PERGA conclusions on the Rarotongan hotel sale
p. 10 · Read in the full issue
That the Hotel was put up for sale without sufficient
attention being given to
the Republic of Nauru mortgage. • That the Hotel should not have been advertised with the prospect of a 60 year lease without that having been negotiated with the landowners. • That the impending South Pacific Forum meeting and the inability to quickly dispose of the Nauru security both had a detrimental effect on the sale process. • That because of the long delay in set tling the terms of the mortgage and the interest shown by the Asian businessman, consideration could have been given to re advertising the Hotel for sale with partial or complete upgrade in place. The finan cial circumstances of original bidders and potential bidders may well have altered more than some 16 months after original expressions of interest were called. • That any re-advertising should have
included reference to internationally recog nised management requirements if this was regarded as an important criterion. • That terms of the sale to RRHL were such that the possibility arises there may
'Economic recovery objectives set out in the Five-Point Plan have not been met'
have been other applicants or consortiums interested in a purchase option, the final contractual arrangements of which were far removed from the original advertised marketing. • That economic recovery objectives set out in the ‘Five Point Plan’ have not been met. Instead Government has incurred con siderable expense, and waived potential revenue in agreeing to the sale in the form it did. No money was received at the time the Hotel was sold.
• That securities in place in relation to the sale give small comfort to taxpayers of the country, particularly over the period of financing - 10 years. • That adequate accounting advice was not sought particularly in regard to the ‘net distributable reserves’ question. • That unlawful expenditure of public money has been incurred to the extent that the limit of one and half percent of the total appropriation for the year ended 30 June 1997, and the current year, has been exceeded. • That the details of the sale were well advanced before endorsements of the sales agent was received. • That a better financial return from the sale of the Hotel could have been achieved. • The Committee concludes that Government cannot claim that the transac tion was carried out in a ‘fully at arms length, transparent and contestable man ner’ in accordance with its stated objec tives. ■