$100-m of my own money down the drain, says Little-White
LENNIE Little-White, conceptualiser of the Outameni Experience, the cultural and educational dream that has become a nightmare for him and the State-run National Housing Trust (NHT), lost $100 million of his own money when the venture went under.
In a scramble to save the Orange Valley, Trelawny-based outfit, Little-White said he sold personal property and that of some of his family members.
“I did everything I could to keep it afloat but there were too many obstacles to overcome,” Little-White told the Jamaica Observer yesterday in his first major interview since the purchase of the Outameni property by the NHT came to light, triggering a raging controversy that has claimed seven directors of the Trust’s board, embarrassed the Government and spurred calls for the head of the chairman, Easton Douglas.
Prime Minister Portia Simpson Miller will take the matter to tomorrow’s weekly Cabinet meeting, following which she will make an announcement that is expected to name new members of the NHT board to replace the seven who resigned, Jamaica House said. The resignations robbed the board of a quorum as only eight members remained, one short of the requisite nine.
‘Private sector coup’
Three of the resignations came during last week when Brenda Cuthbert of the Jamaica Employers’ Federation (JEF) joined Kavan Gayle and Helene Davis-Whyte, who threw in the towel, saying they wanted to give Simpson Miller a free hand to name new members.
Cuthbert was said to have come under intense pressure from her JEF bosses who, as part of the wider private sector groupings, hoped to force new appointments to the board, after they publicly criticised the NHT purchase.
“It’s a virtual private sector ‘coup’ and it succeeded in forcing the Government’s hand,” said a Sunday Observer source closely watching the issue.
In its press advisory, Jamaica House said: “Prime Minister Simpson Miller acknowledges that the current public debate surrounding a recent property acquisition by the NHT board has resulted in the resignation of some board members with implication for the continuation of the work of the board in giving oversight to the NHT in the performance of its functions.
“The prime minister notes that the Government will continue to ensure that the NHT fulfils its mandate of increasing and improving the existing supply of housing, promoting housing projects, creating affordable housing solutions for low-income contributors, providing housing-related benefits for contributors, facilitating social services and physical infrastructure for communities developed under NHT projects, as well as prudently administering and investing the monies of the Trust,” Jamaica House said.
Douglas has maintained that the board’s decision to buy the property had met all the standards for good business and stressed that a decision had not yet been taken on whether or not to buy the intellectual property that was the centrepiece of the Outameni Experience.
The Cuban connection
Little-White yesterday confirmed that he still owned the chattels and intellectual property and that negotiations with the Trust for its sale were ongoing but inconclusive up to the time the controversy hit the media.
Sounding at times emotional but optimistic, he believed the property for which the NHT is taking intense flak can operate a profitable venture, because it would not have the bank payments which were an albatross around Outameni’s neck.
In the interview, Little-White recounted the economic shocks and natural disasters which combined to run Outameni Experience into the ground and he retraced his steps to many entities and government officials stretching across three political administrations in a futile bid to save his ailing brainchild.
Little-White is best known for his Mediamix film outfit which produced, among other hits, the soap Royal Palm Estate that, ironically, was responsible for his plunge into the world of ‘living history’ and the now painful Outameni Experience.
The brunt of that pain is now being borne by the board of the NHT which bought the property housing Outameni for $180 million, setting off a firestorm of criticism about the appropriateness of spending so much money on a failed entity, while the majority of Trust subscribers could not get houses. But it began with a trip to Spanish-speaking neighbour, Cuba in 2002 or 2003, to film Royal Palm Estate.
“While there I saw how they packaged the story of why the 1959 revolution came to be and how the black slaves came to Cuba,” Little-White recalled. “I was impressed. It immediately came to me that Jamaica has an equally rich if nor richer history. I wrote the story of the Jamaican people, starting with the Tainos, the Spanish, the British, the Africans, the Indians, the Chinese and so on up to the present day. I then took it to architect Evon Williams of Collaborative Design and said ‘can you build me something to bring this to life?’. From there he took the story to another architect to design the set.
Little-White recounted that the original business plan anticipated that the attraction would pull in 80 per cent of visitors to the island and 20 per cent of locals. But that was completely reversed when the attraction opened.
“It became so popular with Jamaicans, particularly the educational institutions, from kindergarten to university levels. We sometimes had up to 800 students visiting at one time. We soon realised as well that there was hardly anything in that part of Jamaica where a family could go for recreation. The nearest thing is the Green Grotto Caves or Dunn’s River in St Ann, or the facilities in Montego Bay, St James.
“That is why I suggested to the NHT, which has major housing schemes in the vicinity, that one option for use of the property could be an Emancipation Park in the West,” he said.
PJ Patterson, David Coore, Aubyn Hill
Tracing the start-up of the venture, Little-White said that under the P J Patterson Administration in March 2005, the National Investment Bank (NIBJ), later the Development Bank of Jamaica (DBJ) — then under the late chairman David Coore — was approached to invest in it and took US$500,000 in preference shares. According to a document seen by the Sunday Observer, the bank acknowledged that “the preference shares we hold are convertible, cumulative, redeemable and participating”.
It said the chairman at the time in July 2006 when “the investment was perfected and disbursement made” was Aubyn Hill, who has since become chairman of the Jamaica Labour Party’s Economic Committee.
Financial shocks, natural disaster sank Outameni
Asked why the attraction failed, he said that was as a result of a combination of the devaluation of the Jamaican dollar, a hurricane which caused cruise ships to temporarily drop Falmouth as a port of call, the ongoing cost of bank payments and several other factors, including resistance from some tour operators.
“Our business plan had been predicated on an exchange rate of J$50 to US$1. But there was a massive devaluation and the dollar fell to J$60 to US$1. There were weekly devaluations and every other cost skyrocketed. Remember, we were paying back US-dollar loans. That was amounting to US$30,000 or US$40,000 a month. Our biggest costs were electricity and security, after staff.”
He suggested that the resistance from tour operators, and one major one in particular, was based on the inclusion of the African component in the features which comprise eight-minute components in a one-hour show.
“That is really ridiculous. We have eight-minute components for each of the ethnic groups and they object to the Africans. It’s so typical of how business is done in Jamaica, when it comes to Africans,” Little-White complained, adding that he was surprised to discover that to get certain visiting groups to come to Outameni he had to pay ‘commission’ to some people, including tour company staff and taxi drivers.
‘Not one cent; I got only guineps from venture’
Little-White said he had not made “one cent” from the venture and all he could show for his efforts there were “some guineps”.
“I lost $100 million of my own money. I sold off property belonging to me and family members. I still owe money to extremely supportive people like Kenny Benjamin, who provided security, the Jamaica National Building Society and others. People who suggest cronyism and party connections are being very unkind,” he said.
Little-White scoffed at suggestions that the business should have been making profit from day one. He said few companies could achieve that. “In the case of attractions, only Dolphin Cove and Mystic Mountain had managed to make profits within three years of operations,” he said.
When the financially strapped Outameni concluded that it needed further help to save it, Little-White said he went to then Prime Minister Bruce Golding, who referred him to the Urban Development Corporation’s (UDC’s) Joy Douglas but little or nothing happened, apparently because the UDC had no money.
The Tourism Ministry later referred the matter to the Tourism Enhancement Fund, which said it could not take on the venture and wrote to Milverton Reynolds, head of the DBJ which had already decided to write off its US$500,000.
Bruce Golding’s clarification on DBJ
Golding, under whose portfolio the DBJ fell, sought last week to clarify an Observer report on the DBJ actions while he was prime minister, saying: “…There was no ‘write-off’ by the DBJ in March 2011. What was done was that it made provisions for the loss that it was making on this investment, which meant that the dividends that were due could no longer be taken to its profit and loss account. This is in keeping with international accounting standards and does not constitute a write-off or necessarily an intention to write off. In the case of loans by commercial banks, for example, it is a statutory requirement under section 17 of the Banking Act.
“Recall, as well, that these preference shares were created in 2005 with a five-year maturity and fixed dividends of eight per cent. That five-year period had expired by 2011 and therefore this provision had to be made. Such an accounting action is not something that would be reported directly to or consulted on with the portfolio minister but would be reflected (although not necessarily specifically identified) in the financial statements accompanying its annual report. The decision to write off the investment was taken in October 2013 as stated in a statement issued by the DBJ earlier this week.
“One other point, the naked reality is that it would have had to be written off at some time, whichever party was in power, since even in the event of liquidation or foreclosure, preference shares rank behind creditors and lien holders whose claims would have exceeded the value of Outameni. It became increasingly clear that the DBJ was holding an investment from which it would recover nothing.”
Little-White’s relentless search for a partner led to the NHT after Reynolds suggested it should be handled by the UDC or the NHT. But the Outameni chairman reasoned that with the UDC already strapped for funds, the NHT was a better bet because it could develop an “Emancipation Park of the West” that would serve its subscribers, as well as others in the region.
The NHT board liked the concept and decided to jump in. It was a decision that would cost them heavily.