND -------------- ¶3. (SBU) In 1995 Hurricane Luis devastated Antigua and the aging Half Moon Bay Resort, once one of the premier properties on the island. Ensuing power struggles among HMB shareholders kept them from refurbishing the 110-acre beachfront resort. In 2002 the GOAB, led by then-PM Lester Bird, acquired the property through an act of Parliament, claiming the island's dependence on tourism as a basis for national interest in re-opening the resort. HMB shareholders, including Amcit Natalia Querard, challenged the expropriation in local courts with varying results (refs A and C). In July 2005 the GOAB passed an act of Parliament which would allow the return of the property under three conditions (ref A). Querard rejected the offer. The matter is currently on the docket for the London-based Privy Council, Antigua's highest court of appeal, with the hearing to be held in April 2007. PROPOSED MOU EXPANDS COMMON GROUND... -------------- ¶4. (C) In May 2006 William D. Rogers, a retired senior partner of the Washington-based law firm Arnold and Porter LLP (and former Assistant Secretary of State for Inter-American Affairs from October 1974-June 1976/Under Secretary of State for Economic Affairs from June SIPDIS 1976-January 1977),wrote to Ambassador Kramer and WHA A/S Thomas Shannon identifying his firm as legal counsel for HMB and proposing a resolution very similar to the GOAB's 2005 act of Parliament, with some modifications. As much of the language for the proposed MOU was taken directly from the previously rejected July 2005 act of Parliament, the GOAB representatives were encouraged by the increase in common ground. There are several details yet to be negotiated, but agreement on the MOU would represent significant progress. ¶5. (C) Minister Lovell reiterated the GOAB's longstanding concern regarding Querard's commitment and financial ability to move the refurbishment project forward. He noted that the GOAB had been accused by political critics of ignoring the developmental aspect of the issue and wanted to ensure that any agreement reached would put future development solidly on track. Lovell stated the GOAB's concern that if it made concessions without clearly outlined terms and specific responsibilities for each side, that it would be "left holding an empty bag." ¶6. (C) Rogers assured the Tourism Minister that once the legal issues of clear title were put to rest, the funding would materialize. He highlighted the interest of the Multilateral Investment Guarantee Agency (MIGA),a member of the World Bank Group, and the Overseas Private Investment Corporation (OPIC) in the project as proof of his client's diligence and commitment. Rogers reiterated that once the title was clear, financing (estimated at USD 20 million) would "move smartly," and emphasized HMB's intention to redevelop the property as a premier destination. (Comment: This issue has been a sore spot for PM Spencer and the United Progressive Party (UPP) government since taking office in ¶2004. The interest of MIGA and OPIC is a new and reassuring development. End Comment.) WITH A FEW AMENDMENTS -------------- ¶7. (C) The proposal includes an attachment outlining five provisions HMB expects the GOAB to agree to before it will drop its legal cases, including the one before the Privy Council. These include resumption of utilities and services; granting of licenses, permits and other necessary approvals; assurance of similar economic and physical concessions as those provided to other resort developers; correction of security and access infringements; and extension of general support and cooperation. Attorney General Simon agreed that the provisions seemed reasonable enough, but was unaware of the details of the encroachments and access issues. He agreed to send a survey team out to the site to meet with an HMB representative to go over the specifics. ¶8. (C) Simon pointed out the GOAB's concern about the open-ended language in the MOU, citing Querard's historic unwillingness to be bound by any timelines. He expressed the GOAB's desire to have a "commitment to start" written into the MOU, as well as additional text changes providing clearer performance measures. QUESTIONS REMAIN -------------- ¶9. (C) Some of Simon's and Lovell's concerns were mitigated by the declared interest from MIGA. They asked if MIGA would provide reassurance, in the form of a letter of intent, of its willingness to support the project. Rogers responded that this a definite possibility and agreed to work on setting up a meeting with MIGA officials for Simon and GOAB Minister of Finance Errol Cort when they are in Washington, September 28-29. ¶10. (C) Simon and Lovell also wanted to address the issue of minority shareholder interests and ongoing litigation between the partners (ref B). Rogers explained his understanding that only immediate family members could inherit shares according to the tenants of HMB Holdings Limited. He also noted that the corporation had the right of first refusal, and planned to buy out any outstanding shares. Simon countered that construction and financing could not commence until the matter of the minority shareholders was conclusively resolved. Rogers, acknowledging that he had not investigated the minority shareholder issue and its potential impact on financing in advance of this meeting, promised to follow up on the matter. ¶11. (C) Simon then addressed the issue of severance pay owed to workers who were dismissed when the property was damaged, an item PM Baldwin Spencer brought up at a meeting earlier in the day (septel). Simon acknowledged that it was not legally HMB's responsibility to compensate the workers, but queried whether Querard intended to fulfill her promise to meet this obligation. (Note: This is an issue close to PM Spencer, as he was the union leader representing the displaced workers before he became PM, and ensuring such compensation was part of his campaign platform in the run-up to the March 2004 elections that brought him to power. Resolution and swift repayment of the workers would therefore provide a powerful political boost. End Note.) Simon stressed that payments of the principal should be the first disbursement out of any financing received, while noting that previously divergent positions regarding interest rates were open for negotiation. Rogers reiterated HMB's commitment to meeting this 11-year-old obligation. ¶12. (C) The GOAB representatives also requested specific stipulation of performance standards and timelines, with resulting conditionalities should those standards and timelines not be met. They specifically requested identification of dates by which HMB will drop all litigation, and a timeframe for construction to start after financing has been received. POINTS OF CONCURRENCE -------------- ¶13. (C) Despite the tenuousness of the proposed MOU and attachments and amendments, there were several areas where the GOAB and HMB negotiators were in agreement. Both sides concurred that proceedings should remain confidential and any future press releases would be mutually agreed upon before release. In response to this, Rogers noted the recent (perhaps hard-won) discretion and press silence of his client. They agreed that the process required constant monitoring, with identified performance milestones, which could be announced to the media, such as receipt of financing, groundbreaking, and completion of various phases of development. The parties stated that their common goal would be to settle the matter once and for all with no additional legal actions to be taken against the GOAB or its representatives, "the Crown," or individuals. Rogers and Simon further resolved to be the primary negotiators, in order to keep "personalities" out of the mix, and maintain an open line of communication between them. NEXT STEPS -------------- ¶14. (C) As evidence of the expanded common ground and points of concurrence, the GOAB and HMB interlocutors also agreed to concrete "next steps" to keep the momentum of the negotiations going. These include: -- Rogers to negotiate a letter of assurance from MIGA, preferably for a September 28-29 meeting; -- GOAB to investigate the services issues outlined in Appendix A of the proposed MOU; and -- Rogers to amend the proposed MOU to include workers severance pay issues, identify definite timelines and establish linkages between major points of the agreement, so that the GOAB dropping all claims to the property and HMB ceasing all court proceedings will occur simultaneously. COMMENT -------------- ¶15. (C) The drawn-out struggle over the resort property at Half Moon Bay has been a highly contentious political, economic, and personal one; however, the prospect of international insurers' involvement has made a significant difference in the GOAB's disposition to HMB, if not to Querard herself. An agreement on severance payment to laid-off workers would also be much-welcomed political bonus for the Spencer administration. The devil is in the details, however, and there are many yet to be worked out. Rogers had hoped to walk out of the meeting victorious with a signed MOU under his arm for his client; he came away with a greater appreciation of the complexity of the situation and a lot of homework to do. This is the closest the parties have been to an agreement in some time; with rational negotiators on either side, there just may be some hope for a resolution in the near term. KRAMER