Ritz debt deferral extended

Some $6.2 million owed, premier says

The Cayman Islands Government has
allowed the developer of the Ritz-Carlton, Grand Cayman to further defer
payments on a debt for customs duties owed.

According to information provided
by Premier McKeeva Bush in Legislative Assembly last week, the construction
company that developed the Ritz property has paid some CI$3.8 million, but
still owes nearly CI$6.2 million on the past due tariffs.

However, in a statement released
Friday, developer Mike Ryan denied that $6 million was owed and said that
previous online reports on the issue were “inflammatory and inaccurate”.

Moreover, Mr. Ryan said that the
hotel had not “defaulted” on any debt owed to the government. 

Prior to March 2009, the company
had been making quarterly payments of CI$347,818 to settle the debt, but
following the receipt of the March 2009 payment, the government indicated it
had received no further payments.

A Caymanian Compass article written
in 2007 indicated that the interest-free deferral of payment on import tariffs
was due to be settled by quarterly payments no later than 31 March, 2012.

“The entity (later identified as
the Ritz-Carlton during open proceedings in the LA) has submitted a request to
extend the payment plan and has also offered to pay interest on the outstanding
amount,” Mr. Bush said in response to the parliamentary question posed by
opposition MLA Alden McLaughlin.

Difficult economic climate

Government had not yet decided on
the request for extension, but said the hotel developer had cited “very
difficult economic conditions as the main reason why the request was made”.

Mr. Ryan said there was really
nothing new about the customs tariff payment delays between the Ritz and
government.

“When the project was first
approved in 1997, certain duty deferrals were agreed with the Government then
in power, led by Truman Bodden,” he said. “These deferrals allowed for duties
on the construction of the hotel elements of the Ritz-Carlton, Grand Cayman to
be paid to Government over a five-year period after the hotel was completed.

“As a result of delays, most
notably Hurricane Ivan, the timing on these deferrals was extended over a
seven-year period and since 2005, the developer has been making quarterly
payments of CI$347,818 to the government as per a previously agreed schedule to
repay deferred customs duties. To date, more than $3 million has been paid.

“These payments began in 2005, and
have continued quarterly until March of 2009 when discussions began with
government regarding a restructuring of the payments due to the recession. As a
result, a formal application was made in September 2009 to the Financial
Secretary to restructure the payments in light of the global economic
downturn.”

‘Normal procedure’

Mr. Ryan said it was “normal
procedure” for the payments to be suspended while that application is
considered.

Premier Bush was adamant that the
money owed would be repaid.

“It is important to note that (the
Ritz) has not requested any write-off of the amount due to government,” Mr.
Bush said.

The premier said his government –
and apparently the previous People’s Progressive Movement administration –
believed there was little risk of government not getting the full amount owed.

“That confidence was, perhaps,
demonstrated by the previous administration when, in January 2009, an
associated entity to the one mentioned above (understood to be the Dragon Bay
development), received considerable concession possibilities,” Mr. Bush said.

Those concessions from the previous
government included import duty reductions on construction materials for hotels
and golf courses, a port marina, public roads and other items associated with
the Dragon Bay project’s development.

Mr. McLaughlin pointed out that the
quarterly payments halted between March 2009 and the date of the next payment
on June 2009. The George Town MLA inferred that the May 2009 elections – which
brought Mr. Bush’s government to power – may have had something to do with
stopping the quarterly payments.

Premier Bush denied that.

“This has nothing to do with
elections,” he said, adding that certain incentives needed to be offered to get
and keep development in Cayman. “There are incentives that the world is
offering. That’s something we have to do.”

“But the government position is
that they have to pay.”

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1 COMMENT

  1. Wish I could do that on anything I bring onto the island. Is the government also charging interest as it seems like a free loan as well. Not only is the Ritz an eyesore on the beach, it is a pain the wallet as well.

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