It’s a buyer’s market in tourism-related real estate in Vanuatu right now, with landmark properties on the block. But a couple of them are reportedly facing difficulties completing the transaction.
The Daily Post has learned that the proposed sale of the Grand Hotel, along with a nearby property, is in limbo following questions concerning the source of some of the funds for the purchase. A putative owner of the hotel and casino apparently had difficulty explaining how someone so young could have so much money.
The price tag for the hotel, casino and nearby properties was reportedly in the billions of vatu.
The sale of the hotel was first announced in early May, but in mid-month, a blandly-worded message announced that “the regulatory approvals required for the sale have not been obtained”.
It assured service providers and suppliers that it would be business as usual regardless of whether the sale went through or not.
The Daily Post has learned that the ‘regulatory approvals’ mentioned in the notice relate to the casino license attached to the property. Standard questions were asked concerning the source of funds during process, and one purchaser was apparently unable to provide sufficient documentation to reassure authorities.
The funds were said to have originated from mainland China.
The Daily Post has been told by persons with knowledge of the transaction that not all parties in the deal have had such difficulties, and that at least one top-rank figure in Australian gaming has been actively supporting the purchase.
Vanuatu has been subjected to increasing scrutiny and international pressure to improve its oversight and regulation of financial activity. This is part of a global movement to combat money laundering and the financing of terrorism.
While no doubt disappointing for those concerned, these objections will likely be seen by international authorities as evidence that Vanuatu is taking its AML/CFT responsibilities seriously.
In the past, casino licenses were signed by the Minister of Internal Affairs. A 2018 amendment shifted oversight and administration of casino licenses to the Director of Customs and Inland Revenue. It was felt that moving responsibility to a career civil servant would better protect against corruption and create a more consistent environment for operators.
Approval from the Council of Ministers is still required, however. Cabinet sources confirmed to the Daily Post that the application has been considered and approved by the Council of Ministers two weeks ago.
A related amendment also established ‘fit and proper person’ criteria for all beneficiaries and directors.
A more recent change, however, may weaken some of the buttresses the government has built into casino regulation. Tucked away in a bill updating 13 different laws is another amendment that empowers the Director of Customs to contract “a company or entity that specializes in monitoring casino operators, to assist officers appointed under the Act.”
That bill has been tabled for debate in the upcoming session of Parliament.
Officials have quietly raised concerns that recent efforts along these lines have proven less than effective. It is true that casino monitoring and regulation requires expert technical knowledge and capability, but they worry that writing such a measure into law might not have the desired results.
The Grand is not the only property facing uncertainty. On Monday this week, The Australian published a story suggesting that Iririki Island Resort, which is also on the block, might prove to be a complicated sale.
The article cited a number of legal issues currently before the court in Vanuatu. The Daily Post is aware of these issues, and is awaiting resolution in the courts before reporting further.
The Daily Post has been informed that Iririki’s owners have contacted The Australian concerning the piece and have reserved the right to pursue legal redress if need be.
With both Iririki and the Grand on the block at the same time, prospective investors will find that although the road to acquisition might be strewn with obstacles, there hasn’t been a better opportunity to own a big part of Port Vila’s landscape in years.