Kerzner International had to pay the government in excess of $20 million of its gross casino winnings as a penalty for not replacing 765 rooms demolished at the former Pirates Cove and Paradise Paradise Hotel sites during its second phase, according to Minister of Financial Services and Investments, Allyson Maynard-Gibson.
Minister Maynard-Gibson revealed in parliament on Monday that because the rooms were never replaced, Kerznerﾴs penalty was a reduction of 5 percent in the gross winnings on the casino.
Former Prime Minister Hubert Ingraham warned the government late last year that the South African hotel mogul made commitments to the former administration that he did not keep.
Mr. Ingraham had advised the new government to take account of what Mr. Kerzner owes as it negotiated Atlantis Phase III.
He said, “We have about 600 rooms that we are owed from that deal. So whatever is agreed for the future, we must not be unmindful of these 600 or so rooms and we must not be unmindful of the need for the replacement of the five-star Caf� Martinique Restaurant and Boat House. All are to be replaced.”
However, what the country is getting under the 2003 Heads of Agreement in lieu of the 765 rooms that Kerzner did not build in 1997, is enormously greater, Minister Gibson said Monday.
Unlike the 1997 agreement, the 2003 agreement makes provisions for the cancellation of concessions should Kerzner fail to meet any of its development obligations under the agreement.
“I therefore leave it to the Bahamian people to decide if it was worth $117,500,500 in government concessions in order to ensure a minimum of another 2,000 well paying jobs for Bahamians and a world class resort that is second to none,” Minister Maynard-Gibson said.
Defending the level of concessions granted to Kerzner International by the government, Minister Maynard-Gibson, pointed out that the percentage of special casino tax concessions has been reduced by some 50 percent under the 2003 Agreement.
She compared the newly granted concessions to those granted under the 1997 agreement with Kerzner International – then Sun International .
Minister Maynard-Gibson said the Progressive Liberal Party has no doubt that the 2003 Heads of Agreement is a much better deal for the government, the Bahamian economy and Bahamians in general, compared to the 1993, 1995 and 1997 Heads of Agreement.
She noted that the special casino concessions given to Kerzner International under the 2003 Heads of Agreement are similar to those granted in the 1995 and the 1997 Heads of Agreement.
“The casino tax concessions are almost identical with the 1997 Heads of Agreement, except that a cap has been placed on the 50 percent reduction in annual gross winnings that did not exist in the 1997 agreement,” Minister Maynard-Gibson said.
Under the Heads of Agreement, there is an extension by 20 years of the moratorium on new casino licenses on Paradise Island and New Providence from the completion of Kerzner’s Phase III expansion. The $600 million expansion of Kerzner’s Paradise Island Resort is expected to be completed by Christmas, 2006.
Minister Maynard-Gibson on Monday tabled the new Heads of Agreement the government recently signed.
The Bahama Journal
