Austerity

Government announces civil service salary cuts as part of austerity measures. This circular letter from the Department of Public Administration to all public servants has just been sent to me for comment. I have not checked with anyone to make sure it is authentic. I take it on trust as the source is dependable. I have read it.

Department of Public Administration

The James Ronald Webster Building

The Valley

REF: EST/5/10

GOVERNMENT CIRCULAR NO. 4 OF 8 JUNE 2009

TO: Permanent Secretaries

Hon. Attorney General

Department Heads

All Public Officers

H E, The Governor (for information)

Ministers of Government (for information)

AUSTERITY MEASURES

Anguilla and by extension the Budget of the Government of Anguilla continue to be impacted by the sharp slow down in global economic activity. The Government of Anguilla has been adopting certain austerity measures in response to the global financial crisis. The current difficulty being experienced in meeting monthly expenditure has necessitated further austerity measures by Government.

On Wednesday June 3, 2009 Executive Council agreed to the following for a period of six months in the first instance, effective July 1, 2009, to sharply reduce expenditure:-

(i) the figures for travel allowance categories A to E will be as follows:-

($225.00, $175.00, $125.00, $75.00, $62.50 respectively);

Council further agreed that travel allowance categories should be continuously reviewed to ensure that officers are placed in the correct categories.

(ii) telephone allowance will remain at the current reduced level;

(iii) salary payments be reduced by the amounts set out below:-

a) Hon Deputy Governor, Hon Attorney

General and Public Officers in grades A-F - 10%

Public Officers in grades G-M - 5%

Public Officers in grades A-F who did not receive the 25% salary increase in September 2008 should have the increase actually received reduced using the following formula to determine the percentage reduction (10 ÷ 25 x % increase in salary actually received in September 2008 = % amount current salary to be reduced by). This is proposed exceptionally on moral grounds particularly as persons would have made financial commitments based on their prior salary. This exception must not be construed as giving affected persons any rights or benefits that they would not have otherwise accrued.

b) All elected Members of HoA - 15% (of ministerial and HoA allowances)

Speaker and Nominated Members - 5%

Special Assistants/Advisers/

Specialist Worker - 10%

Wage Workers - 5%

(iv) pensioners will not be affected by any reductions;

(v) officers retiring during the temporary salary suspension period will be afforded their retirement benefits (gratuity and pension) based on their current salary and not at the reduced salary;

(vi) all officers including “contract” officers will be subject to the temporary suspension of benefits;

(vii) the GoA will communicate with financial institutions to request that civil servants who require their loans to be refinanced be granted that service at no cost;

Council noted that the GoA cannot commit to giving back the suspended funds at this time but undertakes that if the situation changes positively and significantly, consideration will be given to either partial or full reimbursement of the suspended funds.

Public Administration acknowledges the historic nature of these measures and the personal sacrifice officers will be required to make. However, it is hoped that public officers will recognize the seriousness of the situation and understand that the measures being instituted come after considerable deliberation.

Public Administration continues to urge officers, especially at this time, to remain vigilant in the collection of government revenues, be professional in the performance of designated duties and practice sound work ethics.

------------------------------------------------

Lana Horsford-Harrigan

Director Human Resource Management

Public Administration

Copy – Honourable Deputy Governor

Here are my comments.

First, let me say that everyone in Anguilla would expect that in time of financial crisis and falling revenue deep cuts must be made, including cuts in salaries and allowances. But, it is elementary that such cuts can only to be made by consent, not by force.

The memorandum makes it clear, if only by inference, that the proposed reduction was determined on by the Executive Council without discussion with either the public service or their representatives. There is no question of seeking to obtain the consent of the civil servants whose salaries will be affected. They are being told of a decision that has been made. The decision is “effective July 1”, by which I understand that salaries will be cut from July 2009. The lack of consultation and the failure even to try to secure prior agreement is unbelievably inconsiderate and unacceptable if true. Tell me which employer in Anguilla could get away with informing his employees, without any prior discussion, that their salaries were about to be cut?

The third paragraph from the bottom, with the words “commit to giving back the suspended funds”, etc, makes it clear that the Executive Council believes that it has the right to take away the proposed salary cuts permanently. This is not guaranteed to be a temporary suspension, it is to be a possibly permanent cut in salary. That is contrary to section 7 of the Constitution of Anguilla. This letter infringes the “property rights” section of the Constitution, and as such is illegal.

One thing that is guaranteed to get me really vexed is when I see government not bothering to take legal advice on a matter of great importance and obvious contention such as this. This proposal is the wholesale cutting of salaries. That is a matter of great importance of obvious contention. There are civil servants who are already living at the limit of their means. There are house mortgages, car loans, university loans, vacation loans, and personal loans for furniture, all expected to be paid on time. Any reduction will call for civil servants to have to begin negotiations with creditors and other persons to whom there are obligations.

That is why I would contend that no competent department of public administration could possibly have circulated this memorandum without first having sought legal advice. And, I would go further and state that no lawyer in a West Indian Attorney-General’s Chambers could possibly have o-kayed it. Both contentions cannot be right. One must be wrong. The conclusion is that either the department took a risk, or the A-G’s Chambers was careless.

I know it is a long time ago, but government must retain files. About the year 1982 Verna Fahie was a young civil servant. She was sent by government on a Canadian scholarship to Barbados. After about a year, government wrote her a letter. They had just realized that she was getting a stipend from the Canadians. That was in addition to her Anguilla public service salary. That was considered too good for her. She was informed that after she came back to Anguilla they would begin deducting her salary until she had paid back the government of Anguilla the amount of the Canadian stipend. She protested that they were the ones that had organized the scholarship, and they should have known about the stipend from the beginning. She did not agree to any deduction from her salary. They went ahead and made the deductions anyway. She took the matter to the High Court. The judge’s decision was that salary is property as much as land is. Just as government is not allowed to confiscate your land without payment of full compensation, so they are not allowed to confiscate any part of your salary. They had to pay her back the salary that had been cut and pay her legal costs as well.

In what way is the proposed new cut any different from what was done to Verna Fahie?

Come on, public admin, get their consent first.

Fathers' Day

I owe 243 of you per day an apology. No one has sent me any troubling or worrying news all week. I am not mad at anyone or anything. The result is that I have not made a single post for seven days. The statistics report I receive every Sunday now tells me that, on average, 243 persons per day visited this site last week. You would have been disappointed that I had nothing new to complain about. I am sorry. I apologise. I can only hope someone or something will upset me soon.

Meanwhile, it is fathers' day. My latest grandchildren are growing healthy and strong. Their mother is teaching them well. Here are a couple of photos of the entire family. The father is the pretty one.

Was it not Sir Francis Bacon who said, “He that marryeth and hath children giveth hostages to fortune”?

Viceroy Delayed

The July “soft opening” has just got even softer. As recently as a week ago, 8 June, the Hon Minister of Finance, Victor Banks, gave a reassuring speech over Radio Anguilla about Viceroy being “well on the way to a soft opening in July". This, he said, will result in the employment of a number of Anguillian workers. Certainly, as of that date the Viceroy management had not informed him that there was likely to be any delay in the previously announced soft opening scheduled for 1 July 2009.

The original opening was supposed to be in 2008

To go back in time a bit, we will all remember that the original soft opening was supposed to have been in December 2008.

Then, they announced that the opening was delayed until 1 April 2009.

Later, that date was quietly changed to 1 June without anyone giving any explanation.

I wonder what the investors in apartments or villas made of these repeated delays and disappointments. The amounts of money they had to commit were huge. Contracts were signed and deposits made on the promise that the project would be completed before December 2008:

Prospective purchasers committed large sums of money on a promise of a 2008 opening

I wonder how many deposits National Bank of Anguilla financed? The risk is that some of these purchasers, badly hit by the current recession that began only after they signed the contracts, will not complete their purchases and will not repay the bank loans.

Then, in May of this year, a visit to the Viceroy website indicated that reservations were not being taken for June any longer. They were only accepting reservations starting 1 July.

This delay was a big concern for us in Anguilla. We all remembered that in December 2008, the House of Assembly had debated and passed the national budget for 2009. At that time, members of the Opposition questioned how government could be anticipating an increase in revenue as they did. The Minister of Finance reassured them with these words:

“He said the increase in revenue of $4 million over the 2008 figure was mainly expected from Stamp Duties resulting from alien landholders’ licenses to be issued to purchasers of real estate when the Viceroy project opens for operation in 2009.”

Now comes the latest disappointment. Viceroy has, as of yesterday, just quietly stopped taking reservations for July. Its website shows that the planned resort now has its reservations commencing in August.

Viceroy online reservations now permits bookings only as of August 2009

Those persons who made reservations for July are being assigned rooms at Cap Juluca and Cuisinart. They have begun to question what is going on:

Yesterday's complaint on Trip Advisor about a cancellation of a reservation

There has not been any public announcement by Viceroy or anyone in government, far less the media. I would have thought that the event would have made the news. But, maybe, no one in government or the media knows yet.

The Hurricane Season has already begun.

I am sorry to be the one to have to tell Victor, but our 2009 Budget has just taken another hit. There will be no revenue from Viceroy for the first half of 2009.

Another clip from the same Trip Adviser page

There is a further concern. How can there be any expectation that Anguillians who were banking on taking up employment with Viceroy in 2009 will hang around to see if the Hotel will really open in August? If I were paranoid, I would ask if it is possible that these last minute changes could be partly designed to ensure there are no Anguillians available for employment when they do really open? Or, is there some more serious systemic problem that we do not know about?

In my humble opinion, we will be lucky to see any revenue at all from Viceroy for the balance of 2009. In my view it is unlikely that there will be any Anguillians employed at Viceroy for the foreseeable future.

The Labour Department better start hiring an interpreter qualified in Tagalog.

Related posts:

27 June 2007: Slave Labour

28 June 2007: Hunger Strike

22 July 2007: Kor Realty Group

20 January 2009: Soft Opening

26 February 2009: Barnes Bay

15 March 2009: Meads Bay

29 May 2009: Pinoys

Reshuffle

Chris Bryant is in. We have not heard much about Chris Bryant before 8 June. He was once a popular parish priest and preacher in his village in Wales. He could talk so good he decided to leave the church and go into politics. He won a seat in the UK Parliament with the help of Tony Blair.

What is his relevance to Anguilla? He is a newly appointed Foreign Office Minister in Gordon Brown’s latest Cabinet reshuffle of 8 June. He is also Deputy Leader of the House of Commons. He is being rewarded for backing of Mr Brown in his confrontation with Labour parliamentarians who want him to step down as PM. This appointment to the Foreign Office is not exactly that of Foreign Secretary. It is a junior government post. Ministers of State in Britain have under secretaries and junior ministers to assist them. He will be an assistant minister to Foreign Secretary David Miliband. He may have responsibility for Anguilla and the British Overseas Territories. In that case, he is one of the ministers in the UK government we will have to deal with.

Chris Bryant MP

There have been so many recent changes in the Foreign Office that I have got lost. I remember welcoming Gillian Merron just a few posts ago. Now, I see that she is no longer Parliamentary Under-Secretary of State in the Foreign Office. PM Brown has promoted her and made her his new Minister of State for Public Health.

What got my attention was Mr Bryant’s nickname in the British Press, Captain Underpants. No, not the American children’s comic book. It turns out that the new Deputy Leader of the Commons was in the news six years ago for a less than ennobling reason. He was discovered sending photos of himself in his underpants to a man he had just met on an internet dating service. Not the sort of person you would have thought an embattled Prime Minister would be proud to be rewarding with such high office.

Chris Bryant MP looking for a date

You have to ask yourself the question, what will some men in politics not do for a little bit of extra sex?

Do you suppose that he would receive a rousing welcome if he came to visit Anguilla?

Would we roll out the pink carpet for him?

He had better hurry. I don’t think he will be minister for much longer.

Medical School

St James School of Medicine. My attention was caught by a throw-away line in Victor’s recent speech, published a few days ago on this blog as “Golf Course”. Right at the end of the speech he said, “and, the long awaited Medical School is scheduled to open in August/September and will create opportunities for the apartment rental sector and other businesses.” That was it. No further explanation.

I went off to do a little research on the internet.

The Caribbean Accreditation Authority for Education in Medicine and Other Health Professionals would be the agency responsible for authorizing such a school. This Authority is the officially recognized institution for accrediting medical schools in the West Indies. It has existed since the year 2004 when the British General Medical Council abandoned us and went off to be fully integrated into Europe. The Authority has a website. I went to visit it. There are eight medical schools listed as having applied to the Authority for accreditation. Some of the schools have achieved full accreditation, while others are only provisionally accredited. I had a look at the details for each of them. I learned that these appear to range from No 1, the University of the West Indies to No 8, the University of the West Indies School of Veterinary Medicine. No 4 is the St James School of Medicine.

So, I went to the “details” page to learn what it had to say about the assessment of the Anguilla project. I found the following from the year 2007:

I note that Sir Graeme Catto and Professor ER Waldrond are the two persons who carried out the Anguilla assessment. Professor Sir Graeme Catto is well-known as the President of the General Medical Council of the UK. He is a Scottish doctor, Professor of Medicine at the University of Aberdeen, Vice-Principal of King’s College and St Thomas’ Hospital Medical and Dental School. Professor ER “Mickey” Waldrond is a distinguished professor of medicine at UWI. This is a very serious team. Their recommendation that the school be given provisional accreditation must be given weight. The St James School was obviously not considered by them to be a fly-by-night operation.

But, I note that this 2007 assessment is only provisional. The assessment team was to have visited in six months time to see how the school was progressing in setting up the facilities for the admission of the first class of students. Did they ever pay this second visit? I cannot find any report of their later assessment, if it ever took place.

I do a little more exploring. I learn that the St James School of Medicine already has a West Indian operation. It has functioned in the island of Bonaire since 2001. YouTube even has a video about it. I find a few grouches posting negative things on various blogs. I find some doubt that the qualifications they give are acceptable in various States of the USA. Then, I go to their website.

I find something odd about the banner at the top of their home page. I say to myself, “Hold on, is that not a view of Road Bay in Anguilla taken from South Hill?”

It may be a minor thing, but I wonder to myself why would they want to illustrate a web page about a school in Bonaire with a picture of a bay in Anguilla.

I ask myself, is the plan to close down the Bonaire medical school and transfer all courses to Anguilla. What would cause them to take such a step?

Is Victor right that this school is about to start up in Anguilla in September?

If so, where is it going to be?

How come I have not heard of any activity on the island relating to the school since provisional approval was given in 2007?

It is all a complete mystery to me.

Tragedies

The TCI Journal is my hero. I try to read the TCI Journal every day. Each daily exposure is for a West Indian what the cathartic effect must have been in old Athens of attending one of the tragedies of Sophocles. One leaves the pages of the Journal drained of all emotion, conscious only that it is good to be alive and living in a different place. I do not know how I could keep my sanity if I had to put up with what the people of the TCI are going through. They are my second set of heroes.

Just today, I was looking at the several items published on 4 June. I have to urge you to read them yourselves to see what I am talking about.

I started with a letter from W Hurd on Freedom of the Press. His quotations ably illustrated the points he was making. I was particularly struck by Adlai Stephenson’s “My definition of a free society is a society where it is safe to be unpopular.”

John Hartley’s Letter from London reminded us how the political crisis now playing out in London may affect the liberties of the people of the TCI, and us in Anguilla too, for that matter.

Diana de Gara’s heart rending call for Patience took my breath away, as all her writing inevitably does.

And then I read Shawn Malcolm’s account of the proceedings in the Supreme Court yesterday. Some 15 lawyers from London were presenting applications by two of the foreigners who were mentioned by Sir Robin Auld as possibly being implicated in paying bribes to Premier Michael Missick. They are trying to stop the Auld Report from being published. They claim that Sir Robin’s remit from the Governor was only to investigate politicians. He had no business mentioning their clients’ names. As Mr Malcolm points out, it is difficult to see how Sir Robin could have detailed the reports of bribes paid to politicians if he did not mention who is alleged to have paid the bribes.

May they all burn in eternal hellfire.

Golf Course

Victor was on the radio today. I suspect he meant to make this speech in the cancelled House of Assembly meeting that should have taken place this afternoon. It is sufficiently important that we should not have to wait until next week's The Anguillian Newspaper to read what he has to say about the abandoned Flag golf course. [I suppose we all know that the watering of the grass started up about one week ago, but has now been discontinued again.]

Anyway, this is what he had to say. What do you make of it?

--------------------------------------------------------------------------------------------------------------

By the Hon Victor Banks

Address on Golf Course Project

June 8^th, 2009

Fellow Anguillians,

Over the past twelve months the Government of Anguilla has been faced with a number of consequential impacts from the global financial situation. Foremost among these have been a shortfall in tourism arrivals; challenges to obtain and maintain financing for a number of tourism projects in the early stages of implementation; slowdown of the construction schedule for one major project at an advanced stage of completion; and the stoppage of all construction activity on one of our main tourism development projects, namely, the Flag Luxury Properties project known as the Tenemos Resort & Golf Course.

The latter has become the topic of discussion and debate in daily conversation; the print media; the radio talk shows; political platforms, and; other fora. I will hereafter refer to it as the Golf Course Project.

The Government of Anguilla has been extremely cautious in its approach to public discussion on certain aspects of the Golf Course Project negotiations in the context of the legal and fiduciary issues which are involved in the process. We have however on a number of occasions sought to involve members of the opposition both in the House of Assembly and meetings at the Secretariat with the intention of bringing some bipartisanship to the process. And to demonstrate our readiness to adopt that approach --- we actually supported at least two motions by the Opposition in the House of Assembly on the topic.

While this period may be characterized as a political year we feel that the issue is important enough to merit the participation of all sides of the political spectrum. We are also aware that the wider public has great concern for this issue and are anxious to find a solution. Our experience, however, has been that the issue is being used as a political football without due regard to the critical realities surrounding the ongoing delay in the resumption of the project.

It is in this context and at this strategic juncture in the negotiations that the Chief Minister has asked me in my capacity as Minister for Economic Development and Tourism to clarify a number of the statements that have been tossed about; explain the reasons for Government’s strong resolve to finding a way forward and outline the progress that we have made to date.

Since the third quarter of 2008, the Government of Anguilla has been in negotiations with the principals of the Golf Course Project to assist them in finding a way to overcome the challenges facing them since they were forced to shut down construction in early June last year. We thought that it was important enough to take a motion to the House of Assembly seeking support for developing an appropriate strategy for assisting the project in its efforts to obtain critical funding. We understood that this might require some unusual measures by the Government of Anguilla but we felt that the impact that the closure of this project would have on the island would be devastating. Where we stand today is testimony to that foresight.

There were many persons who perhaps, understandably, were not supportive because the impression was maliciously circulated that Government assistance meant a direct cash injection into the project. Preoccupation with quieting those negative concerns could have been in fact a lost opportunity to bring an earlier response to the challenges of the project. And unfortunately it ended up with the closing of the Golf Course itself including maintenance and watering. But of course that is water under the bridge.

Still pressing forward in February of this year the principals of the Golf Course Project as a result of the persuasion of the Hon. Chief Minister and other Ministers decided that they would devise a way to restart the project and solicited the support of a team of four local Anguillian consultants to work with them to develop a viable proposal. The outcome of this joint effort was a proposal presented to GOA on March 23, 2009. The proposal indicated that a suitable buyer/operator was identified but certain preconditions were required to get the process going --- the main one being the acquisition of the Golf Course improvements by the Government of Anguilla.

Let me clarify that when I say the golf course improvements I mean all the costs involved in converting the over 100 acres of lands into an operating facility.

To put the issue even more clearly, let me state that the buyer could not in the present financial market conditions get funding for completing the project because the inclusion of the golf course component would make the overall business plan unattractive to lenders. It is an accepted fact that, a golf course, in and of itself does not make a profit --- it usually requires a strong real estate component to ensure viability. In fact in the last twelve months of operations the facility lost approximately 3.9 million US dollars.

It is in this context that the team’s proposal included three possible options for the GOA to acquire the Golf Course. The justification for the acquisition of the Golf Course is based on the premise that only two entities can feasibly purchase the facility, namely, the buyer of the other components of the property because of the value-added or the Government of Anguilla because it would enhance the quality of our tourism product and increase its the overall revenue potential. Since the potential buyer/operator was unable to put together a feasible business plan to its lenders to include the purchase of the Golf Course facility --- the team presented the GOA with a structure whereby it could acquire the golf course improvements.

The three options presented to GOA were as follows:

· Purchase the Golf Course facility via a fifteen year loan with total payments of 83 million US dollars.

· GOA put together a public/private partnership to acquire the Golf Course facility via a fifteen year loan with total payments of 93 million US dollars

· The owner immediately transfers the Golf Course facility to the GOA for a nominal payment of $1.00. GOA then grants an incentive to the project by the allocation of tax revenues (the suggestion being accommodation tax) for a period of thirty years.

The presentation of these three options required GOA to indicate in a letter of intent its readiness to accept any one of them as a way forward. However, the presenters indicated a willingness to discuss any alternatives and modifications which GOA may wish to propose. You may ask the question: why would the GOA even consider any of these options? Let me explain!

I find it at this juncture useful to quote a part of an open letter to the Chief Minister from Mr. Sheridan Smith, CEO/Owner, Sheritons Development Inc. Mr. Smith writes and I quote: “If this is the only logical way to get this property restarted, and to alleviate the financial burden off the shoulders of the Anguilla people, some careful thought and action should be applied. We do not have the luxury of time on our side. The state of the economy is speeding down a slippery slope and the Government should --- in my humble opinion --- find the moral and political will power to implement a prompt settlement of this ongoing disaster.” Those are of course the views of an assertive and enterprising Anguillian who has built one of the most elegant and top class tourism resorts on the island. He concludes by writing and again I quote: “This is a matter of economics and should not be politicized.” I can assure you that Mr. Smith is not an individual who would allow anyone to put words in his mouth.

I have used that abstract from Mr. Smith to provide a backdrop for the concerns which led GOA to consider the options presented to us. Let me list some of these concerns briefly:

· The Golf Course was a major initiative by GOA to enhance our tourism product and remains a critical element of our business plan and promotion strategy

· We need to protect future jobs and business opportunities

· We must defend the interests of local creditors, vendors and contractors who are now owed several million dollars collectively and in some cases separately. Including the GOA.

· Anguilla cannot afford a “white elephant” after committing so many resources to its implementation.

· If we lose this golf course the next one is probably about two years from completion --- even so more than one golf course facility has a multiplier value for golfers in terms of choice of destination.

· If we do not find a solution in a timely manner we can conceivably end up in a long period of litigation which in terms of its complexity would exceed/dwarf the Cap Juluca matter.

· The local rental sector which was encouraged to respond to the needs for all kinds of accommodation is beginning to feel the pinch and if we do not protect their source of business they face a real threat of mortgage failures and foreclosures.

· Anguilla does not have a formal social safety net system that is institutionalized and funded to support persons who have lost jobs and business opportunities --- as a consequence there is a real chance of social and political instability as a result of the failure of large ventures such as this.

· The central government budgetary situation requires some form of immediate to short term stimulation --- because our key revenue streams are dependent on consumption which requires purchasing power.

· The project involves a number of stakeholders not the least among which are a number of international buyers who have chosen to invest in this project and Anguilla --- these homeowners/buyers need our support and assistance --- and they too are making sacrifices. They have not chosen the route of going to the World Press --- so to maintain Anguilla’s good name and reputation as an excellent place to invest we should not let them down.

While the foregoing list of concerns is not exhaustive there are a number of reasons why the GOA decided that of the three options it would prefer to negotiate on modifications to option three, that is, the immediate transfer of the facility to the GOA for $ 1.00 and the granting of an incentive to the project via the allocation of future revenue streams in particular accommodation tax for up to 30 years. Let me explain:

· In this option the GOA owns the land and improvements immediately without any direct liability. That means that we have no commitment to pay any loan.

· In this option the GOA pays only if and when future revenues are payable. In other words if the project is not completed the GOA owes no one anything. In the other two options GOA has a liability to pay whether or not the project is completed.

· This option represents an economic risk free transaction for the GOA because the owner on the basis of a negotiated long term management agreement with GOA will assume all costs associated with the maintenance and operations of the facility.

· GOA can also create a further revenue stream by charging a per-round “recreation tax”.

· The allocation of revenue from accommodation tax of the hotel operations is not the only revenue associated with the project.

· We are cognizant of the fact that everything carries a price and any quoted price can be negotiated. It depends on the commitment of all parties concerned to come to a successful and mutually beneficial arrangement.

On March 27^th a letter of intent was sent to Flag by the Chief Minister indicating our willingness to negotiate the third option and a process of due diligence slated to take over a period of thirty days began. When this option of purchasing the Golf Course was floated one of the Members of the Opposition who was encouraged to use his self-proclaimed influence with Mr. Lee Rizzuto, the owner of Cuisinart Resort & Spa came back with the report that Mr. Rizzuto was prepared to buy the Golf Course. Discussions with Mr Rizzuto and his agents by the Chief Minister and myself clearly confirmed that this is not the case. In fact despite strict instructions from Mr. Rizzuto and his agents that this was not so that member of the opposition continues to say on various media that Mr. Rizzuto intends to purchase the Golf Course.

I believe that to dispel this misinformation once and for all I should read a copy of a letter from the Senior Vice President & General Counsel of the Company to the Chief Minister on the matter. The letter was dated May 29^th and reads as follows:

“It was a pleasure meeting with you this morning regarding the golf course issues. You asked me to confirm with Mr. Rizzuto if he has any intention of actually paying monies to purchase the golf course. This will confirm that the offer Mr. Rizzuto made to Mr. Sillerman never involved the payment of any monies by Mr. Rizzuto to purchase the golf course. The considerations which Mr. Rizzuto will undertake are limited to the assumption of the operating costs and maintenance of the golf course. In the event agreements can be worked out by all parties, I hope this sufficiently clarifies this point. Please let me know if you require anything further. Sincerely etc.”

Obviously, that member of the opposition either mistakenly or deliberately is spreading the wrong information. But even from a basic business standpoint for Mr. Rizzuto to decide to purchase such a high price facility and then operate it at a loss for several years would defy the very principles which made him the successful entrepreneur that he is. Mr. Rizzuto himself has said this.

I therefore want to disabuse all listeners of the idea that that there is any one out there who has a feasible plan to purchase the Golf Course as a separate entity. I repeat that only the GOA or the buyers of the other components of the project can realize any practical benefit in doing so.

But even in the face of overwhelming evidence that GOA could benefit from this transaction. Technical officers in the relevant ministries were charged with doing the necessary due diligence in researching the matter. GOA employed two qualified international firms at great expense to review the purchase and management agreements and do an evaluation of the asset. This exercise took some time and the period for due diligence having come to a close the principals of Flag opined that GOA was reneging on its agreement and decided to suspend the maintenance of the Golf Course which they decided that at a cost of US$200,000.00 a month without any resolution in sight would represent a waste of valuable resources.

Nevertheless, Government continued its due diligence and negotiations and on Thursday May 28, 2009Executive Council instructed me to make a final offer based on a modification of option three. Rather than an incentive based on allocation of accommodation tax revenues for thirty years --- GOA offered ninety percent of the allocation for fifteen years and seventy-five percent for ten years. Added up this offer would amount to 21 years of one hundred percent allocation. We feel that this is a reasonable compromise for a valuable asset which GOA would acquire. In other words it is not a free concession but a transaction which includes the transfer of an asset in exchange for future revenues. As I said earlier nothing comes without a price and we believe that this is a reasonable cost to pay for a fully operational resort with a top class golf course facility.

The point must be made that this is not an unusual government transaction. Governments use revenue in the form direct payments and loans to buy goods and services for its people including the purchase of roads; airports; seaports; schools; hospitals; playgrounds golf courses and so on, to develop its economy. This is the same thing. But in addition GOA is acquiring a facility without any contingent liability if it is not successful. In other words if it does not work out we owe no one anything. But let me explain what this agreement triggers in terms of the project. Bear in mind that immediately upon signing, this document goes into escrow until the other cogs of the arrangements fall in place.

As soon as GOA successfully negotiates the terms of the purchase and management agreements, the other components of the larger strategy to restart, complete and operate the project are triggered as follows:

· Flag Properties settles its liens with its lenders

· A new developer/owner is brought in

· The homebuyers arrangements are affirmed or mutually modified if required

· A new construction loan is arranged

· Agreement is reached with the Contractor for past due amounts and scope of new work

· Flag Properties must come to a mutually agreed settlement of outstanding monies owed to local creditors, vendors and contractors, including GOA.

This last component as it relates to local creditors, vendors and contractors will be of major importance in the approval of the new owner/operators of the project. GOA remains committed to ensuring that Anguillians who are owed monies have been dealt with satisfactorily.

On the basis of the foregoing agreements which will shortly be approved in the Anguilla House of Assembly the principals of Flag have in good faith restarted the maintenance program for the Golf Course facility and have begun negotiating the other components of the deal. We feel that this represents significant progress and hope for a final resolution of the challenges of restarting this very vital project.

While I am on my feet I would also like to take this opportunity to report that the Viceroy Project is well on the way to a soft opening in July which will result in the employment of a number of Anguillian workers --- and the long awaited Medical School is scheduled to open in August/September and will create opportunities for the apartment rental sector and other businesses. The fiscal situation is challenging but we are encouraged that with continued progress on all these fronts we will experience some relief from the pressures that now attend us.

Let me take this opportunity to thank you all for your kind attention and wish you all the best as you strive to manage the many challenges which are affecting all of us in this unique period of global financial and economic crisis.

Blessings