THE GRENADINES: THE INCREDIBLE DISAPPEARING RESORT

C O N F I D E N T I A L BRIDGETOWN 001415

SIPDIS

SIPDIS

WHA/CAR FOR ALAIN NORMAN
SOUTHCOM ALSO FOR POLAD

E.O. 12958: DECL: 10/30/2017
TAGS: CACM CDB CVIS EAID ECON EFIN ELAB ETRD KCRM
PGOV, PINR, PREL, SNAR, VC, XL, OECS, USTR, MY
SUBJECT: THE GRENADINES: THE INCREDIBLE DISAPPEARING RESORT

REF: A. A) 07 BRIDGETOWN 1377

B. B) 07 BRIDGETOWN 1341

Classified By: CDA CHOWARD FOR REASONS 1.4 (B) AND (D).


1. (C) Summary: Embassy Bridgetown recently learned that the
Government of St. Vincent and the Grenadines (GOSVG) has
repossessed land on Union Island that is owned by a long-term
American investor in the Grenadines. Ambassador Ourisman
raised this possible expropriation with Prime Minister Ralph
Gonsalves, who insisted that the act was a legal
"forfeiture". The American investor, Haze Richardson, has
appealed the decision in SVG courts but remains skeptical of
the ultimate result. Both Richardson and another American
investor, who is attempting to overcome bureaucratic hurdles
in SVG to open a new resort in the Grenadines, complained to
the Embassy that the Gonsalves administration is not friendly
to foreign investors. End Summary.

Background
--------------


2. (U) In October 2007 a key Embassy contact informed PolOff
that the SVG government under PM Ralph Gonsalves had
"expropriated" 100 acres of land owned by an American
investor. In fact, the official publication of the
government of St. Vincent and the Grenadines, "Focus",
published by the Agency for Public Information (API),ran a
story in its June 2007 issue proclaiming the case a
"Resounding Nationalist Victory." According to the article,
the SVG High Court found that the American investor, Haze
Richardson, and his two companies that owned the land,
Chatham Bay Club Ltd. and Chatham Bay Development Corp.,
Ltd., had violated the terms of the "Alien's (Land-Holding
Regulation) Act." The Court ruled that Richardson was
required to spend a minimum of $15 million USD on
construction within three years of receiving the license and
that his failure to do so meant that Richardson must
"forfeit" the land to the government with no compensation.
Citing the danger of foreign investors taking advantage of
the lack of capital gains taxes as a way to speculate in
land, Acting High Court Judge Albert Matthews stated, "It is
my view that the purpose of such legislation is to obviate
any attempt towards recolonization."


3. (U) Haze Richardson first invested in the Grenadines when
he and five other investors bought the island of Petit St.
Vincent (PSV) from the GOSVG (a British colony until 1979).
Richardson had retired from the United States Air Force and
discovered the Grenadines when he and a former Air Force
buddy sailed the Caribbean on a private schooner. Richardson
eventually bought the property outright, and ventured to
transform the isolated island into an exclusive, high-end
resort. The resort currently boasts 22 rooms and a staff of
85, composed mostly of Vincentians but also including
Grenadian nationals from Carriacou and Petit Martinique.
According to Richardson, the resort is the second-largest
hotel in St. Vincent and the Grenadines (behind Raffles
Resort on Canouan). The resort is managed solely by
Richardson and his wife Lynn.


4. (C) In addition to the property on Petit St. Vincent,
Richardson and his partners also bought 100 acres of land at
Chatham Bay on Union Island in 1987. The original plan was
to develop a similar resort on Union Island, but Richardson
claims that lack of access not only made the land difficult
to develop, but also difficult to sell. No roads led to the
property on Chatham Bay and no planes larger than 12-seaters
can fly into Union island, making it difficult to bring in
international visitors for a large hotel (PSV, which has no
airport, brings visitors into Canouan's larger airport and
then to PSV by boat).

He Said... They Said
--------------


5. (C) Reftel A documented Ambassador Ourisman's raising of
this possible expropriation with Prime Minister Gonsalves.
During that conversation, Gonsalves emphasized that the
government had offered to pay Richardson the original
purchase price of the land, plus interest. Gonsalves further
claimed that when he had communicated this offer to
Richardson through his lawyer, Richardson refused it and
demanded compensation of $25 million USD. In a private
conversation with PolOff, Haze and Lynn Richardson stated
that the government has never offered to pay them any amount,
or at least their lawyer never conveyed this to them. PolOff
informed Richardson that PM Gonsalves told Ambassador
Ourisman that he was willing, even at this late date, to
honor his original offer to Richardson. Regarding the
problem of access to the property, PM Gonsalves told
Ambassador Ourisman that the government had invested in
infrastructure such as a road to Chatham Bay, which had
raised the value of the property. Richardson reports that
the government never notified him of the existence of the
road. (Note: There is a very rudimentary dirt road from
Clifton, the main town on Union Island, to Chatham Bay;
locals find it faster to travel from Clifton to Chatham Bay
by boat. End note).


6. (C) Richardson confided to PolOff that he heard a rumor
that the Prime Minister was interested in the land at Chatham
Bay because he had a Malaysian investor lined up to take over
and develop the property. The PM's cousin and Embassy
contact Ken Boyea confirmed this rumor, noting that the Prime
Minister has traveled to Malaysia several times this year and
allegedly flew there just after the court's ruling was
announced in June. In the meantime, Richardson has appealed
the High Court's ruling and is awaiting a response to the
appeal. He further expressed a lack of confidence in the
independence of SVG's judiciary, and noted that he expects he
will also lose the appeal. He then plans to appeal all the
way to the Privy Council in London, which he believes he may
win. Richardson and his wife both stated that their ultimate
fear is that the GOSVG may eventually seek to take the PSV
Resort from them. For this reason, they claim they are ready
to give up the land on Union Island so as not to make too
many waves, and they asked PolOff not to raise the issue with
Gonsalves again, at least for the time being.

But That's Not the Only Phantom Resort...
--------------


7. (C) PolOff recently met another American investor, Thomas
Mangione, who reports encountering his own difficulties with
the Gonsalves administration. Mangione opened Safe Harbour
Bank in St. Vincent in 2000 and is seeking to open a resort
community on Canouan island named Safe Harbour Resort. Along
with his partner Eliane Abramoff, Mangione plans to build a
three-acre resort featuring 101 hotel rooms, 50 apartments, a
retail "village", and a 100 seat conference center. The
plans also call for Safe Harbour Bank to relocate its
headquarters from Kingstown to an office located above the
conference center, in an effort to increase and promote
financial services. Mangione officially submitted the full
set of complete drawings for approval at the end of May 2007,
and has received approvals from all required parties up to
the Prime Minister. However, before the SVG Planning board
of directors can vote on a significant project, they need a
formal reply to their request from the Minister of Finance,
Minister of Grenadines Affairs and the Chairman of the
Canouan Village Development Ltd. All of these positions are
held by the Prime Minister.

Hitting the Big Jolly Wall
--------------


8. (C) According to Mangione, PM Gonsalves has not granted
him a meeting in the intervening five months. He claims that
despite many requests for meetings, he has been "ignored
and pushed aside" by the Prime Minister. Mangione stated
that since the Prime Minister's Unity Labour Party (ULP)
campaigned on promoting tourism and financial services, he
finds these investment roadblocks particularly strange.
Mangione stated: "All I can imagine is that this is an
Anti-American agenda." Mangione reports that as a result of
the delay, his company has "lost a lot of time and potential
profit". He further confided that the experience has so
soured his view of investing in SVG that he has been talking
to investors about potentially moving out his financial
services business to another island because, as he sees it,
the GOSVG has been "unfriendly to American business." In
Mangione's words, " We are shocked that they aren't taking us
out to dinner."


9. (C) Concurrently, investor David Mann and the British firm
Barrasford & Bird received approval from the government to
build a similar development on St. Vincent proper, and have
nearly completed construction of the Buccament Bay Resort's
first 120 units. Prime Minister Gonsalves has visited the
site several times to observe progress, and has frequently
touted the project on television. By contrast, he has only
said on one occasion that "investors have expressed interest"
in developing a resort on Canouan, without providing details.
Mangione posts that the Prime Minister's reluctance to
approve the project and general silence on the issue may be
due to influence from Canouan Resorts Development Ltd. (CRD),
the company owned by Swiss-Italian Antonio Saladino, who owns
the 1200-acre Raffles resort and Trump golf course. Mangione
speculates that CRD does not want competition, and
representatives for Saladino informed Mangione that the
previous Mitchell administration had promised them that they
would always be the only foreign investment on Canouan
island.

Comment
--------------


11. (C) The most troubling aspect of the Chatham Bay dispute
is that Gonsalves and the American investor have such
conflicting accounts of the facts of the case. In light of
the massive foreign investments being attracted by St. Kitts,
St. Lucia, and other countries of the Eastern Caribbean, St.
Vincent does not appear to be finding much success in
attracting investment. Between these cases and the GOSVG's
apparent nonchalance at the closure of the Kingstown Medical
College (Ref B),one gets the impression that the Gonsalves
administration is at the very best indifferent to American
investment in SVG. End Comment.





HOWARD