The Kor Group, based in Los Angeles, California, has been involved in the development of the Viceroy Resort and Residences in Anguilla for more than three years. Kor was initially attracted to the island because of its unrivaled beaches, gourmet cuisine, and some of the warmest and friendliest people one could ever hope to meet. Furthermore, Anguilla’s low-volume, high-value tourism model fit well with Kor’s Viceroy brand. Since Kor purchased the shuttered Cocoloba Resort in 2004, it has strived towards being an exemplary partner in the further development of Anguilla as a luxury resort destination. Unlike many developers, Kor’s involvement in a project does not end with the development of the project because the company also operates the hotels it develops. Therefore, Kor’s business model is to make significant long-term investments and become good corporate citizens in the select communities in which it does business.

The events over the last several weeks have caused much concern to the company. Kor admits that mistakes were made and that certain issues could have been handled better, however, the company believes that the public may not be familiar with all the facts necessary to reach their own informed conclusions about the project and its impact on the island of Anguilla.

Claims have been made that the Viceroy project will not benefit Anguillians, but Kor maintains that this is not the case. The project will have a significant positive impact on the island, not the least of which is employment. The company estimates that approximately 600 job opportunities will be created once the resort is open. Kor is committed to instituting on-island training programs to better prepare Anguillians for meaningful roles in the operation of the resort by introducing them to the Viceroy standards. To that end, Kor also intends to create cross-training opportunities in its existing hotels in Los Angeles, Palm Springs, Miami and Mexico.

In addition to the job opportunities that will be created, Kor points to several facts supporting the economic contribution it is making to the island:

The Viceroy project is estimated to pay US$6.8 million in customs fees during the construction phase of the project, of which US$2.5 million has been paid to date. While the project received concessions from the government related to customs duties, similar incentive packages are routinely offered by governments around the world in order to attract investment, and in fact, are precedented in Anguilla given that the existing major hotels previously received concession packages on customs duties. In addition to customs fees, Kor has paid US$7.3 million in transfer and mortgage taxes, bringing the total government mandated fees paid to date to US$9.8 million.

In addition to the US$14.1 million in government mandated fees outlined above, Kor has also injected US$20 million directly into the local economy:
• US$15.8 million in contracts awarded to local contractors
• US$0.5 million in additional contracts that are in the process of being awarded to local contractors
• US$1.7 million in growth capital provided interest-free to local contractors to help them expand their businesses to meet the operational demands of the project
• US$2.0 million in lodging, rentals, meals and entertainment on island

In terms of its commitment to be a good corporate citizen, Kor has donated US$2 million for the expansion of the West End and Island Harbour schools, as well as 2 new school buses. Kor has donated more than US$100,000 to sponsor local events such as boat racing and carnival troupes. Kor’s Director of Acquisitions and Development, Alex Samek, noted that “Kor has made these significant commitments to the social development of Anguilla during the construction phase of the hotel because of its deeply-rooted passion for the island, its people and its culture.” Although the majority of the units in the project, including the villas, are being sold to individual buyers, the government ensured Anguilla would benefit from a recurring revenue stream by instituting use restrictions and requiring that owners put their units into a rental program when not in use. As a result, once the resort is operational, Kor projects that Viceroy will generate approximately US$3 million per year in accommodation tax and $1.6 million per year in annual resort residence levies.

Kor has two additional projects in Anguilla. One is a small 6-acre project on Meads Bay intended to offer additional beachfront access and services for Viceroy guests, given that the majority of the 35 acres that make up the Viceroy project do not front the beach. The other project is envisioned to be a mega-yacht marina and resort development in the East End, an area thus far lacking any major investment. The East End development was approved after several town hall meetings in which the majority of the local people in attendance expressed support for the project, especially because of the investment it would bring to the East End. Jeffrey Smith, Kor’s Chief Operating Officer and Partner, stated that “these additional projects have been phased so as to allow for a careful and measured approach towards development in Anguilla. The current focus is on completing the Viceroy project and adding to Anguilla’s reputation of hospitality and world class resorts.”

Regarding the recent labor dispute, Jeffrey Smith went on to say that “anyone working on our projects anywhere in the world is expected to abide by all applicable laws.” The general contractor on the Viceroy project, Carillion Construction West Indies, Ltd. has not been accused of violating any laws in Anguilla, and notes that in order to evaluate the workers’ full compensation package, additional costs that the company incurs on behalf of each of the individuals on the project should be taken into account, such as: transport costs to and from Anguilla, medical testing in India and Anguilla as required by the government, medical care, air-conditioned housing, food, clothes, laundry, utilities, and housekeeping.

One must take into account the buying power that the money that the workers are earning in Anguilla provides in India in order to better understand why they are willing to pay a broker in India to get these highly sought after overseas jobs. According to the US embassy in India’s website, the average person in India earns $523 per year, and must pay all their living expenses from this amount. By comparison, the lowest paid Indian workers in Anguilla could save $2,160 per year, or more than 4 times what the average person makes in India. The government relied on two factors in approving Indian work permits: (i) that all the workers had signed contracts detailing the terms and conditions of their employment, and (ii) that the High Commissioner of India, who is charged with the welfare of Indian labor in Anguilla, reviewed the pay scales employed by Carillion and deemed them acceptable. Carillion has over 20,000 Indian workers employed throughout the world, and believes that those working in Anguilla are amongst the highest paid.

There has been Indian labor working on the Viceroy project for more than 9 months, and prior to that, Mexican labor for a year. Their living conditions were similar, and there were no any major issues until recently. The High Commissioner of India inspected the site at least two times and reported that the living conditions were very good. The Labor Department and the Health Authority conducted several random inspections of the facilities and spoke with the Indian labor on site, and there were never any major issues reported. It is important to note that the issues brought up by the Indians were addressed during recent negotiations between the government, Carillion and the workers’ legal representatives, and all agreed that the resolution reached was fair. As part of the negotiations, Carillion offered to repatriate anyone who was not happy working on this project. In order to ensure that the workers felt no pressure to remain, Carillion offered to cover both travel costs and broker fees. That offer remains open today. Less than 5% of the workers have asked to return to India, and Carillion is diligently trying to expedite their return.

Kor takes the well-being of all its employees seriously and holds its contractors to the same standard. Kor’s CEO and Founding Partner, Brad Korzen, commented that “Kor recognizes its responsibility as a major developer in Anguilla. We are committed to upholding our pledge to be an exemplary corporate citizen and partner to both the people and government of Anguilla. Now that the terms of the labor agreement have been accepted in principle by all parties involved, we will continue to be actively engaged in ensuring that Carillion honors its commitments. Again, we look forward to delivering one of the finest resorts in the Caribbean that the people of Anguilla can be proud of and play a significant role in.”

- The KOR Group

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