Opening of St Kitts citizenship project revives unanswered questions

The recent opening of the Park Hyatt resort in St Kitts, ostensibly financed through that country’s citizenship program, has revived long standing but unresolved questions concerning the possible involvement of illegal Iranian money in the project.

In or about 2008 or 2009, the Park Hyatt developers and promoters, Range Developments, and/or an associated company, Range Hospitality (collectively “Range”), launched the development of a $100 million (or $150 million – reports vary) timeshare project in Karbala in Iraq – the Al Rawdatain Gardens – intended for sale to Muslim pilgrims and featuring a hotel component and serviced apartments, to be managed by Shaza Hotels, the Islamic hotel division of Kempinski.

The Al Rawdatain Gardens was intended to have 624 apartments. Investors could buy up a week’s stay for $5,000-plus or buy the unit for $1.3 million using a Sharia-compliant fractional ownership programme.

By May 2011, two-thirds of the units in Al Rawdatain Gardens were reported to have been sold to Muslim pilgrims

The main contractor for the Karbala project was Tadbir Construction Development (Tadbir) Group. Tadbir was a company or group of companies blacklisted by the US Department of the Treasury as a network of front companies controlled by the Iranian leadership, the purpose of which was to generate and control massive, off-the-books investments, shielded from the view of the Iranian people and international regulators.

The units at Al Rawdatain were scheduled to be delivered to the pilgrims/timeshare buyers beginning early 2013; however, the project was placed on hold due to cost overruns, alleged illegal channeling of funds, corruption and potential embezzlement.

Range ultimately sold the entire Karbala project to Tadbir, the Iranian blacklisted company.

In the meantime, Range was actively selling units in its Karbala project to US investors through at least two sales offices located in the US and, in 2012, conducted at least seven sales presentations in the US.

Further, Range claimed in its promotional materials that construction of the Karbala project was “fully funded”. This was demonstrably not the case since the project had run into financial difficulties. Thus investment in the Karbala project in particular appears to have been promoted in the US on the strength of several false premises.

Given that there was a continuing flow of investment funds from US purchasers of the Karbala project to Range, which would then have to use it to pay the contractors Tadbir, US residents were therefore innocently funneling money ultimately to a blacklisted Iranian company.

Also in 2012, Range signed a management agreement with Hyatt Hotels Corporation (a US public company) for the Park Hyatt resort project in St Kitts, which was also actively promoted to US investors and, according to reports, raised at least US$150 million.

Thus, given that the Karbala project was at the time in serious financial difficulties and, since Range had reportedly raised substantial investment funds from purchasers of units in the St Kitts project, there was a possibility that some of this money could be channeled back to the Karbala project in order to pay the blacklisted contractors.

In other words, innocent investors in the St Kitts project (some of whom may be US residents) may have been used to pass funds indirectly to a blacklisted Iranian front company.

Five years later none of these issues have been satisfactorily investigated or resolved.

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