CATEGORY:MAJOR DEVEIOPMENT ------------------------------- INSIDE GRENADA Sunday February 11,2007 Hardbeatnews, NEW YORK, NY: The Export-Import Bank of Taiwan has brought action against the Grenada government in the U.S. District Court, Southern District of New York, for loans that Grenada made before it switched its diplomatic alliance to the Peoples Republic of China. The Taiwan bank is seeking to recover $21.6 million from the Grenada government plus interest payments. The loans were taken by the government of Prime Minister Keith Mitchell to facilitate the construction of the first sports stadium at Queen's Park, the ministerial complex in the Botanical Gardens, the agricultural sector and for road construction projects on mainland Grenada and in the sister island of Carriacou. The legal action in New York, which commenced Dec. 21, 2006, followed another case in the U.S. against Grenada Deputy Prime Minister and minister of Energy Gregory Bowen and three Russians by American oil investor Jack Grynberg for $500,000 over a deal that went sour. Grynberg subsequently filed a multi-million dollar arbitration proceeding against the government of Grenada in Europe over the decision of Grenada not to honor its contractual obligations to him. The case is being heard by Judge Harold Baer with the Taiwan bank represented by the firm of Sullivan & Worchester while Grenada's interests are handled by Donzell Tucker, the wife of Grenada foreign Minister Elvin Nimrod. Initially the defense response to the suit was that Grenada could not make the payments due to "economic hardships" brought to Grenada by Hurricanes Ivan in 2004 and Emily in 2005. Reportedly the argument of the defense was rejected by the judge who urged the parties to try and reach an out of court settlement regarding repayment of the loans by Grenada. The ongoing case is being followed closely in Grenada because of what are described by one observer as "severe legal, political and embarrassing consequences" for Grenada. According to records submitted to the court, the Taiwan bank extended four loans to Grenada between 1990 and 2000 totaling $28 million. Grenada failed to repay certain installments of principal since April 1, 2004 and to make certain interest payments since that date in violation of the terms of certain of the loan agreements, causing a default on all of the loans pursuant to cross-default provisions. At present the total outstanding principal amount for the four loans is $20,250,001. The case has developed following the 2004 decision of the government of Grenada to switch its diplomatic relations with Taiwan to the PRC government on the mainland. The contest has escalated with a number of other countries also switching. The older countries in the Caribbean Community (CARICOM) - Barbados, Guyana, Jamaica and Trinidad & Tobago - have had long time relations only with the PRC. But in recent years newer CARICOM member states started out with Taiwan but have switched to the PRC. They include the Antigua & Barbuda, Bahamas, Dominica, Grenada and St. Lucia. CARICOM member states continuing to maintain diplomatic relations with Taiwan are Belize, St. Kitts & Nevis and St. Vincent & the Grenadines While Taiwan's relations with Grenada are frigid, the relations of Grenada with mainland China are not in such a good state either as the result of an unrelated but embarrassing incident in Grenada last week. At the opening ceremonies for the new cricket stadium in Grenada, a gift from the PRC, the Royal Grenada Police Force band erroneously played the national anthem of Taiwan rather than the one of the PRC. Prime Minister Mitchell apologized for what he called an "inadvertent error." Two police officers involved in the incident were relieved of their duties pending the outcome of an investigation. Article written by John Collins Special To HBN Reprinted from Hardbeatnews.com