Clear Ocean Hotel and Resort Ltd is going to the Supreme Court claiming Rs17.5 billion from government after it mothballed the latter’s project to develop a hotel in St.-Felix, which also straddled parts of what was formerly a public beach. This lawsuit shows how government managed to put itself in the awkward position of being both defendant and opponent in what happened at Pomponette.

The case of Clear Ocean

Clear Ocean Hotel and Resort Ltd (COHRL), the company behind the controversial project to build a hotel on the formerly public beach of Pomponette in the South, is now suing the Mauritian state for Rs17.5 billion for terminating its lease on August 22, 2019. The company – 70 percent owned by Seychelles-based Pelangi Resorts Holding Ltd and 30 percent by Boutique Grand Surface Co. Ltd – and, whose directors are South-African Miranda Hartzenberg Meyer, François Daniel Conradie and Rocky Boodhoo, points to the fact that they were asked to come up with a new EIA license and Rs20.1 million in lease payments as evidence that they had been done wrong by the Mauritian government. 

The Pomponette issue has been a long time in the making. Back to October 2003 in fact, when the then-government came up with an integrated plan to develop tourism in the South of Mauritius. The plan included developing land exchanged with St.-Felix sugar estate and turning 16 arpents of Pomponette public beach – which had been declared public in 1991 – into a hotel development site. 

Since no hotels showed up, the status of Pomponette was not changed. Using that 2003 plan, former Labour Party (LP) government attempted to woo a developer, Midas Acropolis, into setting up a hotel there. A deal that implicated former environment minister Deva Virahsawmy (and members of his family) who delivered the EIA licence to Midas Acropolis shortly before the 2014 election. 

When it became obvious that the deal with Midas was not going through – the deal itself pointed as evidence of corruption under the previous LP government by the new MSMled one – COHRL attempted to buy out Midas and take over the deal. That did not work, and Midas lost its state lease. 

The new government instead looked to cut a deal with COHRL directly. So began a series of moves that would ultimately lead to the present situation: on August 24, 2016, then minister of housing and lands Showkutally Soodhun stripped 16 arpents of Pomponette of its public beach status. In October that same year, government simply shifted the EIA licence from Midas Acropolis to COHRL. On April 10, 2017, prime minister Pravind Jugnauth personally cleared the project and on August 15, 2017, the government signed a new lease agreement with COHRL to develop a five-star Sheraton hotel. 

All this with no public consultation. Soodhun justified the move by pointing out that the change of status of Pomponette was something long envisaged dating back to 2003 and that the hotel built by COHRL in the South would create jobs and bring in $360 million in investments to the country. The conditions of the 60-year lease included starting construction on the development by November 6, 2017, and paying an annual rent of Rs17.7 million.

The troubles begin

It was not long before the COHRL deal started looking more like an albatross around the government’s neck. For one thing, it seemed to have missed the fact that one of COHRL’s directors, Miranda Meyer, was herself facing legal trouble over bad loans from Standard Bank in South Africa. In fact, a 14.4-hectare property of hers in Mossel Bay had been seized and sold off under orders of the Western Cape Division of the High Court in South Africa, in February 2017, just two months before the prime minister cleared the COHRL deal. 

But trouble soon reached Mauritius as well: the activist group Aret Kokin nou Laplaz (AKNL) started protesting the project and pushed for returning Pomponette’s public beach status. For its part, COHRL brushed off opposition to its project as rival hoteliers wanting to block their entry into Mauritius. 

But it soon became clear that the whole thing was headed towards disaster. Meyer’s company, Pelangi Resorts who owned 70 percent of COHRL, set up a number of subsidiary companies in Mauritius to establish facilities in the resort, such as a fitness centre, nursery, gardening service, beauty parlour, marketing, etc. COHRL used these facilities to attract smallscale investors into putting $10,000 each. 

According to media reports in South Africa, the project attracted some big fish investors in Western Cape and 50 smaller ones putting in the $10,000. It was not long before five such investors lodged police complaints in Cape Town against Miranda Meyer for financial offences, with South Africa’s Reserve Bank and the South African Revenue Service also looking into her dealings with her investors. Two South African architects, Frik Wagenaar and Christo Botha, also announced legal action against Meyer accusing her of setting up shell subsidiaries in Mauritius and misleading potential investors about the resort’s design. All this was being splashed around South African media. 

While the notoriety of COHRL was growing in South Africa, in Mauritius too it was becoming hard to ignore. On May 14, 2018, BH Property Investments demanded that the Mauritian Supreme Court’s Bankruptcy Division liquidate COHRL for racking up Rs6.17 million in unpaid rent for offices in Ébène. On June 5, 2018, BH Property’s lawyer told the court that the matter had been settled out of court. 

Now this should have sent alarm bells ringing within government: how could a company purporting to bring in millions of dollars in investments be dragged before a bankruptcy court for a mere Rs6 million in unpaid office rent? And that too, when the lease agreement signed between the state and COHRL clearly stipulated that, in the event of the company’s winding up, its lease would automatically be terminated. So just how much attention was government paying to this? 

On May 7, 2019, then minister of housing and lands Mahen Jhugroo (who had inherited Soodhun’s ministry) was asked about the case against COHRL. His response? “I have just been made aware of what the hon. member just informed the House… I have not been made aware about the liquidation processes at the level of my ministry,” Jhugroo told parliament. 

It’s hard to see how Jhugroo’s ministry could have missed the episode given that BH Property had published notices against COHRL in two newspapers on May 17, 2018, and in the Government Gazette on May 19, 2018. And just how was this issue of unpaid rent resolved? 

In January this year, Rocky Boodhoo, one of COHRL directors, was taken to Curepipe court after a French national complained that Boodhoo had borrowed money from him to pay for the rent but had paid him back with a Rs3 million cheque that had bounced. 

At the same time, the subsidiary companies set up by COHRL in Mauritius – Pelangi architects, Pelangi Youth, Pelangi Marketing, Pelangi Yacht Club and Pelangi Project Management, amongst others – were swiftly shut down and wound up. It was not that the government was simply ignoring COHRL’s money troubles; it was also trying to ignore a brewing public relations disaster. In November 2017, COHRL put up a metal fence to cordon off its construction site, including part of Pomponette beach that the government had handed to it. 

As it turned out in court in February 3, this year, as part of the judicial enquiry into the death of ex-MSM agent Soopramanien Kistnen, his company Rainbow Construction was paid Rs1.9 million to put the fence for COHRL as testified by Boodhoo. 

But what was all this for? There was no hotel being built and the whole episode was just becoming an embarrassment for government. Faced with public pressure and critics pointing out the incongruity between the EIA licence given to Midas Acropolis and what COHRL was proposing, on September 12, 2018, COHRL was asked to reapply for am EIA licence. “As of 02 May 2019, Clear Ocean Hotel and Resort Limited has not yet submitted an application for the new EIA licence,” said Jhugroo, once again on May 7, 2019. 

It wasn’t just an EIA licence: according to the lease agreement, COHRL was supposed to start its hotel construction on November 6, 2017, that was then extended to January 8, 2018; and then again, the deadline was pushed back to June 30, 2019. After this latest deadline had lapsed on July 9, 2019, the COHRL project was again raised in parliament. In reply Jhugroo said, “Following a site visit effected on July 1, 2019, by officers of my ministry, it has been reported that no construction works have started.” 

It looked like government had stuck its neck out for COHRL that was not delivering. So, when the government finally revoked the lease, it had given COHRL, deputy prime minister Steven Obeegadoo said on July 28, 2020, “the reasons related to non-payment of the rent”.

The weird position of the state

But it is not how the state finally ended the lease with COHRL, but rather what it has chosen to do – or rather not to do – since then that has landed it in a rather ridiculous position. It is a simple matter to end the Pomponette saga simply by declaring it a public beach once again. After all, in a sense this was something that former minister of housing and lands Mahen Jhugroo had already committed government to doing. “I did ask my officers to see to it that the plots of land that had been granted which are not being used be reproclaimed as public beaches in the near future,” he said on December 5, 2017. 

One would have thought that Pomponette, leased out but not being used, would have been a prime candidate. But nothing of the sort has happened. It is not that it is difficult to do. Jhugroo went on to explain that, according to the government’s interpretation of section 2 of the Beach Authority Act, “only the minister of housing and lands is mandated to proclaim public beaches, and as such, also de-proclaim public beaches”. 

That is to say, it’s just a simple matter for a single minister: if Soodhun could deproclaim Pomponette, then one of his successors could simply proclaim it again as public beach, according to the law. But the government has chosen not to do this. On July 28, 2020, Obeegadoo told parliament that “now, as at date, the site is still earmarked for hotel development”. 

And the government seemed to have learnt all the wrong lessons from the Pomponette episode. In the 2020-2021 budget, government proposed amending the Environment and Land Use Appeal Tribunal Act, “to specify clearly who can appeal against the decision of the Ministry of Environment, Solid Wate Management and Climate Change to issue, or not, an EIA licence”. This was not in the budget speech but tucked away in the annex to the 2020-2021 budget. Rather than taking the lesson from Pomponette of making land development processes more transparent, government was making it more opaque and harder to challenge. 

The government has long resisted turning Pomponette into a public beach once again by arguing that AKNL lodged a demand for judicial review by the Supreme Court back in November 2016 contesting Soodhun’s decision to de-proclaim Pomponette and that they were waiting for the outcome of that case. “Now after nearly five years the court will finally listen to arguments in the case in October,” says Yan Hookoomsing of AKNL, “it has taken so long but we have not thrown in the towel and have stood firm”. But this tactic has now landed the state in an awkward position. 

With COHRL’s case, the state will find itself having to argue both sides of the Pomponette fiasco in front of the same court: in one case why the COHRL deal was so bad and why it had to take its lease away, while in the other against AKNL, why it was right to deproclaim Pomponette beach to make away for the COHRL deal! 

“From the start, this lease should never have been given, you allowed COHRL to come, the government gave them the beach at Pomponette, the government asked for trouble and now they have it,” concludes Hookoomsing, “now let’s see if the government fights COHRL as hard as it has fought us over this issue.”