It’s now official. The government of Antigua and Barbuda has what it considers “official” permission to confiscate a US$60 million resort.
The Half Moon Bay Resort sits on one of the most beautiful beaches in the Caribbean. It’s justifiably famous for its pink sand. A consortium of U.S., Canadian, and British investors, owns, or used to own, the resort.
Over the past 35 years, their company, H.M.B. Holdings Ltd., invested millions of dollars in the resort. However, the Antiguan government has long coveted the property. And in 2005, the Attorney General secretly transferred title from H.M.B. Holdings to the government.
The Attorney General called this action “expropriation,” not “confiscation.” However, owners of expropriated property receive some form of compensation. But the Antiguan government offered no compensation to H.M.B. Holdings.
H.M.B. Holdings unsuccessfully contested the seizure in the local courts. Eventually, the company lodged an appeal before the Privy Council in London, Antigua’s highest court. In June 2007, the Privy Council declared the expropriation legal, but only if the government paid fair and adequate compensation.
The Antiguan government now claims that this decision provides judicial sanction for its actions. Yet, it has never offered to purchase the property. Nor has it offered H.M.B. Holdings a single dollar in compensation.
The confiscation of the resort is only one initiative to discourage foreign ownership of real property in Antigua. Foreign investors in Antiguan real estate must obtain government permission—a license—to purchase it. Foreign shareholders of companies owning land there must obtain individual land-holding licenses.
Investors foolish enough to develop property must also obtain approval from the newly established Antigua and Barbuda Investment Authority. This agency is empowered to dispense waivers and concessions to encourage politically favored developers.
The Half Moon Bay Resort debacle is only the latest chapter in Antigua’s sordid treatment of foreign investors. In 2001, the government tried to seize US$76 million in assets recovered from the liquidation of Eurofed Bank, Ltd. This was despite the fact that the vast majority of these assets belonged to legitimate depositors.
At the time, one Eurofed depositor asked, “What sort of message does this send out to foreigners who are doing business or contemplating doing business with Antigua's offshore sector?"
The message is quite clear. The Antiguan government, and its representatives, are the new Pirates of the Caribbean. Invest or do business there at your peril.
Copyright © 2007 by Mark Nestmann
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