KINGSTON — Minister of Finance and the Public Service, the Hon Audley Shaw, issued a statement on the National Investment Bank of Jamaica’s (NIBJ) approval of an equity investment in a hotel being developed by the Runaway Bay Development Company Limited in February, 1996, Tuesday (May 17).

Mr. Shaw, in closing the Budget Debate on Wednesday (May 11), had described the development as a “sweetheart deal” involving Dehring, Bunting & Golding. However, this was later denied in a newspaper article by Opposition senator, Mark Golding.

The statement issued by Mr. Shaw on Tuesday read:

“I wish to set the record straight on an assertion made by Senator Mark Golding in respect of the further injection of US$11 million made by the National Investment Bank of Jamaica (NIBJ) in Runaway Bay Development Limited (RBDL) after its initial investment in 1996 of US$7 million investment in their Runaway Bay hotel project (known as Hedonism 3).  Mr. Golding is quoted as saying: “Mr. Shaw’s statement that NIBJ injected a further US$11 million between 2000 and 2004 is simply untrue”.


“The facts are:-

1)      In 1996, in the midst of the financial crisis, the Government of Jamaica through NIBJ made an equity investment in RBDL of US$7 million. At that time, the promoters – Mr.  Peter Bunting, Mr. Mark Golding, and partners – invested US$5 million, comprising, cash of US$1 million and property re-valued at US$4 million, up from its 1993 purchase price of US$2.5 million.

2)      The investment was approved by the NIBJ Board of Directors and overruled a management recommendation that the investment should be capped at US$3.1 million. The Board was advised by management that the investment was in breach of the investment policy of the NIBJ, a policy which normally requires Cabinet approval.

3)      Contrary to Mr. Golding’s assertion, the NIBJ did, in fact, increase its investment in Runaway Bay Development Limited by US$11 million in four (4) separate instances, two of which included debt re-structuring exercises for the promoters – Mr Bunting, Mr. Golding, and their partners, as set out below:


Date of Investment

Amount $US

Type of Investment


6 Million

$1.93M in preference shares; $4.07M as unsecured debt


1 Million

Interest capitalised on conversion of US$8.9M preference shares into ordinary shares


4.015 Million

Acquisition of non-performing loans from two commercial banks


223, 000

Payment to contractors arising from settlement


11.238 Million



(i)                 In 1997, the NIBJ increased its exposure in RBDL by investing a further US$6 million. Curiously, US$4.07 million of this amount was an unsecured loan, with the remaining US$1.93 million representing equity. 


(ii)               In 2000, the NIBJ facilitated the restructuring of the promoter’s debts by capitalising interest on conversion of US$8.9 million preference shares into ordinary shares. 


(iii)             In 2004, the NIBJ facilitated a second debt-restructuring exercise for the promoters, by acquired the non-performing debts of two local commercial banks for US$4 million, plus interest of US$15,000.


(iv) In 2006, the NIBJ paid US$223,000 to the project’s contractor, Nevalco. Note, the    over-run on the project was approximately US$18 million,

 4) To date, the total investment by NIBJ is US$18.238 million, of which only $3.8 million is secured. On the other hand, the investment by the promoters is US$14 million, of which $9 million is secured. Notwithstanding the difference in equity and exposure, the NIBJ had no board representation until 2000, while Mr. Bunting remained a board director until 2006.

5)  Simply put, the promoter is likely to recover 65 percent of its initial investment, while NIBJ is only likely to recover 20 percent of its investment. This is likely to result in a J$1.3 billion write-off of tax-payers’ money. 


I challenge Mr. Golding to refute the accuracy of these details and to provide reasonable explanations for the following questions:-

1)      Why did NIBJ inject a further US$11.238 million in a project which was under capitalised from the beginning and heavily indebted? (As at 2000, NIBJ’s investment in the project was US$14 million, all of which was unsecured).

2)      Was it not unusual that the only cash investment made by Mr. Bunting, Mr. Golding et al, in the project is US$1 million?(Lands which they acquired in 1993 for approximately US$2.5 million and re-valued to US$4 million were also contributed. They subsequently injected US$9 million as secured debt).

3)      As part of the restructuring exercise, why were Mr. Bunting, Mr. Golding et al, not required to improve their equity contribution to the project rather than injecting secured debt?

4)      Why were Mr. Bunting, Mr. Golding et al, not required to provide security, even though it is customary for lending institutions, including the NIBJ, to require personal guarantees and other pledges?

5)      Why was the NIBJ board so motivated to breach its own investment policy at a time when many in the financial sector were being accused of making bad investments in the hotel and agriculture sectors?

6)      Why did the NIBJ Board find it necessary to make such a large investment in a fairly developed part of the north coast, i.e., an area not considered a green-field area?

Why was no GCT paid by Runaway Bay Development Limited?

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