The government disclosed this in its reaction to the protest organised by the workers of the company on Thursday in Ilorin, Kwara State.
The Kwara State Government has accused the previous administrations of Bukola Saraki and Abdulfatai Ahmad of looting all the revenue generated by Kwara Hotel for 16 years without investing any money in the company.
The government disclosed this in its reaction to the protest organised by the workers of the company on Thursday in Ilorin, Kwara State.
The angry workers locked the entrance of the hotels, accusing the management of Harmony Holdings and the state government of poor management of the hotels.
They claimed they were owed seven months' salaries and other entitlements by the government.
They further revealed that only 30 rooms were functional out of the 172 rooms in the hotels.
Reacting, the government, through a statement released by Corporate Affairs Unit Harmony Holdings Limited, described the situation as unfortunate, claiming that the edifice was turned into a shadow of itself due to massive corruption that ravaged the state during Bukola Saraki and Abdulfatai Ahmed’s administrations.
“The management of Harmony Holdings Limited is aware of a protest organised by staff of Kwara Hotel, one of its subsidiary companies, over 7 months of unpaid salaries. It is therefore instructive to put some records straight despite the emotions that might be attached to the issue.
“Firstly, we regret the unfortunate situation that the hotel and its workers are currently in and it is on record that we have never abdicated our responsibility as we have been doing everything within our reach as the investment management company of the Kwara State Government with the active support of the state government to fix the challenges confronting the hotel most of which were inherited from the previous administration.
“It is on record that when the current administration of Governor AbdulRahman AbdulRazaq assumed office in 2019, Kwara Hotel, a 172-room facility, had below 20% of its room capacity functioning. Most of the rooms which serve as revenue lines were not in a tenantable condition. The hotel had also taken a weary look with so many infrastructural ruins. Similarly, there were huge liabilities running into over N500 million inherited by our management and this government arising from the mismanagement of the hotel under the last administration,” the statement reads in part.
“The government further stated that they were faced with a multifaceted challenge when they took over the hotel's management in 2019. This includes, but is not limited to, finding the most efficient and long-lasting solution to the long overdue infrastructure upgrade, which clearly requires an investment of at least N2 billion to restore the lost glory of the hotel and reactivate its brand.”
The statement continued: “The above background is to explain that the challenge at the hotel has a history which sadly has been left unreported by some persons who only care about using the incident for their usual cheap blackmail, mudslinging and mischief.
“The public will recall that it was at the tail end of the administration of late Governor Muhammad Alabi Lawal that the last major investment and massive facelift was done at Kwara Hotel. This meant that the succeeding administration of Governor Abubakar Bukola Saraki inherited more or less a brand new hotel which had every potential to turn the fortunes of the state around because the structure of Kwara Hotel gave it a unique edge over its competitors in the whole of Northcentral. Unfortunately for over 16 years following the exit of Governor Muhammed Lawal’s administration, no value addition was made to the hotel other than the fact that it was passed from one set of cronies to another under the guise of private sector investment in which not a single kobo was invested but rather the revenues generated from the hotel over these extended periods were looted with impunity.
“The public is rightly reminded that it was under the Dr. Abubakar Bukola Saraki-led administration that Austin Peters of KH Integrated Management Services (KHIMS) was appointed as a management consultant for the hotel. The terms of engagement required them to invest a minimum of Two million dollars which amounted to about Three Hundred and Sixty million naira at that time to upgrade the hotel infrastructurally and thereafter manage it for some years before ceding it back to the Kwara State Government.
“Clearly, there is nothing bad in inviting a management consultant to run a company, but the misdemeanour lies in the fact that this management consultant never invested a dime in Kwara Hotel contrary to the terms of engagement. To our utmost consternation, it also went ahead to borrow over N350 million from GT Bank in the name of the hotel which was totally paid back from the cash flow of the hotel with evidence showing that the borrowed funds were diverted and never invested in the hotel. A case of double jeopardy you would say.
“The management company continued to have a field day misappropriating all revenues being generated from the hotel on an average of N50 million monthly without carrying out as much as the renovation of a single room. By the end of 2016, the hotel was already in a full state of deterioration and it could no longer meet up with its obligations. It was in 2017 under the administration of Governor Abdulfatai Ahmed that this management consultant was shown the exit door leaving behind in its trail hundreds of million naira of owed and unpaid obligations both to staff and others.
“Unfortunately for Kwarans and the hotel, the then government of Governor AbdulFatai Ahmed that took the decision to sack the management consultant never had the political will to investigate the crimes committed against the hotel and the good people of Kwara State resulting in the accumulated indebtedness of over N500 million.
“The management of Harmony Holdings was directed to take over the debt without taking appropriate actions against the purported consultants hired by his predecessor even in the face of the mind-boggling mismanagement of the hotel, violation of terms of engagement and accumulated obligations.
“The government thereafter paid the first tranche of the debt that was owed to workers and laid off a majority of them following the transfer of the management of the debilitated hotel to Harmony Holdings Limited with a promise to give the hotel a facelift either through direct investment or the sourcing of a private sector investor, but that never happened till the end of its two terms in office.
“This is the sad tale of how Kwara hotel was systematically killed within a period of sixteen years due to greed, avarice and putting personal interest above the collective interest of the people. Despite the situation inherited at Kwara Hotel where most of the rooms had already become untenantable, with other facilities that generate revenue for it deteriorated, and in the face of a huge debt portfolio, the current administration has never shied away from taking responsibility and addressing the issue frontally. It was clear that tackling such an issue will take time and resources. Nonetheless, the government was very keen that the hotel must not go into extinction.
“It’s important to state that the hotel has been operating on a perpetual loss trajectory for over five years now and the major source of support has been from the various interventions we have received from the Kwara State government both in terms of deliberate patronage to keep us in business and also through bailout funds at timely intervals to augment salary payment.
“All through the COVID-19 period when the hotel like others shut down operations and had little or no income, we didn’t lay off a single staff member; all salaries that were paid within that period were from the state government’s intervention. Till date, the hotel like some other ailing subsidiaries of Harmony Holdings have been beneficiaries of multiple rounds of bailout both from Harmony Holdings the parent company and particularly the Kwara State government.
“The current source of agitation which is the accrued unpaid salaries of 7 months has received the attention of His Excellency Governor AbdulRazaq who has graciously approved another intervention fund to clear the salary backlog and the funds are being processed by the respective organs of government. We have therefore appealed to the workers to continue to be calm in the face of the current trying period that the hotel is going through.”
The government further stated that he is working to address the hotel's infrastructure shortcomings, disclosing that the current management of Harmony Holdings Limited had determined it was appropriate to employ the strategy of hiring a very capable private sector investor with the necessary financial and technical capacity to renovate the hotel, upgrade its status, and manage it professionally.
This idea had received the governor's approval.
It said, “Following his approval, a thorough bidding process was initiated and a preferred investor alongside an international hotel brand has been recommended to handle the hotel management. The investment plan is for the investor to put in no less than N2 billion in the hotel under a Joint Venture (JV) arrangement that would also see the total obligations owed to the staff cleared from the payment of the upfront premium.
“The process has also recently been approved by the State Executive Council. It is now on the table of the State Assembly for its legislative consent as representatives of the people. We understand that the Assembly will be calling for a public hearing to aggregate the inputs of Kwarans on the proposed concession before it makes its resolution. This explains the reason for the delay in the process of the new investment in the hotel, which has also affected the planned defrayal of staff obligations.
“Given his passion for the welfare of workers, however, Governor AbdulRahman AbdulRazaq has already approved the payment of over N26 million as an intervention in the interim to pay off the outstanding 7 months' salaries. The approval has been communicated to the staff and they have been assured of payment as soon as the funds are processed. But it was surprising to see them going out this morning to protest when their representatives have always been brought to the round table to understand the situation of things. Notwithstanding the action of today, we have reassured them that every staff of Kwara Hotel will get their outstanding salaries in no distant time once the fund is released.
“This current government is not the one that would turn away from responsibilities of the mandate freely given to it by Kwarans to salvage the long years of rot that the state was put in under successive governments of the past even in the face of the herculean challenges of the mind-boggling mismanagement it inherited across the board.”