Govt seeking to retrieve Kingston lands after BK Group breaches contract

…takes Winston Jordan, BK, former NICIL Head to court

The property in question at Kingston (Kaieteur News photo)

The Government of Guyana has moved to the High Court to retrieve prime waterfront properties in Kingston, Georgetown, from the BK Group after the company breached contractual obligations.
In addition to BK Marine Inc, former Finance Minister Winston Jordan, former Head of the National Industrial and Commercial Investments Limited Colvin Heath-London, NICIL and the Registrar of Deeds were also named respondents in legal proceedings filed by Attorney General Anil Nandlall.
The AG is claiming that sale of the lands located at Water or Mudlots 1 and 2; Lot F of Mudlot 3 and Lots A, B and D, North Cummingsburg, Georgetown, in July 2020 to BK is illegal, unlawful, null, void, repugnant and contrary to public policy.
It was noted that the lands were first leased to Brian Tiwarie, the owner of BK International Limited, on December 4, 2006, by NICIL. However, there were certain conditions upon which the lease was granted.
The lease was for a term of (20) years with an option to purchase for the sum of $110 million. But this sale option was conditional. BK had undertaken certain investments on the lands for which the property was leased. The agreement noted that the company had to complete the construction works of the investment plan within four years of the Mayor and City Council’s approval. Failure to complete the works at the end of the four years would result in NICIL issuing a six months’ notice of default for BK to complete the works within that period.
If that date passed, without substantial completion, then the option to purchase and the price listed in the agreement “…shall become null and void and the option price thereafter will be subjected to mutual agreement.”
According to the lease agreement, BK was supposed to develop, construct and renovate on the lands, a modern wharf facility. Included in this Business Plan was the construction of: a hotel; a skybridge; restaurants and bars; a facility for docking of cruise liners/floating hotel/ocean-going vessels; roof garden with a view of the river/ocean and city; offices including customs department; a mall; Guyanese craft shops; warehouse to handle import/export trade; facilities for purchasing/processing export of agricultural produce.
The works were scheduled for 12-36 months to the tune of US$6 million and at the end of the project, some 300 persons were to gain direct employment.
However, this was never done hence BK lost the “Option to Purchase” clause.
Moreover, the AG disclosed in the legal documents that the company had racked up arrears in leasing fees.
According to the lease agreement, BK had agreed to pay an annual rent of $10 million with monthly instalments of $833,333 plus tax commencing immediately upon signing. The company was also required to pay all rates and taxes.
However, as of March 2017, BK had owed the sum of $81,360,158 in lease rental fees, interests included. Additionally, the company owed another $6,372,156 to the M&CC for property taxes.
In 2009, BK wrote NICIL alleging that its breach of the Agreement of Lease was due to “a global financial crisis” and requested an amendment to the business plan to instead set up a stone depot and general stores, fertiliser storage, cold storage for vegetables, paddy and rice storage, steel and galvanised pipes storage, modem containerised port with heavy lift, PVC pipes and pipe fittings factory, cement depot, portage ready mix concrete plant on the said property.
NICIL, in October 2011, then agreed to transfer the property at the sale price of $110 million upon completion of the revised business plan but this was conditional on the company settling the arrears of lease payments along with some other requirements.
However, that purported Deed of Amendment was never executed.
As such, in 2013, NICIL initiated legal proceedings against BK International Limited in the High Court after the company continued to remain in possession of the property without paying the rental fees.
However, after the change of Government in 2015, rather than pursuing the claim for arrears or terminate the lease agreement for breaches, NICIL under the APNU/AFC Administration went ahead and sold the property to BK International. The sale price was $202,602,759.
According to the AG in the court document, NICIL accepted the company’s offer to purchase the property in October 2017 for the sum of $191.9 million, in addition to settling all other outstanding rent from December 2011 to August 2017, plus half the total interest sum of $21.2 million, that is, $10.6 million for a new total purchase price of the sum of $202.6 million.
“The property was sold at a gross undervalue and way below market value in relation to comparable and competitive facilities of a similar nature, form and usage which was sold consistent with the market value,” he contended, adding that the management of NICIL, “…acted recklessly and without obtaining a Certificate of Value for the property in order to ascertain the current market value.”
As such, citing instances of fraud, malfeasance, conspiracy and negligence, the Attorney General is asking the High Court for a series of orders and declaration.
The court is being asked to declare the October 2017 Sale Agreement as illegal, unlawful, null, void, repugnant and contrary to public policy and declare that the transport dated July 2020 – during a time when the country was embroiled in a political deadlock from the contentious March 2020 elections which was resolved until August 2020 – was obtained unlawfully, illegally and by fraud.
Nandlall is also seeking an order to set aside the transport.
Further, he asked the court to set aside and declare that the Vesting Order made by former Minister Jordan in the Official Gazette in March 2020 is null and void and incapable of effecting Transfer of Title of the said properties.
The AG also wants the court to declare that BK Marine Inc has been unjustly enriched in the sum of approximately $5 billion which is the true representation of the value of the property situated in Kingston.
An order for restitution to the State of the property is also being sought from the court along with an order for disgorgement of sums paid by the company and another order for restitution to the State as well as for BK to give up possession of the property in question.
In addition, the AG is also claiming damages in excess of $300 million against Jordan, Heath-London and NICIL for: loss and damage suffered as a result of negligence and/or breach of the duty; loss and damages suffered as a result of conspiracy and/or breach of the duty, and loss and damage suffered as a result of breach of fiduciary duty.
Another $100 million in damages is being claimed for misfeasance in public office committed by Jordan. Damages of $100 million is also being claimed for loss and damage suffered as a result of fraud committed by the defendants. (G8)