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You are here: Islands Islands News Minister Richardson answers MPs on Harbour/Zebec settlement

Minister Richardson answers MPs on Harbour/Zebec settlement

page8a108PHILIPSBURG--Deputy Prime Minister Dennis Richardson provided answers on Tuesday to questions Members of Parliament (MPs) had asked about the Harbour’s settlement with Zebec Development in a first round of questions during an emergency meeting the day before.

Richardson first tackled the reasoning for both the court case and the settlement, then went on to more individual questions asked.

 

Case/settlement

The core issue is that Zebec intended to develop the Dutch Village on long-lease land of the Harbour. Zebec paid some US $1.5 million in fees to the Harbour to develop the project, which would allow Zebec to develop some 3,000 square metres of land commercially.

However, it later turned out to clash with agreements the Harbour had made with Royal Caribbean Cruise Lines (RCCL), as RCCL has development planned for part of that area. Therefore, Zebec would be left with 1,000 square metres rather than 3,000.

During the first round of questions on Monday, MP Theo Heyliger said he had signed off on a building permit in his capacity as former VROMI Minister. The permit allowed for development on 3,000 square metres, but he had been unaware of any limitations about the amount of land. Richardson pointed out that the limitation had been decided on between private parties.

The agreements also clashed in that Zebec’s development plans clashed with RCCL’s development plans for the area in terms of what the land could be used for.

Criticising the mix-up, whether it had been caused by overzealousness or oversight, MP Wescot-Williams said Zebec and the Harbour had known full well that a previous agreement was in place with RCCL. She showed concern that it would be the people of St. Maarten who would have to pay. The settlement amount, which was US $10 million, should have to be substantiated, she added.

MP William Marlin also questioned whether the taxpayers would bear the brunt of the settlement, but Richardson said this had been averted.

The MPs demanded a substantiation of the settlement amount, but due to a non-disclosure agreement, it was agreed that a breakdown could be shown only in a closed-door meeting. On request of MP Marlin, the “closed door” meeting was held right after the session, after the broadcast stopped.

The clashes eventually led Zebec and the Harbour to court. A settlement eventually was deemed the best option by both parties, Richardson said, for a number of reasons. These included that there could be no telling what the outcome would be, how much it would cost the parties, and how long the issue might be dragged on. It could even take up to 15 years, he said.

Furthermore, the Harbour did not want to continue the court case because it could get in the way of cruise tourism development and the area’s development.

In response to MP Cornelius de Weever’s question of how much was estimated to be saved, Richardson said it could be calculated to “a tremendous amount,” given that the court case could take between four and 15 years, especially if the Supreme Court becomes involved, and that there were other direct and indirect costs to consider, including a lower number of cruise passengers coming to the country.

Richardson said the Council of Ministers had been informed and “supports a settlement in view of the consequences.” The Government also has indicated it is happy with RCCL’s development plans.

 

New Group

A group of local Indian merchants has shown interest in developing where Zebec left off. In response to various questions, Richardson disclosed their names as Prakash Mirpuri and Deepak Merchandani and the company name as Ocean Drive Properties, and said they would be subject to the same restrictions as Zebec.

Another point was that the Harbour had not had local companies bid on the opportunity, but it was pointed out that the developer would be the one to hold bids for who could become involved. The company had been “on the scene” from earlier and had expressed willingness to become involved. The company presented its idea to the Harbour and was chosen. Zebec obtained the deal in the same fashion.

The intention is that this week “the agreement with the new group will be arranged and the harbour will not be stuck with the $10 million [loan repayment – Ed.] on its own, as stipulated.

 

SZV

Regarding the role of Social Health Insurances SZV, Richardson said the SZV Director did indeed have the authority to authorise the $10 million loan to the Harbour to use for the settlement, without having to meet with the supervisory board.

The board should be informed of a director’s intentions, but does not have to approve “specific, concrete” decisions.

The $10 million loan carries a five per cent interest rate on a 60-day loan agreement and the development area concerned was used as collateral.

The loan had been referred to a “bailout” by some MPs, but Richardson said it was just a business deal as far as SZV was concerned; i.e. the Harbour was not prioritised for any reason. He added that SZV had experience in dealing with the Harbour, as it had been one of the institutions involved in providing a bond loan to the Harbour issued through the Central Bank.

A number of follow-up questions were asked about SZV’s other investments, including how much goes to local projects and who is deemed eligible. Richardson explained that SZV focuses on investments deemed the safest, given that it ultimately deals with securing pension funds and does not go around seeking projects in which to invest.

“These are not the kind of investors that are at the same time developers. … Developers present and they [SZV – Ed.] can judge whether the risk is acceptable to the policy of the organisation,” he said.

Based on the old Netherlands Antilles law, he added, SZV should aim to invest 60 per cent in the same country and 40 per cent abroad. However, not many local projects were invested in, presumably for lack of projects. Some MPs questioned this.

As far as Richardson knows, no local projects have been presented in the past five years. However, SZV is said to have an interest in St. Maarten Medical Center and is considering investing in the new Government Administration Building as well, although this has not been worked out yet.

 

Other

In response to questions by MP Wescot-Williams, Richardson also said the settlement or agreement between the Harbour and Zebec had nothing to do with development in Simpson Bay, but that any related permit status would be double-checked.

In response to a question by MP Christophe Emmanuel on how Tropical Shipping had ended up in Intermar’s hands, he said Intermar was an agent, not the owner of Tropical Shipping.

Richardson was joined by support staff and Harbour Group of Companies Chief Executive Officer Mark Mingo.

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