Opinion: American University of The Caribbean – School of Medicine

POSTED: 09/16/13 12:09 PM

It is tough to wrap your mind around the inner workings of a politician. Point in case: National Alliance MP Louie Laveist. With his fellow faction member George Pantophlet he questioned Finance Minister Maarten Hassink on Thursday extensively – though repeatedly is probably a better expression – about the deal the previous owners of the American University of the Caribbean in Cupecoy made with the tax inspectorate.

Laveist wanted details – and he is not going to get them. That makes sense: employees of the tax inspectorate face prison sentences if they divulge information about individual tax payers.

Minister Hassink said on Thursday that he would not give any information until he had received legal advice about his liability – in case he would decide to make the information public. We figure that our minister knows better than anyone (in any case better than Laveist) that releasing information about individual tax payers – no matter how controversial this might be – is absolutely not an option.

Do the people have a right to know? That was Laveist’s argument and up to a point we sympathize with it. Former Finance Minister Roland Tuitt opened this can of worms when he gave his private press conference at the Turning Point rehab center on August 15 where he accused the first Wescot-Williams cabinet of making some bad deals that have cost the treasury more than 100 million guilders. While Tuitt did not mention any names, it was clear that he was referring to – amongst others – the American University of the Caribbean in Cupecoy.

While Tuitt got his figures all wrong, he did put his finger on a deal the previous owners of the university – the American Associated Group (AAG) – made with the tax inspectorate prior to selling the institution to Devry Inc.

Tuitt claimed that the tax man should have collected 34.5 percent of the purchase price. Since Devry bought the university for $235 million, that would suggest a windfall of $81 million. According to Tuitt, the government collected only 10 percent, of $23.5 million. In this calculation, the tax inspectorate let go of $57.5 million, equal to 103 million guilders.

What Tuitt did not know – or at least, he did not mention it at his politically inspired press conference – is that Devry paid $200 million for the university’s goodwill and $35 million for the real estate.

Over this goodwill, the American Associated Group should have paid 25 percent “stakingswinst” – the profit tax due when a company goes out of business by selling to a third party.

That should have given the tax inspectorate a nice payday of $50 million. Instead – and several sources have confirmed this information independently –AAG had already made a deal with the tax man to settle all of its fiscal liabilities for a meager $7.2 million. That included $1.5 million in outstanding taxes and $1.2 million in transfer tax for the sale on the real estate. Effectively, AAG paid therefore only $4.5 million in profit tax. On a value of $200 million that comes down to 2.25 percent – a sliver compared to the 25 percent that should have been due.

The government is now in court with AAG in an attempt to set the matter straight, but the question remains whether the state has a case: after all, AAG has a signed, sealed and delivered agreement – and the owners – the Tien-family – must have been laughing all the way to the bank.

On Monday, Today will publish the first of a series of articles about medical schools in the Caribbean in general and about the American University in the Caribbean under its previous ownership in particular.

 

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