In September 2016 the government announced a $100 million deal for Prospect Reef to be developed by The ICA Group, a United States based firm whose financing sources had previously raised questions following its unsuccessful negotiations to finance the airport expansion project.
Nearly three years later, the Prospect Reef deal has fallen apart amidst unanswered questions and finger pointing.
“The government has played the wait game — waiting, waiting, and stupid reasons not to sign the lease,” said Ali Shaikh, CEO of The ICA Group. “Without the lease, without the asset, how can any investor put money in? So they never really wanted to give us in the first place.”
Former Premier Dr. Orlando Smith, however, blamed the failure on ICA Group.
“They made a bid for project development,” he said. “Government agreed once they met certain conditions which were put in writing. These conditions were not met. Eventually they did not come back. After that, the extension ran out.”
Government purchased the struggling Prospect Reef Hotel and Resort for $6 million in 2005 with plans to convert it into a government-owned hospitality-training centre. But instead it continued falling into disrepair, despite promises from successive governments to sell or develop it.
In 2013, Dr. Smith announced plans to build a “world-class hotel facility” in a $100 million deal with the United Kingdom-based developer Sir Robert McAlpine Group, which, along with ICA Group, was part of a consortium of companies then negotiating with government on the proposed airport expansion project.
But the Prospect deal was never finalised, and negotiations fell apart the following year because McAlpine’s interest in the resort project had “waned” and the firm did not want to proceed unless the government funded a feasibility study, Dr. Smith said at the time.
In September 2016 Dr. Smith announced a deal with ICA Group, which Mr. Shaikh said at the time was headquartered in Dubai and had its “operating company” in Colorado.
During a House of Assembly sitting that December, Dr. Smith revealed that the firm’s local subsidiary, ICA (BVI) Group, included Virgin Islanders Verlin “Bolo” Crabbe as president and Dion Stoutt as director, with Mr. Shaikh acting as its “key principal.”
The agreement was signed in July 2017 for over $90 million. Mr. Shaikh pledged that the project would include 190-200 rooms across two hotels, in addition to condos, town houses, a marina, a conference centre, parking lots, an infinity pool, a saltwater pool, villas and the Dolphin Discovery Centre, which was set to be the focus of one of the hotels.
Firm’s history in VI
ICA Group had first come to public attention in the Virgin Islands in February 2013 as one of the companies, along with McAlpine, in negotiations with government officials and private consultants to finance, build and operate the Terrance B. Lettsome International Airport for a period before turning it back over to the government.
ICA’s role in the proposed public-private partnership would have been to finance the project and secure an airport operator. However, a May 2016 business case submitted by PricewaterhouseCoopers said the firm “found no evidence of ICA’s ability (past or present) to bring financing and an operator to ultimately deliver the project” and called its proposed financing sources “obscure at best.”
Government subsequently decided against using the public-private concession model for the airport.
When ICA’s Prospect deal was announced about four months after PwC’s report, Mr. Shaikh told the Beacon that he disagreed with the PwC analysis.
“That makes me upset. We have a signed letter from an operator,” he said in September 2016, adding that he had obtained financing from Deutsche Bank and a flying agreement with JetBlue for the expansion project.
And despite the PWC business analysis and criticism from the opposition in the House of Assembly, Dr. Smith expressed confidence in him.
When the development agreement was signed in July 2017, Mr. Shaikh said he hoped to break ground within six months and after that the project would take between 18 months and two years.
Dr. Smith maintains today that he had no reason at the time to think that Mr. Shaikh would not come through with the financing.
“No, I wouldn’t say that there was anything early on [that suggested that],” the former premier said.
Mr. Shaikh declined to speak about any of his other recent or ongoing projects, citing non-disclosure agreements. Instead, he referred questions about his past work to his website, which lists a “Portfolio” of several projects that appear to date back more than 10 years.
The list includes ventures from across the world, ranging from an oil terminal in Pakistan to theme parks in China and Japan.
But some of the projects did not come to fruition.
For example, the website touts ICA’s involvement in a theme park named after Osamu Tezuka, the late Japanese manga artist.
The international consulting company Calo Global, however, states on its website that this “ambitious” project was never built because of administrative conflicts. Mr. Shaikh told the Beacon that the development didn’t come to fruition because Mr. Tezuka’s wife, who “controlled all the licences,” died.
The ICA website also mentions a musical motion picture based on Treasure Island that does not appear to exist. Mr. Shaikh said he financed the film in the mid-2000s, and it was produced by Elliot Kastner, who died in 2010.
He told the Beacon that to his knowledge the movie was never released and he is not sure what happened to it after it was sold.
Other listed ICA projects, which the Beacon was unable to independently verify, include helping to prepare an aviation policy for Pakistan; advising the Pakistan government on the privatisation of an electricity company; and working on a Chinese theme park the website says is “due to open in spring 2007;” among others.
Multiple people associated with Mr. Shaikh’s past projects declined to comment for this article.
ICA’s Prospect Reef plans were delayed by the devastation from Hurricane Irma in September 2017. But in February 2018 Dr. Smith said he was still interested in developing the resort.
Over the next year, however, the project failed to make headway, and Mr. Shaikh and government began blaming each other for the lack of progress, according to documents provided by the CEO.
On June 28, 2018 Mr. Shaikh asked for a four-month extension to the June 30 deadline to fulfil certain obligations set out in the development agreement, according to a June 29 letter from government to ICA Group.
The letter does not explain those obligations in detail, but government stated that it would review the extension request but would not repeal or amend the Prospect Reef Management Act until the conditions were met.
Ron Potter, Dion Stoutt, Premier’s Office Deputy Permanent Secretary Elvia Smith-Maduro, and then-Assistant Secretary Malvern Brathwaite were all present for discussions regarding the development agreement on June 28, according to the letter.
Mr. Shaikh said last month that he and government officials agreed on the extension so that government could pass legislation allowing Prospect Reef to be transferred as an asset and “accommodate our requirements in a timely fashion.”
He added that government also requested a performance bond from ICA Group for $85 million.
“We have never heard of [this condition] in our life,” Mr. Shaikh told the Beacon. “We explained to them a performance bond is to be provided by the construction company that does the construction [to show] that they are going to perform construction. We are the developer: We are not the construction company.”
Dr. Smith said he did not know offhand what the specific unfulfilled conditions were, and referred questions to the Premier’s Office, which did not respond to requests for comment.
Mr. Shaikh said he is legally prohibited from sharing the development agreement and referred requests for a copy to government.
Mr. Potter declined to speak about the deal, and Ms. Smith-Maduro and Mr. Brathwaite did not respond to requests for an interview.
By November 2018 the plans still had not moved forward. Mr. Shaikh complained in a letter to Dr. Smith that government had not yet signed the lease, and he provided evidence of “two investment commitments:” a 2015 letter from Burj Capital, a private equity firm based in the United Arab Emirates, stating its intent to invest in the airport project; and a letter from Dolphin Discovery stating that it was ready to start construction of its new facility at Prospect Reef.
Representatives from Dolphin Discovery and Burj Capital did not respond to requests for comment.
By January Mr. Shaikh was in negotiations to secure a bond from Guardian Group, a Trinidad and Tobago-based firm that asked that he provide financial statements from Mr. Crabbe’s VI-based company Autland, according to documents provided by Mr. Shaikh.
Guardian Group, he said, asked for the information about Autland as part of a “background check.”
Mr. Stoutt told a different story. He said that there were “conversations” in which Mr. Shaikh tried to convince Mr. Crabbe to put up Autland as collateral for the ICA Group’s bond, but that to his knowledge Autland never agreed.
He called Mr. Shaikh a “crazy man” for suggesting Mr. Crabbe do so.
“Autland has nothing to do with ICA. Autland has no reason to secure a bond for ICA,” Mr. Stoutt said. “ICA has a thing with the government, and ICA should secure their own bond. He’s making it sound like Autland has an obligation to do anything for them.”
In a Jan. 12 email to Mr. Crabbe, Mr. Shaikh wrote, “We still do not have the list of equipment and assets from Autland that are needed to secure the bond.”
He continued, “the Premiere [sic] was going to sign the lease if we provided the bond, which we are prepared to do once we have the information from Autland.” Mr. Shaikh said Mr. Crabbe never responded to his email.
For his part, Mr. Stoutt said that both parties played a role in the deal falling through.
“There were things from both sides which could have been done in a swifter manner,” he said. “All the information was not completed to reach that point where financing could have been brought to the table. It’s an unfortunate thing, but I don’t think there should be any ill will from ICA to government or government to ICA because they were both negotiating in good faith and unfortunately within the timeline of the terms of that particular contract both persons weren’t able to satisfy the requirement or what was in the documentation.”
The new government came to power in the Feb. 25 election, and by March 26 the Premier’s Office had informed ICA Group that it would not amend or repeal the Prospect Reef Management Act due to “the inordinate delays and failure of the Developer to perform its obligations set out in the Development Agreement,” according to a letter provided by Mr. Shaikh.
Mr. Shaikh fired back, lambasting government for cancelling meetings and for refusing to extend the deadline for the development agreement.
The bond from Guardian Group still seemed to be a stumbling block as a March 31 deadline loomed.
In a March 22 letter to the Premier’s Office, Mr. Shaikh said he had “asked for locals to provide the information needed to complete the bond as per their requirement, which is very simple, Financials and Equipment list to pre-qualify the construction Contactor [sic] the Autland.”
Mr. Crabbe is not copied on the communications with the Premier’s Office and Guardian Group, and he did not respond to requests for comment.
At this point Mr. Shaikh had grown incensed, and on March 27 he sent a letter to the Premier’s Office complaining, “It seems your new government is unable to improve upon the inability of the previous government to do business in a straightforward and direct manner” and claiming he had already spent $1.8 million bringing investors to the VI and had planned to invest $150 million.
Mr. Fahie did not respond to requests for comment, but his government recently gave Claude Skelton-Cline’s firm Grace Consultants a $98,000 no-bid contract to provide various services for six months, including negotiations for the development of the Prospect Reef site.
Junior Minister of Tourism Shereen Flax-Charles said during the budget debate on April 26 that she had spoken to potential developers for the property at a cruise industry conference.
“Our intention is to seek an investor to develop this property [because] we do need a major four- or five-star property here on Tortola,” she said. “And so Prospect Reef is in a good location, and I think that we need to put our heads together to make sure that Prospect Reef comes back to the glory that it was and better in the coming years.”
Meanwhile, Dr. Smith remains resolute about the failure of the ICA plan.
“The government met its responsibilities,” he said. Mr. Shaikh disagreed.
“The BVI is a great country, great potential, but I think that it has been ruined by questionable people,” he said.
‘So much potential’
Today Prospect Reef is a wasteland of empty hotel rooms with windows and roofs blown off, beds and nightstands smashed to smithereens. One of the few rooms that remains intact is the one where Angel Barnes has lived for 14 years.
He used to do air conditioning and refrigeration work for the hotel, and his manager asked him to live there so that he could be around to help if there was a problem at night.
Now he and his wife Patria O’Neil Barnes are the only inhabitants of the otherwise deserted complex, kept company only by a few fishermen, a security guard, and some former employees who come to hang out.
He misses the days when the rooms were filled with guests from all over the world and the bustling restaurant drew crowds.
“It’s one of the most beautiful places in Tortola, this one here,” he said.
Occasionally Mark Fuller comes to fish out on the rocks, and he gives Mr. Barnes some of his catch. He stumbled upon the spot while driving by one day.
“It’s just so sad. So many people looking for places to stay,” he said. “It’s got so much potential.”