Shaw accuses PNP of 'sweetheart deal'

Finance and Public Service Minister Audley Shaw has accused the previous government of facilitating a "sweetheart" deal which benefited members of the People's National Party (PNP) hierarchy.

He said the deal could cost taxpayers US$15 million.

Shaw told his fellow lawmakers in the House of Representatives yesterday that in the midst of the financial crisis of the 1990s, the then administration, through the National Investment Bank of Jamaica (NIBJ), now the Development Bank of Jamaica (DBJ), approved equity investment in a hotel amounting to US$7 million.

Shaw, who was closing the Budget Debate, said the NIBJ's board of directors had approved the equity investment despite management's recommendation for the investment to be capped at US$3.1 million.

According to Shaw, the management of the NIBJ had cautioned that granting the request for US$7 million exceeded the entity's investment policy guidelines.

"I have it in writing because I demanded a special report from the Development Bank of Jamaica on this," the minister said.

He said the board of directors who made the decision comprised six members of which three "were among the 'who is who' of the PNP hierarchy".

Shaw said the total investment by the NIBJ/DBJ in the project now stood at US$18.1 million.

"We are advised in writing by the DBJ that when all costs and factors are taken into consideration, the hotel is on the auction block, it's set to be sold."

"DBJ's most optimistic assessment is that they will lose US$12 million to US$ 15 million out of that US $18 million investment and it will have to be written off.

"In other words, between J$1 billion to J$1.3 billion of poor people's money is likely to be written off in this investment," Shaw declared.

"The project is the Runaway Bay Development Company Limited (RBDL) sponsored by a company in which Peter Bunting and Mark Golding were two of the three directors and a related entity of Dehring, Bunting and Golding in which they were major shareholders," Shaw added.

"At the time of the NIBJ's investment of US$7 million, the promoter's total investment was US$5 million of which only US$1 million was in cash," Shaw added.

Further, Shaw said between 2000 and 2004, the RBDL restructured its debt, which resulted in NIBJ/DBJ 'miraculously' becoming the major shareholder, injecting an additional US$18 million.

"Of that US$18 million total investment, the only amount that was secured was US$3.8 million."