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Identifier
Created
Classification
Origin
06BRIDGETOWN1706
2006-09-25 20:27:00
CONFIDENTIAL
Embassy Bridgetown
Cable title:  

ANTIGUA - HALF MOON BAY: INCREASING COMMON GROUND;

Tags:   EINV  PGOV  PREL  PINR  CASC  ELAB  OPIC  KIDE  AC  XL 
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VZCZCXYZ0009
PP RUEHWEB

DE RUEHWN #1706/01 2682027
ZNY CCCCC ZZH
P 252027Z SEP 06
FM AMEMBASSY BRIDGETOWN
TO RUEHC/SECSTATE WASHDC PRIORITY 3376
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUEHCV/AMEMBASSY CARACAS 1501
RUMIAAA/HQ USSOUTHCOM J2 MIAMI FL
RUMIAAA/HQ USSOUTHCOM J5 MIAMI FL
RUEHCV/USDAO CARACAS VE
						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