Cabinet intervenes, stops legal action
Cabinet has stopped the Development Bank of Samoa (D.B.S.) from taking legal action and seizing the assets of at least eight tourism properties with loan accounts there.
The decision was confirmed by the Minister of Tourism, Sala Fata Pinati, who was teary when he spoke to the Samoa Observer about the industry’s predicament.
The Minister wouldn’t identify which hotels he was referring to.
Earlier this week, the Samoa Observer revealed an internal memo from Minister Sala to Prime Minister Tuilaepa Dr. Sa’ilele Malielegaoi, asking for assistance on tourism properties that are “financially distressed” and are in heavy debt.
The Prime Minister was asked to consider the allocation of $20 million from the Government to “write off” principal amounts owed by “financially distressed properties to different financial institutions". He also urged the Government to advise the financial institutions to hold off on "all legal actions" against the properties while a solution is being worked out.
Sala said the request in the memo was accepted.
“The Cabinet has accepted my request to hold off all legal actions and they are considering of $20 million from the Government to write off principal amount owed by the hotels,” he said.
"I appeared before Cabinet not as a Minister, but as a human being pleading for help. It was an emotional day for me as I literally wept before Cabinet, they needed to know how much this means for me, when the wealthy people come to me, a poor man for help, I had to act,” said Sala, while wiping tears from his face.
Sala said the tourism industry needs the hotels to remain in business.
“The consequences (of these hotels being closed) far outweigh the amount of the loans. We are not saying the hoteliers’ loans will be written off,” the Minister added.
“No they will pay their loans for the time being, and make up on the missing payments. The Cabinet is more concerned on the ripple effect.
“If the D.B.S. moves to seize the assets of the eight hotels, this means the workers will be jobless and they will have to look for means to pay for their loans and provide for their families.”
The Minister was also worried the move by D.B.S. will have huge implications on the hoteliers.
“It’s true; the hoteliers may have been reckless when they didn’t make the repayments and I’m certain there are reasons behind that, but in the end, the Cabinet have to consider the consequences once the government proceeds with the D.B.S. auctions,” he said.
Asked about the issue of parity considering other debtors who are faithfully making their repayments, Sala said the issue is unfortunate.
“I want to make it clear the government will not write off the debts,” he said. “The is only helping to postpone the legal action by Development Bank that had already moved to auction off the assets of some of these hotels."
Attempts to get a comment from the Development Bank of Samoa have been unsuccessful.