VZCZCXYZ0000
PP RUEHWEB

DE RUEHWN #1415/01 3131708
ZNY CCCCC ZZH
P 091708Z NOV 07
FM AMEMBASSY BRIDGETOWN
TO RUEHC/SECSTATE WASHDC PRIORITY 5746
INFO RUCNCOM/EC CARICOM COLLECTIVE PRIORITY
RUEHKL/AMEMBASSY KUALA LUMPUR 0041
RUCPDOC/DEPT OF COMMERCE WASHDC
RUMIAAA/HQ USSOUTHCOM J2 MIAMI FL
RUEHCV/USDAO CARACAS VE
RUMIAAA/HQ USSOUTHCOM J5 MIAMI FL

C O N F I D E N T I A L BRIDGETOWN 001415 
 
SIPDIS 
 
SIPDIS 
 
WHA/CAR FOR ALAIN NORMAN 
SOUTHCOM ALSO FOR POLAD 
 
E.O. 12958: DECL: 10/30/2017 
TAGS: CACM CDB CVIS EAID ECON EFIN ELAB ETRD KCRM
PGOV, PINR, PREL, SNAR, VC, XL, OECS, USTR, MY 
SUBJECT: THE GRENADINES: THE INCREDIBLE DISAPPEARING RESORT 
 
REF: A. A) 07 BRIDGETOWN 1377 
     ¶B. B) 07 BRIDGETOWN 1341 
 
Classified By: CDA CHOWARD FOR REASONS 1.4 (B) AND (D). 
 
 ¶1. (C) Summary: Embassy Bridgetown recently learned that the 
Government of St. Vincent and the Grenadines (GOSVG) has 
repossessed land on Union Island that is owned by a long-term 
American investor in the Grenadines.  Ambassador Ourisman 
raised this possible expropriation with Prime Minister Ralph 
Gonsalves, who insisted that the act was a legal 
"forfeiture".  The American investor, Haze Richardson, has 
appealed the decision in SVG courts but remains skeptical of 
the ultimate result.  Both Richardson and another American 
investor, who is attempting to overcome bureaucratic hurdles 
in SVG to open a new resort in the Grenadines, complained to 
the Embassy that the Gonsalves administration is not friendly 
to foreign investors.  End Summary. 
 
Background 
---------- 
 
¶2. (U) In October 2007 a key Embassy contact informed PolOff 
that the SVG government under PM Ralph Gonsalves had 
"expropriated" 100 acres of land owned by an American 
investor.  In fact, the official publication of the 
government of St. Vincent and the Grenadines, "Focus", 
published by the Agency for Public Information (API), ran a 
story in its June 2007 issue proclaiming the case a 
"Resounding Nationalist Victory."  According to the article, 
the SVG High Court found that the American investor, Haze 
Richardson, and his two companies that owned the land, 
Chatham Bay Club Ltd. and Chatham Bay Development Corp., 
Ltd., had violated the terms of the "Alien's (Land-Holding 
Regulation) Act."  The Court ruled that Richardson was 
required to spend a minimum of $15 million USD on 
construction within three years of receiving the license and 
that his failure to do so meant that Richardson must 
"forfeit" the land to the government with no compensation. 
Citing the danger of foreign investors taking advantage of 
the lack of capital gains taxes as a way to speculate in 
land, Acting High Court Judge Albert Matthews stated, "It is 
my view that the purpose of such legislation is to obviate 
any attempt towards recolonization." 
 
¶3. (U) Haze Richardson first invested in the Grenadines when 
he and five other investors bought the island of Petit St. 
Vincent (PSV) from the GOSVG (a British colony until 1979). 
Richardson had retired from the United States Air Force and 
discovered the Grenadines when he and a former Air Force 
buddy sailed the Caribbean on a private schooner.  Richardson 
eventually bought the property outright, and ventured to 
transform the isolated island into an exclusive, high-end 
resort.  The resort currently boasts 22 rooms and a staff of 
85, composed mostly of Vincentians but also including 
Grenadian nationals from Carriacou and Petit Martinique. 
According to Richardson, the resort is the second-largest 
hotel in St. Vincent and the Grenadines (behind Raffles 
Resort on Canouan).  The resort is managed solely by 
Richardson and his wife Lynn. 
 
¶4. (C) In addition to the property on Petit St. Vincent, 
Richardson and his partners also bought 100 acres of land at 
Chatham Bay on Union Island in 1987.  The original plan was 
to develop a similar resort on Union Island, but Richardson 
claims that lack of access not only made the land difficult 
to develop, but also difficult to sell.  No roads led to the 
property on Chatham Bay and no planes larger than 12-seaters 
can fly into Union island, making it difficult to bring in 
international visitors for a large hotel (PSV, which has no 
airport, brings visitors into Canouan's larger airport and 
then to PSV by boat). 
 
He Said... They Said 
-------------------- 
 
¶5. (C) Reftel A documented Ambassador Ourisman's raising of 
this possible expropriation with Prime Minister Gonsalves. 
During that conversation, Gonsalves emphasized that the 
government had offered to pay Richardson the original 
purchase price of the land, plus interest.  Gonsalves further 
claimed that when he had communicated this offer to 
Richardson through his lawyer, Richardson refused it and 
demanded compensation of $25 million USD.  In a private 
conversation with PolOff, Haze and Lynn Richardson stated 
that the government has never offered to pay them any amount, 
or at least their lawyer never conveyed this to them.  PolOff 
informed Richardson that PM Gonsalves told Ambassador 
Ourisman that he was willing, even at this late date, to 
honor his original offer to Richardson.  Regarding the 
problem of access to the property, PM Gonsalves told 
Ambassador Ourisman that the government had invested in 
infrastructure such as a road to Chatham Bay, which had 
raised the value of the property.  Richardson reports that 
the government never notified him of the existence of the 
road. (Note: There is a very rudimentary dirt road from 
Clifton, the main town on Union Island, to Chatham Bay; 
locals find it faster to travel from Clifton to Chatham Bay 
by boat. End note). 
 
¶6. (C) Richardson confided to PolOff that he heard a rumor 
that the Prime Minister was interested in the land at Chatham 
Bay because he had a Malaysian investor lined up to take over 
and develop the property.  The PM's cousin and Embassy 
contact Ken Boyea confirmed this rumor, noting that the Prime 
Minister has traveled to Malaysia several times this year and 
allegedly flew there just after the court's ruling was 
announced in June.  In the meantime, Richardson has appealed 
the High Court's ruling and is awaiting a response to the 
appeal.  He further expressed a lack of confidence in the 
independence of SVG's judiciary, and noted that he expects he 
will also lose the appeal.  He then plans to appeal all the 
way to the Privy Council in London, which he believes he may 
win.  Richardson and his wife both stated that their ultimate 
fear is that the GOSVG may eventually seek to take the PSV 
Resort from them.  For this reason, they claim they are ready 
to give up the land on Union Island so as not to make too 
many waves, and they asked PolOff not to raise the issue with 
Gonsalves again, at least for the time being. 
 
But That's Not the Only Phantom Resort... 
----------------------------------------- 
 
¶7. (C) PolOff recently met another American investor, Thomas 
Mangione, who reports encountering his own difficulties with 
the Gonsalves administration.  Mangione opened Safe Harbour 
Bank in St. Vincent in 2000 and is seeking to open a resort 
community on Canouan island named Safe Harbour Resort.  Along 
with his partner Eliane Abramoff, Mangione plans to build a 
three-acre resort featuring 101 hotel rooms, 50 apartments, a 
retail "village", and a 100 seat conference center.  The 
plans also call for Safe Harbour Bank to relocate its 
headquarters from Kingstown to an office located above the 
conference center, in an effort to increase and promote 
financial services.  Mangione officially submitted the full 
set of complete drawings for approval at the end of May 2007, 
and has received approvals from all required parties up to 
the Prime Minister.  However, before the SVG Planning board 
of directors can vote on a significant project, they need a 
formal reply to their request from the Minister of Finance, 
Minister of Grenadines Affairs and the Chairman of the 
Canouan Village Development Ltd.  All of these positions are 
held by the Prime Minister. 
 
Hitting the Big Jolly Wall 
-------------------------- 
 
¶8. (C) According to Mangione, PM Gonsalves has not granted 
him a meeting in the intervening five months.  He claims that 
despite many requests for meetings, he has been   "ignored 
and pushed aside" by the Prime Minister.  Mangione stated 
that since the Prime Minister's Unity Labour Party (ULP) 
campaigned on promoting tourism and financial services, he 
finds these investment roadblocks particularly strange. 
Mangione stated: "All I can imagine is that this is an 
Anti-American agenda."  Mangione reports that as a result of 
the delay, his company has "lost a lot of time and potential 
profit".  He further confided that the experience has so 
soured his view of investing in SVG that he has been talking 
to investors about potentially moving out his financial 
services business to another island because, as he sees it, 
the GOSVG has been "unfriendly to American business."  In 
Mangione's words, " We are shocked that they aren't taking us 
out to dinner." 
 
¶9. (C) Concurrently, investor David Mann and the British firm 
Barrasford & Bird received approval from the government to 
build a similar development on St. Vincent proper, and have 
nearly completed construction of the Buccament Bay Resort's 
first 120 units.  Prime Minister Gonsalves has visited the 
site several times to observe progress, and has frequently 
touted the project on television.  By contrast, he has only 
said on one occasion that "investors have expressed interest" 
in developing a resort on Canouan, without providing details. 
 Mangione posts that the Prime Minister's reluctance to 
approve the project and general silence on the issue may be 
due to influence from Canouan Resorts Development Ltd. (CRD), 
the company owned by Swiss-Italian Antonio Saladino, who owns 
the 1200-acre Raffles resort and Trump golf course.  Mangione 
speculates that CRD does not want competition, and 
representatives for Saladino informed Mangione that the 
previous Mitchell administration had promised them that they 
would always be the only foreign investment on Canouan 
island. 
 
Comment 
------- 
 
¶11. (C) The most troubling aspect of the Chatham Bay dispute 
is that Gonsalves and the American investor have such 
conflicting accounts of the facts of the case.  In light of 
the massive foreign investments being attracted by St. Kitts, 
St. Lucia, and other countries of the Eastern Caribbean, St. 
Vincent does not appear to be finding much success in 
attracting investment.  Between these cases and the GOSVG's 
apparent nonchalance at the closure of the Kingstown Medical 
College (Ref B), one gets the impression that the Gonsalves 
administration is at the very best indifferent to American 
investment in SVG.  End Comment. 
 
 
 
 
 
HOWARD