By Tom Westcott.
London, 19 November:
The Maltese owners of Benghazi’s abandoned Grand Hotel say they will pull out its €130 million redevelopment, . . .[restrict]if they are not given permission to demolish the building and replace it with a modern structure.
Joseph Farrugia, a top executive at Corinthia hotels has told Libya Herald: “We are waiting permission to demolish. As the building stands, based upon analysis that we have done, we are unable to develop on that site with the existing building. We wont be insured. Unless we are given permission to demolish and rebuild, we just cannot develop that site. Then we pull out. We move out of Benghazi”.
The fate of the historic Grand Hotel was discussed at a meeting last week between the Maltese company and local officials, almost a year to the day, after the dubious authorisation for its demolition.
The 1936 sea-front hotel, formerly called the Qasr al-Jazeera and the Berenice, is one of the oldest buildings in Benghazi. After standing empty for nearly a decade, it was taken on for redevelopment in 2008 by Malta-based International Hotel Investments (IHI), the investment arm of the Corinthia Group, which specialises in luxury hotel developments, in partnership with the Libyan Arab Foreign Investment Company (LAFICO).
Although redevelopment of the proposed new five-star hotel was supposed to start in 2008, IHI had only completed planning and structural analysis before the revolution. No actual work had taken place until November last year, when a demolition team suddenly appeared and started to knock down the building, provoking a local uproar.
Despite a campaign to save the Grand Hotel and an earlier ruling that the building would be safe until there had been an enquiry, the demolition work was apparently signed off by the head of Benghazi city council, Salih Al-Ghazal. At the time, a journalist said that it was vandalism, adding: “Someone on the council must have been paid.”
The protestors managed to get the-then NTC leader Mustafa Abdul Jalil to sign a warrant stopping the work, but not before the portico and entrance of the hotel had been demolished. Local people shored up the damaged front of the building and adorned it with a banner reading: “Benghazi’s historic buildings are not for sale.”
The hotel had, however, already been sold three years earlier. Farrugia, who is the senior manager of Business Development for Corinthia and IHI, told Libya Herald: “It would have been more cost-effective for us to retain and restructure the old building.”
However, he explained that: “Various technical studies of the existing structure and the materials used, confirmed that it does not meet today’s safety standards.” Not only was the concrete found to be substandard but the construction was not up to modern-day standards required for seismic protection against natural disasters such as earthquakes.
“We have no other option but to rebuild the façades identical to the existing façades using modern building methods and materials,” said Farrugia. “For this purpose, we have already carried out laser scans using the latest technology to enable us replicate faithfully the façades.”
The local reaction against the demolition work came rather late in the day. The studies and analysis of the hotel’s original structure were completed in 2010 and IHI already had the go-ahead for demolition by November 2010. The onset of the revolution merely set the work back a year.
“Right after the revolution we met with the planning authorities “ explained Farrugia, “and eventually the local council gave us permission to demolish, so we started the demolition, but then we had a few protests and we were asked again to suspend the demolition, which we did of course.” He described the protests as small and said said they were “mostly caused by misunderstandings.”
Since November 2011, the hotel’s fate has remained unclear but, by the end of this month, IHI hope to have been granted permission to start work again. And that work means demolition.
“We had a meeting last week in Benghazi and it sounded very promising,” said Farrugia. The chairman of the Privatisation and Investment Board attended the meeting, along with members of NGOs and pressure groups. Farrugia said that 90-95 percent of people present were in favour of continuing with the project. A decision is expected in the next few weeks. “They told us that by the end of the month there should be a decision and the probability is that we will be given permission again,” Farrugia said.
The estimated €130-million project is 75-percent owned by IHI and 25-percent owned by LAFICO and will be constructed on a 7,000-square-metre footprint of the original building. “The façade will be rebuilt identical to the existing one,” Farrugia said. “To the back of the existing hotel, the structure will be in the same ‘language’ but rise to 15 floors.”
A plot of land behind the hotel and an interconnecting road have already been acquired for the extension of the property, including three levels of underground parking. According to latest plans, the hotel would comprise 338 rooms, executive bedrooms, suites and a presidential suite. There would also be conference facilities, an executive lounge and bar, a spa, a gym and swimming pool.
Assuming permission is granted for the project to go ahead, Farrugia said that it would benefit Benghazi in many ways. He said it would raise the city’s image and international standing, as well as rehabilitating the city’s Italian district and being a stimulus for tourism and business in the city. The hotel, once completed, would also provide jobs for some 400 people, the majority of whom, according to Farrugia, would be recruited and trained locally. “We expect the Benghazi hotel to be one of the best hotels in North Africa,” he added.
Corinthia has been involved with Libya for 28 years, since LAFICO decided to invest in the Pisani family’s first hotel in 1974. What started out as a small Maltese family business has since become a global consortium of ten luxury hotels, perhaps in no small part thanks to LAFICO’s hefty backing. Corinthia first invested in Tripoli in 1999, opening Corinthia Bab Africa Hotel in 2003 and, under its separate Mediterranean Investments Holding, also own Palm City Residences near Tripoli. The new €350-million Medina Tower in Tripoli is another joint venture Corinthia project.
Farrugia attempted to clarify the rather complex relationship between LAFICO, Corinthia and IHI. He explained that Corinthia trades as the Corinthia Group of Companies, although the official name of the company is actually Corinthia Palace Hotel Company Limited (CPHCL). CPHCL is jointly owned by LAFICO and the Maltese Pisani family. IHI is the investment arm of Corinthia Group, which owns 58 percent of it. LAFICO owns 11 percent of IHI, however, because LAFICO own 50 percent of Corinthia and, therefore half of Corinthia’s 58 percent share of IHI, they actually own around 40 percent of IHI, 29 percent of which is indirectly owned.
On top of this, LAFICO has often funded part a project. It is a 25-percent direct participant in the Benghazi project, but it is a 50-percent owner of Corinthia’s London hotel. This opened in April 2011 despite LAFICO assets being frozen in March, on the grounds that these were “under control of Muammar Qaddafi and his family, and a potential source of funding for his regime.”
In fact, Corinthia’s projects appear to have been virtually unaffected by the asset freeze. In an attempt at transparency, IHI explain on their website: “The asset freeze and sanctions against Libyan entities are targeted at named entities and not companies in which such entities are among the shareholders, as with IHI.”
Offering the assurance that there are over 3,000 shareholders in IHI, although LAFICO has some 40 percent of the shares, IHI explained that the sanctions permitted it to continue to conduct its “legitimate business activities, as our business does not involve making available any funds or economic resources to a designated entity prohibited by such sanctions.” This meant that the new Corinthia Hotel London could open, as planned, in April 2011.
“Our relationship has not changed,” Farrugia said, “there is a new chairman at LAFICO, of course, but we have been with LAFICO since 1974. We have very, very close relations and we are developing other projects in Libya as well, and they are with us all the way.”
Since the revolution, two directors representing LAFICO have changed. Farrugia said that this shuffling was not because of the revolution but was because it was “their turn” to be assigned to something else. The ‘new’ directors are not in fact new but were apparently directors before, and the vice-chairman, Yousef Abdelmaula, has held his position “for a long time”.
“There are no problems at all,” said Farrugia. “We are just as close as we’ve ever been. Most of the people are still there, it’s still the same people who we are dealing with.”
Corinthia’s Qaddafi connection did, however, clearly become something of an embarrassment with the company’s Khartoum hotel. With the onset of the revolution, the Burj Alfateh Hotel in Khartoum, Sudan, celebrating the date of Qaddafi’s 1969 seizure of power, hastily changed its name to that of its parent company, becoming simply another Corinthia Hotel. Locals have nicknamed the extraordinary €148-million construction, overlooking the Nile, ‘Qaddafi’s egg’. [/restrict]