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PP RUEHWEB

DE RUEHWN #1706/01 2682027
ZNY CCCCC ZZH
P 252027Z SEP 06
FM AMEMBASSY BRIDGETOWN
TO RUEHC/SECSTATE WASHDC PRIORITY 3376
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUEHCV/AMEMBASSY CARACAS 1501
RUMIAAA/HQ USSOUTHCOM J2 MIAMI FL
RUMIAAA/HQ USSOUTHCOM J5 MIAMI FL
RUEHCV/USDAO CARACAS VE

C O N F I D E N T I A L BRIDGETOWN 001706 
 
SIPDIS 
 
SIPDIS 
 
WHA/CAR FOR ROBERT COLLINS 
EB/IFD/OIA FOR JAMES ROSELI 
L/CID FOR MARGUERITE WALTER 
L/WHA FOR DAVID SULLIVAN 
EB/CBA FOR NANCY SMITH-NISSLEY 
SOUTHCOM ALSO FOR POLAD 
 
E.O. 12958: DECL: 09/21/2016 
TAGS: EINV PGOV PREL PINR CASC ELAB OPIC KIDE AC XL
SUBJECT: ANTIGUA - HALF MOON BAY: INCREASING COMMON GROUND; 
RESOLUTION ATTAINABLE? 
 
REF: A. BRIDGETOWN 995 
     ¶B. BRIDGETOWN 487 
     ¶C. BRIDGETOWN 287 
     ¶D. BRIDGETOWN 18 
 
Classified By: DCM MARY ELLEN T. GILROY FOR REASONS 1.4 (b) AND (d). 
 
¶1.  (C) SUMMARY:  On September 20 Ambassador Kramer and legal 
counsel to the Half Moon Bay property's Amcit majority 
shareholder met with Antigua and Barbuda Attorney General and 
Minister of Tourism to revitalize efforts to resolve 
differences surrounding the 11-year-old expropriation case of 
the Half Moon Bay (HMB) Resort.  The meeting, regarded as 
productive by all participants, increased the common ground 
on which to build future cooperation, identified issues that 
need additional clarification, and produced concrete "next 
steps."  Although underlying issues require further 
negotiation and the MOU needs some wordsmithing to ensure 
acceptability and compliance by both parties, this session 
produced more positive momentum than has been evident in 
quite some time.  Cautious optimism would not be 
inappropriate.  End Summary. 
 
¶2.  (C) Ambassador Mary Kramer and William D. Rogers, 
representative of Half Moon Bay (HMB) Holdings Limited 
majority stockholder Natalia Querard, met with Antigua and 
Barbuda Attorney General and Minister of Legal Affairs Justin 
Simon and Minister of Tourism Harold Lovell in Antigua on 
September 20 to expedite resolution of the HMB expropriation 
case (reftels).  PAO and PolOff (notetaker) accompanied the 
Ambassador.  During the meeting Ambassador Kramer noted that 
she would like to see this chapter in bilateral relations 
closed before she leaves post later this year.  She also 
emphasized the importance the resort, once fully functioning, 
could play in boosting Antigua's tourism industry.  AG Simon 
echoed the Ambassador's sentiments, thanked the Embassy for 
its continued support, and welcomed all participants in the 
spirit of negotiation, declaring his interest--even 
anxiousness--in seeing the matter settled swiftly. 
 
BACKGROUND 
---------- 
 
¶3.  (SBU) In 1995 Hurricane Luis devastated Antigua and the 
aging Half Moon Bay Resort, once one of the premier 
properties on the island.  Ensuing power struggles among HMB 
shareholders kept them from refurbishing the 110-acre 
beachfront resort.  In 2002 the GOAB, led by then-PM Lester 
Bird, acquired the property through an act of Parliament, 
claiming the island's dependence on tourism as a basis for 
national interest in re-opening the resort.  HMB 
shareholders, including Amcit Natalia Querard, challenged the 
expropriation in local courts with varying results (refs A 
and C).  In July 2005 the GOAB passed an act of Parliament 
which would allow the return of the property under three 
conditions (ref A).  Querard rejected the offer.  The matter 
is currently on the docket for the London-based Privy 
Council, Antigua's highest court of appeal, with the hearing 
to be held in April 2007. 
 
PROPOSED MOU EXPANDS COMMON GROUND... 
------------------------------------- 
 
¶4.  (C) In May 2006 William D. Rogers, a retired senior 
partner of the Washington-based law firm Arnold and Porter 
LLP (and former Assistant Secretary of State for 
Inter-American Affairs from October 1974-June 1976/Under 
Secretary of State for Economic Affairs from June 
 
SIPDIS 
1976-January 1977), wrote to Ambassador Kramer and WHA A/S 
Thomas Shannon identifying his firm as legal counsel for HMB 
and proposing a resolution very similar to the GOAB's 2005 
act of Parliament, with some modifications.  As much of the 
language for the proposed MOU was taken directly from the 
previously rejected July 2005 act of Parliament, the GOAB 
representatives were encouraged by the increase in common 
ground.  There are several details yet to be negotiated, but 
agreement on the MOU would represent significant progress. 
 
¶5.  (C) Minister Lovell reiterated the GOAB's longstanding 
concern regarding Querard's commitment and financial ability 
to move the refurbishment project forward.  He noted that the 
GOAB had been accused by political critics of ignoring the 
developmental aspect of the issue and wanted to ensure that 
any agreement reached would put future development solidly on 
track.  Lovell stated the GOAB's concern that if it made 
concessions without clearly outlined terms and specific 
responsibilities for each side, that it would be "left 
holding an empty bag." 
 
¶6.  (C) Rogers assured the Tourism Minister that once the 
legal issues of clear title were put to rest, the funding 
would materialize.  He highlighted the interest of the 
Multilateral Investment Guarantee Agency (MIGA), a member of 
the World Bank Group, and the Overseas Private Investment 
Corporation (OPIC) in the project as proof of his client's 
diligence and commitment.  Rogers reiterated that once the 
title was clear, financing (estimated at USD 20 million) 
would "move smartly," and emphasized HMB's intention to 
redevelop the property as a premier destination.  (Comment: 
This issue has been a sore spot for PM Spencer and the United 
Progressive Party (UPP) government since taking office in 
¶2004.  The interest of MIGA and OPIC is a new and reassuring 
development.  End Comment.) 
 
WITH A FEW AMENDMENTS 
--------------------- 
 
¶7.  (C) The proposal includes an attachment outlining five 
provisions HMB expects the GOAB to agree to before it will 
drop its legal cases, including the one before the Privy 
Council.  These include resumption of utilities and services; 
granting of licenses, permits and other necessary approvals; 
assurance of similar economic and physical concessions as 
those provided to other resort developers; correction of 
security and access infringements; and extension of general 
support and cooperation.  Attorney General Simon agreed that 
the provisions seemed reasonable enough, but was unaware of 
the details of the encroachments and access issues.  He 
agreed to send a survey team out to the site to meet with an 
HMB representative to go over the specifics. 
 
¶8.  (C) Simon pointed out the GOAB's concern about the 
open-ended language in the MOU, citing Querard's historic 
unwillingness to be bound by any timelines.  He expressed the 
GOAB's desire to have a "commitment to start" written into 
the MOU, as well as additional text changes providing clearer 
performance measures. 
 
QUESTIONS REMAIN 
---------------- 
 
¶9.  (C)  Some of Simon's and Lovell's concerns were mitigated 
by the declared interest from MIGA.  They asked if MIGA would 
provide reassurance, in the form of a letter of intent, of 
its willingness to support the project.  Rogers responded 
that this a definite possibility and agreed to work on 
setting up a meeting with MIGA officials for Simon and GOAB 
Minister of Finance Errol Cort when they are in Washington, 
September 28-29. 
 
¶10.  (C) Simon and Lovell also wanted to address the issue of 
minority shareholder interests and ongoing litigation between 
the partners (ref B).  Rogers explained his understanding 
that only immediate family members could inherit shares 
according to the tenants of HMB Holdings Limited.  He also 
noted that the corporation had the right of first refusal, 
and planned to buy out any outstanding shares.  Simon 
countered that construction and financing could not commence 
until the matter of the minority shareholders was 
conclusively resolved.  Rogers, acknowledging that he had not 
investigated the minority shareholder issue and its potential 
impact on financing in advance of this meeting, promised to 
follow up on the matter. 
 
¶11.  (C) Simon then addressed the issue of severance pay owed 
to workers who were dismissed when the property was damaged, 
an item PM Baldwin Spencer brought up at a meeting earlier in 
the day (septel).  Simon acknowledged that it was not legally 
HMB's responsibility to compensate the workers, but queried 
whether Querard intended to fulfill her promise to meet this 
obligation.  (Note:  This is an issue close to PM Spencer, as 
he was the union leader representing the displaced workers 
 
before he became PM, and ensuring such compensation was part 
of his campaign platform in the run-up to the March 2004 
elections that brought him to power.  Resolution and swift 
repayment of the workers would therefore provide a powerful 
political boost.  End Note.)  Simon stressed that payments of 
the principal should be the first disbursement out of any 
financing received, while noting that previously divergent 
positions regarding interest rates were open for negotiation. 
 Rogers reiterated HMB's commitment to meeting this 
11-year-old obligation. 
 
¶12.  (C) The GOAB representatives also requested specific 
stipulation of performance standards and timelines, with 
resulting conditionalities should those standards and 
timelines not be met.  They specifically requested 
identification of dates by which HMB will drop all 
litigation, and a timeframe for construction to start after 
financing has been received. 
 
POINTS OF CONCURRENCE 
--------------------- 
 
¶13.  (C) Despite the tenuousness of the proposed MOU and 
attachments and amendments, there were several areas where 
the GOAB and HMB negotiators were in agreement.  Both sides 
concurred that proceedings should remain confidential and any 
future press releases would be mutually agreed upon before 
release.  In response to this, Rogers noted the recent 
(perhaps hard-won) discretion and press silence of his 
client.  They agreed that the process required constant 
monitoring, with identified performance milestones, which 
could be announced to the media, such as receipt of 
financing, groundbreaking, and completion of various phases 
of development.  The parties stated that their common goal 
would be to settle the matter once and for all with no 
additional legal actions to be taken against the GOAB or its 
representatives, "the Crown," or individuals.  Rogers and 
Simon further resolved to be the primary negotiators, in 
order to keep "personalities" out of the mix, and maintain an 
open line of communication between them. 
 
NEXT STEPS 
---------- 
 
¶14.  (C) As evidence of the expanded common ground and points 
of concurrence, the GOAB and HMB interlocutors also agreed to 
concrete "next steps" to keep the momentum of the 
negotiations going.  These include: 
 
-- Rogers to negotiate a letter of assurance from MIGA, 
preferably for a September 28-29 meeting; 
 
-- GOAB to investigate the services issues outlined in 
Appendix A of the proposed MOU; and 
 
-- Rogers to amend the proposed MOU to include workers 
severance pay issues, identify definite timelines and 
establish linkages between major points of the agreement, so 
that the GOAB dropping all claims to the property and HMB 
ceasing all court proceedings will occur simultaneously. 
 
COMMENT 
------- 
 
¶15.  (C)  The drawn-out struggle over the resort property at 
Half Moon Bay has been a highly contentious political, 
economic, and personal one; however, the prospect of 
international insurers' involvement has made a significant 
difference in the GOAB's disposition to HMB, if not to 
Querard herself.  An agreement on severance payment to 
laid-off workers would also be much-welcomed political bonus 
for the Spencer administration.  The devil is in the details, 
however, and there are many yet to be worked out.  Rogers had 
hoped to walk out of the meeting victorious with a signed MOU 
under his arm for his client; he came away with a greater 
appreciation of the complexity of the situation and a lot of 
homework to do.  This is the closest the parties have been to 
an agreement in some time; with rational negotiators on 
either side, there just may be some hope for a resolution in 
the near term. 
KRAMER