fp Turks and Caicos

There are many legitimate concerns raised by the Turks and Caicos Commission of Inquiry. And The Premier, The Hon. Michael E. Misick MP was duty bound to submit himself to the authority of the commission; and that he has done. It was and is the opinion of this Newspaper, that the government should have welcomed the Commission of Inquiry, then seek to add the terms of reference advanced by Donhue Gardiner MP, to wit: that the Commission should take in its brief to assist the government in getting the various Commissions (Public Complaints and Human Rights), along with the agencies provided for in legislation (Land Commission, Integrity Commission, etc) on their feet, to ensure the good governance of the Turks and Caicos Islands.

When the Commission raised legitimate questions, we have, these four days, reported on them and with no commentary in support or defense. The mere act of publishing them as is, is our commitment to the purest form of journalism. However, the Commission must take care in their attempts to paint a picture of the “Age of Misick”, that they do not overreach. (To see the real significance of the Salt Cay deal, see our second article on day III).

When matters turned to a golf course development on Salt Cay, Mr. Milne seemed to think he had found evidence of favoritism or waste of national resources. At issue was the lease of 238 acres of land for $1.00 per acre, per year. This drew ooooohs and ahhhhhs from the crowd. But it gave the wrong impression and may leave the public misguided as how golf course land is dealt with worldwide. Mr. Milne even quoted a Deloitte & Touché Report on land use and resources on Salt Cay, to support his notion of poor dealing on the part of the government in this very narrow and particular matter of the golf course.

First, the matter must be put in context by providing background on the larger issue: Mr. Milne – Counsel to the Inquiry – attempted in the afternoon to bring the day’s questioning to a climax. The subject area was quite legitimate. It concerned the issue a development in Salt Cay – an old historical community in Turks and Caicos, home to the Dickerson clan, amongst others. The development was to be carried out by a Mr. Mario Hoffman.

In a word, Mr. Hoffman’s background should appear impressive in general. Mario Hoffmann is Chairman of Istrokapital's board of directors, and he is listed in the National Bank of Slovakia 2004 Annual Report as Chairman of The Supervisory Board from 13 December 2004. (It is unclear whether he still holds that position).

Mr. Hoffman partnered with J&T Bank to do a real estate development in Turks and Caicos Islands. According to the bank’s website: (http://www.jtfg.com/en/news-group-2046.html) the development which includes, “A luxury hotel resort with a number of services and a top golf course will be built on Salt Cay Island. A total area of more than 320 hectares will house 130 apartments, each in a detached house, and 75 luxurious private residences. Visitors will have a possibility to use 5 restaurants, two sports centres, luxurious spa and a marina for 80 yachts. Costs of building the resort will exceed USD 600 million. The resort will be operated by one of the most prestigious global hotel chains”.

Under local legislation, Mario Hoffmann and the companies controlled by him remain the owner of the lands the resort should be built on, taking up almost the whole island, so he is entitled to a part of the revenues from th[e] project.

According to Mr. Hoffman - majority owner and chairman of the managing board in ISTROKAPITAL SE: “This deal will allow me to keep my relationship to this island I grew to love over the years, but it will also reinforce the cornerstone of my business, which is still retail banking, and it will make it possible for me to consider entry to additional retail financial services. Part of the revenues amounting to 1.5 billion can be used to strengthen the position of the ISTROKAPITAL Group in Poštová banka to ensure its further development and expansion as planned."

J&T Bank’s website states further, “Besides private banking and real estate development, J&T focuses primarily on long-term investments in Czech and Slovak industrial companies and it operates also in healthcare, food industry and media. Assets of the J&T Group amounted to 88.88 billion Crowns (About USD$3,920,762,164.23) as of 31 December 2006. Last year, the Group generated a profit of SKK 2.95 billion (USD$130,133,307.66). The Group employs more than 12,000 people”.

Within the resort development, it was intended that there should be a golf course. Typically, deals for golf course lands are “giveaways”. A golf course’s size and the cost of the land are in disproportion to its profitability. A golf course – unless run by a corporation or a charity, cannot stand on its own. It is an elegant amenity, but the money is made on the hotel, or resort. This is true in many areas of development. In Airport development the runways do not make money, even though there are landing fees. The terminal and other amenities, such as parking make the money. In many hotel/casino combination developments, the hotel makes little, if any money. It is the casino that makes the money, but the casino would be useless without the hotel. In the same sense, the golf course is necessary as a recreational facility, but the resort makes the money.

While we The Free Press are unaware of the further particulars of the deal, we can say – with intimate knowledge of such deals – the lease arrangement for the 238 acres at $1.00 per acre, per year is perfectly legitimate and reasonable. Additionally, that the government sought an appraisal of the Salt Cay property (valued at $7.76 million dollars), gave credence to the impression Mr. Milne sought to create. However, knowing the book or market value of the land, is different from knowing that anyone would pay for it. It must not be forgotten, once one acquires land for a golf course, one still has to spend 10s of millions to develop it as such, and further 100s of millions to develop the resort community around it.

Sensible people can disagree as to whether Salt Cay is the proper site for such a deal. But let there be no question that that deal structure is common practice in developments. Therefore, it was in error that Mr. Milne sought to make it appear that there was something underhanded in the deal structure.