Press Statement by Dr Ernest Hilaire on The Desert Star Holdings (Dsh) Project

The Saint Lucia Labour Party notes with deep interest the signing of a Master Agreement between Desert Star Holdings (DSH) and the Government of Saint Lucia signalling CIP-approval status, DCA approval and the right to start implementation of a major project in Vieux Fort South. It is interesting that the former SLP Government was in negotiations with the developer over a period of at least eighteen months and within less than two months of being elected to office, the Allen Chastanet led Government has signed on the dotted line and agreed to proceed with the project. We note that the project has been signed with absolutely no dialogue by the current Government with the community of Vieux Fort.

The Labour Party believes that the project, if it materialises, has the potential to contribute significantly to the development of the southern part of the island, diversify the island’s investment portfolio and in particular, help to reduce unemployment in the island. For the promised benefits to materialise, the project will have to be designed and implemented with considerable sensitivity as it could cause major disruption and dislocation in the lives of citizens in the south of the island.

The SLP Party points out that whilst it had agreed on most of the fundamental points of the agreement with the Developer, DSH, there were some critical elements which required national consultation and even parliamentary debate and approval.

As a Government, the Party has always maintained that as long as government, particularly Ministers and indeed the Minister responsible for Citizenship by Investment allow the staff of the CIP Unit to operate independently, the program could, yield benefits to Saint Lucia.

Before demitting office, the Labour Party Government approved four projects under the CIP Programme:

1. Bay Gardens Residences in Rodney Bay;

2. Belevedere Estate in Belvedere, Canaries;

3. Sunset Bay in Choiseul; and

4. Range Developments in Black Bay, Laborie.

All four were reviewed by the CIP Unit and Invest Saint Lucia to ensure that all requirements, including due diligence of the potential investors, were met. All four projects also received “approval in principle” by the DCA. Following these approvals, the CIP Unit recommended the projects to the Minister for Citizenship by Investment for onward transmission to Cabinet for its approval.

Accordingly, the Saint Lucia Labour Party wishes to seek clarification on the following:

1. The press release speaks to the Desert Star project being the first and only integrated resort development project in Saint Lucia. Does that mean that the Allen Chastanet Government agreed that there cannot be any approval given to a local or foreign investor for another integrated resort development? If so, can the Prime Minister clarify what was agreed upon as an integrated resort development? Were any exclusive rights given to DSH for the operation of a casino, horse racing facility, betting facilities or citizenship by investments? If so, how would these concessions, if granted, impact other investors who may wish to invest in Saint Lucia presently and in the future?

2. The Prime Minister announced that horse racing aspect will become a qualifying investment. The Saint Lucia Labour Party must ask why this is necessary if the horse racing facility and casino are parts of a hotel development project which currently qualifies as an investment under the CIP. Further does that mean that any investor interested in horse racing can apply under the CIP or is this exclusive for DSH?

3. The Saint Lucia Labour Party wishes to enquire whether the Saint Lucia National Trust provided its support for the project as submitted to the Cabinet of Ministers. It recalls that there were extensive environmental issues with the project, especially with the use of the Mankote′ Swamp. The SLP had involved the National Trust in the preliminary discussions but wishes to enquire whether they were consulted before the final agreement was signed.

4. The Saint Lucia Labour Party notes the procedures for CIP-approval status to be given and wishes to know whether the CIP Unit received an application from the developers or CIP approval in accordance with the Act and its Regulations? More specifically, the Saint Lucia Labour Party wishes to know whether the CIP Unit approved and made a recommendation for the project to be approved.

5. The Saint Lucia Labour Party also notes that for a project to receive CIP-approved status it must be granted DCA ‘approval in principle’. Did the DCA provide such approval? This is critical because once a project is CIP-approved, the developer can commence selling investments which is a right to citizenship but if there is no DCA approval the project cannot commence. Further, if it is never approved what happens to the investments which applicants would have made? Therefore, has the DSH being given approval to commence marketing and selling citizenship through investment BEFORE it has DCA and CIP approval?

6. The Government statement suggests that CIP applications for Desert Star will be accelerated. The Labour Party does not think that any particular investor should be ‘pre-approved’ or receive preferential treatment as this undermines the CIP. All applications regardless of the source must follow the prescribed due diligence process to maintain the integrity of the CIP.

7. The Prime Minister also announced that the limit for citizenships to be granted through investment will be increased from the present limit of 500 applications as prescribed by

Legislation. The Saint Lucia Labour Party wishes to inform the Prime Minister that he cannot on his own increase the limit. Only the Parliament of Saint Lucia can do so. Therefore, has DSH been guaranteed an annual number of citizenships through investment which is more than 500? If so, did the Prime Minister promise DSH that he would seek parliamentary approval? If so, what is the number of applications for citizenship that the Government agreed to prescribe for DSH?

8. The Prime Minister’s statement refers to the project as a US$2.6 bn project. The Labour Party seeks clarification as to whether this is the development cost or is this development cost plus DSH’s profit? It is significant as the figure determines the citizenship allocation for the developer. Assuming the development cost is only US$1b but profit is US$1.6bn, it means that Saint Lucia has to provide citizenships for development cost plus US$1.6bn to meet profit. It is for this reason that each project must be reviewed by Invest Saint Lucia and the CIP Unit before a recommendation can be made to the Minister for submission to Cabinet for approval. Can the Government clarify whether the lands and mangrove will sold or leased to the developer and if so, at what rate? And if not, will Government be transferring the lands and mangrove free to the developer?

9. The Saint Lucia Labour Party also wishes to enquire as to what sovereign guarantees or undertakings to make repayments were given to DSH in the event that the project is not successful? If the project does not commence or all phases are not completed, what is provided for the return of the lands and mangrove to the people of Saint Lucia?

10. Finally, the Saint Lucia Labour Party wishes the Government to clarify whether it has, as is required under the CIP regulations, completed or has in hand the due diligence reports. No project, regardless of size, scale or potential should be approved without sufficient due diligence. Previously, the Prime Minister was very critical of the CIP calling for transparency and voicing concerns with due diligence process. This is an ideal opportunity for the Prime Minister to assure the nation that the CIP due diligence process was completed and is to satisfaction.

Finally, I wish to repeat that the Saint Lucia Labour Party commenced negotiations for this investment project and is fully supportive of its completion and of all the projects which were negotiated during the Labour Party period in Government. However, we need to be satisfied that the Government did not act with undue haste and has protected and preserve the best interests of the people of Saint Lucia.

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