Two Friday's ago, a no-confidence motion in the name of Chaguanas West Member of Parliament, Jack Warner, came to a premature end as the substance of the motion was not debated.
The motion of censure, according to an entry on Mr Warner's official Facebook page, "sought to challenge the professional competence of Senator Larry Howai to be the Minister of Finance and the Economy at this difficult time."
Mr Warner's motion must have been based on the assumption that Mr Howai is not fit to hold to hold public office because he presided over a financial institution that lent money to some high-profile businessmen, such as Arthur Lok Jack, and that First Citizens was not paid back.
In my view, Mr Warner's motion was ill conceived as banks are in the business of lending money and it is a fact of banking that some loans go sour. There are hundreds of thousands of banks in the world and Mr Warner would be hard pressed to find one bank in the whole world that did not have a "bad" loan in the period 2006 to 2009. Loans that go sour have been part of the history of banking since the first Babylonian merchant made a loan to a farmer around 2000 BC.
The Carlton Savannah project was one of many construction projects in this country that suffered from cost overruns and delays in the 2007 and 2008 period.
That's because the cost of construction escalated sharply in that period as a result of sharply higher labour and material costs that impacted almost every construction project in the world during the years 2007 and 2008. That was the period during which the price of all steel products more than doubled on the global market.
While there were significant cost overruns globally for construction projects in 2007 and 2008, locally the cost of construction was exacerbated by the fact that the then administration contributed to heating up the construction sector by opting to build a number of high-profile projects–such as the Port-of-Spain Waterfront, the Richmond St Government Complex, NAPA and other state-sponsored projects–at the same time.
Most local construction projects started during the years 2006, 2007 and 2008 suffered from the impact of higher labour and material costs.
Carlton Savannah was not the exception.
Construction on the project, which was originally designed to be a condo/hotel, began in 2007 with a loan of $150 million from First Citizens and with the shareholders and potential condominium purchasers putting up $40 million.
Eventually, because of the cost overruns caused by the sharp and unpredicted escalation of construction costs in 2008, the bank lent the project $286 million.
Discreet enquiring have revealed that First Citizens is close to closing the sale of the Carlton Savannah property to some British investors for about $150 million.
I was told last week that the project's shareholders, who put up a total of $40 million, were entirely wiped out but that the prospective condominium owners got back much of what they had invested mainly because there was a threat of a lawsuit that would have prevented the property from opening in time for the Commonwealth Heads of Government conference that was held here in late 2009.
Also as a result the cost escalation problem, Guardian Holdings, which coincidentally is chaired by Mr Lok Jack, was forced to take a $457 million writedown on a Martinique property development named Pointe Simon in 2013. The 2013 writedown followed a $150 million non-cash provision GHL took in 2012.
GHL declared net profits of $46 million in 2013, a sharp decline from the $353 million the group reported in 2012.
The adjustments on the Pointe Simon project–which comprises a 22-storey office tower, a seven-storey condominium unit and a eight-storey, mixed-used boutique hotel–were due to the "longer expected absorption period and lower than anticipated future revenue than we originally forecasted," according to GHL's 2012 annual report.
Canadian-owned RBC Caribbean, which was GHL's partner in the project when it started construction in 2007, exited Pointe Simon in 2010.
But RBC is one of two Canadian banks, the other being CIBC First Caribbean that lent a huge sum of money to the Shorelands Renaissance project. It's estimated that the two Canadian banks lent the developers of the project the eye-watering sum of $850 million (US$132 million). The Renaissance project ended costing a total of $1.1 billion.
The project, which started in March 2006 was due to be completed in April 2008. The project experienced problems with the original contractors, which resulted in expensive remedial work having to be commissioned. And given the problems with original contractor and the escalation in construction costs, the developers were forced to seek new financing in April 2010.
This was because the project had run out of money and was already two years late. In April 2010, the developers needed an additional $425 million to complete the two-tower complex which comprises 74 residences: Eight penthouses, 28 four-bedroom units, 26 three-bedroom units and 12 two-bedroom units.
The developers were the Rahael family holding company, with 50 per cent. A 25 per cent stake each was owned by property developers Jeffrey Guillen and Richard Woodruff.
The complex, which completed construction in mid 2012, is built on 90,000 square feet of land, which was acquired for about $30 million in 2004. That's $333 a square foot or nearly $15 million an acre.
Located on the water's edge at Shorelands, just opposite the Hi-Lo in Glencoe, the Shorelands Renaissance comes with an infinity pool, a fully fitted out gym with accompanying saunas, one for men and the other for women, a large common room with bar and flat-screen television as well as a 24-hour concierge service and a receptionist.
Each of four-bedroom units has exclusive elevator access, is en-suite with its own walk-in closet and shower and toilet facilities. The four-bedroom units, all of which have ten-foot high ceilings, also come with an extra room for a helper, which is also en-suite.
Even today, the price for the residences is about $3,000 per square foot. The four-bedroom units are 5,200 square feet, which means that this residence will put a $15.6 million dent in the purchaser's bank account. The three-bedroom units are 4,200 square feet and the two bedroom units are 2,800 square feet.
It is interesting to note that Toronto-based bankers from RBC and CIBC visited the Ministry of Finance two Friday's ago in an attempt to negotiate a stamp duty concession from the Government.
The stamp duty issue arose because the potential owners of properties at the Renaissance were asked to subscribe as shareholders in Hyacinth Akow Ltd, the development company.
It is believed that the property development was structured so that the shareholding owners would not have to pay millions of dollars in stamp duty to convey their properties.
Board of Inland Revenue sources say the request by the Canadian banks for some consideration on the stamp duty issue is under active review but that such consideration would involve the BIR setting a precedent that might be difficult to justify.
In 2012, the Canadian banks issued a warning e-mail to the shareholders threatening to have the company that owns the property placed into receivership. The threat of losing the deposits made on the million-dollar residences infuriated the shareholders, some of whom have been waiting to take delivery of their homes for more than six years now.
The Sunday BG understands that 34 of the 76 apartments remain as "inventory."
Asked on Friday about the stamp duty issue, Rahael said: "The shareholders of the development subscribed to shares in the development company.
"Those who have subscribed for shares are awaiting the distribution of assets pursuant to the voluntary liquidation process. There have been some delays in the distribution of the assets as the liquidator is required to complete certain statutory and legal duties.
"The stamp duty issue has nothing to do with the voluntary liquidation process, but there is an expectation that the subscribers would pay a stamp duty of $25, which is the prescribed payment for situations of liquidation, AFTER the process of voluntary liquidation is completed and in keeping with the law.
"I don't recall when the process of voluntary liquidation began but it was sometime after we spoke in July 2012.
Last week, Nicole Duke-Westfield, RBC Financial's senior manager of corporate communications was asked to confirm or deny that RBC sent officials from Toronto to Port-of-Spain for a January 23 meeting to discuss with the Government the possibility of a tax concession on the $1.1 billion Renaissance at Shorelands project, which was financed by loans totaling $850 million from CIBC FirstCaribbean and RBC Royal Bank.Ms Duke-Westfield responded: "No. The banks (FCIB & RBC) have not requested any tax concessions from Government.
"The bank(s) meets regularly with the Trinidad and Tobago government and government officials. It is our policy not to confirm nor deny such meetings, nor to comment on the substance of such meetings due to client confidentiality."