PAYMENTS DUE FOR ‘SWEETHEART’ COOKS HOTEL DEAL

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RAROTONGA, Cook Islands (Cook Islands News, January 18) – The Cook Islands Investment Corporation has confirmed that operators of the Rarotongan Beach Resort and Spa are due to pay government NZ$3.2 [US$2.2] million by September this year.

Government still owns mortgages over the leases and the payment of the money will allow the operator, Tata Crocombe, to fully own the resort.

In a "sweetheart deal" Crocombe, who was facilitating the sale of state assets at that time, was given the nod as the preferred candidate by the government to buy the hotel in 1997. This was approved by the Sir Geoffrey Henry-led administration.

No money was transferred and he was given a grace period of ten years to pay up $3.25 million without any interest.

Replying to questions, CIIC's Lloyd Miles says that they have maintained close contact with the operators of the hotel throughout the years.

He says that $3.25m was the agreed purchase price for the sale and purchase of business assets.

Under the deal signed with Crocombe, the money would be paid out of the profits that the hotel was expected to generate eventually.

The Rarotongan, the first hotel built in the Cook Islands owned and operated by government, had a chequered history prior to the handover to Crocombe.

Previously the Nauru government had loaned money to the Cook Islands for the national culture centre in 1992 for a term of 15 years, which was secured over the hotel property.

But five years later when they wanted to sell the hotel, after nine months of negotiations, the Nauru government finally released its mortgage and government transferred a payment of $3.25 million. Government's shares within Telecom were sold to finance the purchase.

Miles says that all parties have been aware of the 12 September deadline for the payment to government.

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