CEO of St Kitts and Nevis’ Citizenship by Investment Unit, Les Khan, has clarified the arrangement with that entity, and their involvement with the construction of the new correctional facility, noting claims by two former government ministers have been misleading.
Khan said the numbers involved with the Citizenship by Investment (CBI) programme and this project had been taken out of context, after claims from former Deputy Prime Minister Shawn Richards and former Minister of Foreign Affairs Mark Brantley, that $2.2B EC is set to be raised to build an $80M facility.
The CEO explained that the Alternate Investment Option was created, and there are two categories of investment options. The first, he said, is privately-funded and privately-owned, where the developer builds the initiative that meets a government mandate, and he or she owns the initiative in the long term. The second is privately funded and state-owned. He said the new correctional facility would be supported by the latter initiative.
Addressing claims that $2.2B EC is being taken away from the people of St Kitts and Nevis, Khan said that is not the case
“There is no $2.2B EC, there is 5000 or 5500 in terms of the number of shares to assist the developer in recovering their investment.”
He also indicated that to quote a number like $2.2B is misleading in the sense that the developer is selling a share or citizenship at $175,000.
“If we were to look at the new correctional facility, what we were to actually get from that will be hundreds of millions of US dollars multiplied by 2.6, and that will be over a period of three years, whatever it takes for the developer to sell the unit of investment. $2.2B doesn’t exist, it is never coming out the government coffers. There will be money going into the government coffers.”
Khan said in the Alternative Investment Option for the correctional facility, the country gets an infrastructure asset, and one that they would not have been able to finance over a period of time.
He explained that factors to consider are where the developers are going to sell, and what price can they sell at.
“I can assure you that it is not $175,000 and it is not at $200,000. There are market prices out there in the Middle East and Russia, when it is opened, and China.
“It is a competitive market. We are competing with Dominica, Antigua, St Lucia and Grenada, where the pricing is so tight that the developer has to take a deep discount on his sale price, just to be able to sell and get revenue.”
Khan said regardless of the price that the shares are sold, the developer still has a responsibility to ensure fees are paid to the government.He said $200,000 and $175,000 are government prices, but explained that what the developers can sell in the market, is what they can sell and can take.
He added that this CBI option also has guarantees that the facility will be completed.
“In this particular initiative, one of the mandates was a running balance in the account at the National Bank, so that we could ensure they have the capital to continue construction. You also have to remember the developer is putting all the money up front, before sales.”
Khan also explained why the project has over 5000 shares as opposed to the 300 offered for the construction of the Park Hyatt.
“The decision to grant 300 shares was based on the $400,000 that they could get at that point in time. Things have evolved, and the market is no longer a $400,000 market.
Prime Minister Dr Timothy Harris on Tuesday said the project was approved in 2021, noting that twice it came to the Cabinet.
“Mark Brantley supported it, Shawn Richards supported it, Jonel Powell supported it, and then they come out months after saying they have a problem with it. Show me the minutes where you had a problem.”
Dr Harris added that the current prison facility has outlived its usefulness, and the residents there deserve better.
“They have their sons and daughters, mothers and fathers who want to know that in our prison they are safe. The human rights body…Mark knows has written to us time and time again, and said the prison is overcrowded and we needed a new one, and everybody agrees.”
He said his government had to find creative ways to do the right things for the citizens.
“We came up with the idea of an alternative investment option…Mark voted for it, and Shawn supported it.”
He then explained the rationale behind the idea.
“Let people come in with money to build things the country needs, and in return we will give them the opportunity to participate in our CBI programme.
“The same programme was used on the Ramada Hotel, they offered shares and went around the world and got people to buy and raised the money to invest and produce a Ramada Hotel with 300 rooms. The same CBI has built residences for Four Seasons; the same CBI that built the Park Hyatt, so nothing strange.”
Dr Harris said the only difference is the investor will help with this brand new correctional facility and in return, they get some shares.
“We don’t know if they will get the shares sold off, for we do not control the market. We don’t know when. All we know is by a certain date it will produce the new correctional facility and give our people a better place, a better opportunity for rehabilitation.”
He reiterated that no money out of the government coffers will go to the construction of the facility.
“I want to make it clear…not one cent of government money is going to that. We don’t have anything to worry about in relation to that.”