MoU with SleepIn was standard practice – former GO-Invest CEO

…non-binding, meant to serve as precursor to actual contract

Before it demitted office, the previous Government concluded a Memorandum of Understanding (MoU) with SleepIn investor Clifton Bacchus.
Scrutiny has been brought to bear on that MoU, which was cancelled in 2015, purportedly for the concessions it promised.
The MoU was, however, not a binding agreement. Former Guyana Office for Investment (GO-Invest) Chief Executive Officer (CEO) Keith Burrowes made this distinction, when contacted by Guyana Times.
According to Burrowes, an MoU is only a precursor to a contract, adding that there

Former GO-Invest CEO Keith Burrowes

are benefits with this arrangement, as an investor had to become compliant with the necessary requirements because the attainment of a contract was on the line.
“Whenever we gave contracts to some (investors), they would go to the bank and get monies using the contract and then they wouldn’t follow through,” he explained.
“You have certain things to do (with an MoU) and once you do these things, then we will move into a contract,” he continued.
SleepIn’s Church Street branch has been making preparations for quite some time to set up a casino. Under the law, only three casinos are allowed in each Region in Guyana. For Region Four, Ramada Princess has one, while another has been earmarked for the Marriott Hotel at Kingston. SleepIn has sought the third one.
With the MoU made with the previous Government being cast aside by the coalition and after being rejected initially by the Gaming Authority, Bacchus had reapplied for a licence.
It was understood that under the MoU, SleepIn was obligated to operate, maintain, upgrade and expand the hotel and casino “where deemed appropriate” by the investor.
Some of the other stipulations of the MoU included the investor providing training to local staff at an international standard. Non-nationals were also to be kept to 25 per cent.
SleepIn was also supposed to work with appropriate local institutions and organisations in the tourism and hospitality sector to provide support in several areas. GO-Invest also required that SleepIn create a minimum of 1000 new direct jobs, with the official investment agreement expected to delve into more details on job creation.
The MoU also stipulated that, as far as possible, only local manufacturers were to be used to acquire goods, equipment and services. This is provided that their quality and prices were competitive.
Not only was the hotel supposed to comply with statutory requirements necessary for the operation of a hotel, but it also had to ensure that the environment was protected from pollution.
SleepIn also had to invest a minimum of US$15 million in the construction of the hotel and casino. Under obligations of Government, the MoU had said that “subject to the approval of the President”, Government would provide the hotel division and operations with a corporate tax holiday. This was supposed to have commenced from the start of business.
The MoU also stated, “Subject to the official approval of the President, the casino division/operations will be taxed at 35 per cent on the net profit and there will be an accelerated depreciation allowance and then unlimited carryover if losses from previous years according to the laws of Guyana.”
It is understood that the MoU could have been terminated by the mutual consent of Government and SleepIn. In addition, it could be terminated if SleepIn failed to live up to its commitments “without providing a reasonable explanation” or if the company became insolvent. There was a force majeure and a non-disclosure clause.
Additionally, the MoU had stated that all incentives for the casino that are granted by the Guyana Revenue Authority and the Gaming Authority to SleepIn would also have been offered to the other licensed casino operators under the Gambling Prevention (Amendment) Act of 2007.