Construction has picked up again at the Cirta hotel lately. The establishment should go back into business in 2024. But its renovation, which was supposed to be “urgent” in order to serve during the “Constantine, capital of Arab Culture” event in 2015, has caused enormous surcharges.
The renovation of the Cirta and Panoramic hotels, the biggest establishments managed by EGT-Est, a subsidiary of the Hôtellerie, Tourisme et Thermalisme (HTT) group, was on the shelves of the subsidiary since 2011. The latter even sought bank loans in order to finance the operation. At the time, 1245 billion dinars ($9.2 million at current rates) were allocated to this renovation.
However, the authorities, who gave the renovation of the hotels a sense of urgency, saw it fit to delegate the management of the project to the Société des investissements hôteliers (SIH), which was headed by Abdelhamid Melzi, along with a reevaluation of the financial envelope dedicated to the project.
Melzi, then a powerful “butler” in charge of the entirety of State residencies, inherited the project management thanks to “simple over the counter conventions, between the owner EGT-Est and SIH”, signed on July 7, 2014, which came in application of an instruction by the authorities, to which a decision by the Conseil des participations de l’Etat (CPE) gave a formal form in September 2013.
If the Panoramic hotel was delivered more or less in time, the Cirta hotel missed the event, its renovation taking forever. 8 years after “Constantine, capital of Arab Culture”, and 12 years after the inscription of its renovation, the hotel is still to be delivered. The delay caused enormous surcharges, which the Accounts Court analyzed in its latest 2023 report, published in December.
The costs of the rehabilitation and modernization plans for these two hotels were raised by the SIH to 4.65 billion dinars for Panoramic and 6 billion dinars for Cirta.
The Accounts Court said in its report that the average unit cost of renovation per room was 89.5 million dinars for the Cirta hotel, still not delivered, and 77.1 million dinars for the Panoramic hotel, the operation of which was delegated to Protea, a subsidiary of Marriott. These costs were found to be “exorbitant” by its auditors who had as a reference in their report the average costs of renovation of El Marsa hotel (31.46 million dinars) and Mazafran (7.51 million dinars).
The operation, which mobilized around 11 billion dinars ($82 million at current exchange rates) for both hotels, is not done as of yet.
According to the Accounts Court auditors, “the extent of works and the related, CPE approved costs, were estimated by the project manager SIH without associating the relevant EGT-Est”. Furthermore, the auditors added, “EGT-Est does not have, since works on both hotels began, periodical reports on the state of advancement, nor does it have technical files and financial and accountability situations on the relevant programs”.
The Accounts Court thus blames EGT-Est for not terminating the conventions it signed with SIH despite the latter’s failure to fulfill its commitments, including that of not informing EGT-Est about the evolution of works as well as the situation of consumption of the funds allocated to the operation.
A disadvantageous management transfer
In order to defend themselves, HTT officials once again accused the entity managed by Melzi. In his response to the Accounts Court, the CEO of HTT underlined two main grievances.
The first one relates to the signing of the Panoramic management transfer contract to Protea. The CEO of HTT said that Melzi replaced the hotel owner -EGT-Est- in May 2016 to sign the contract, which according to him included “rogue clauses”.
He listed the clauses in question: “The duration of the contract – 30 years with automatic renewal for an additional 20 years –, the assumption by EGT-Est of all taxes for which Protea will be liable, the excessive remuneration of services based on a complex contractual package burdening almost all operating income, the ban on calling into question the business plan and finally, the agreement to make foreign legislation the framework for settling disputes and the principle of international arbitration”.
The second grievance is based on the conclusions of the Inspection générale des finances (IGF) report of December 2022, relating to the evaluation of the rehabilitation program of the Cirta and Panoramic hotels, which mentions likely illicit foreign currency transfers abroad, under the project of this renovation.
“The document confirms the points raised by the group in this matter and reveals other excesses such as the probability of an illicit transfer of foreign currencies abroad via fictitious invoicing, the use of investment credit for the acquisition of passenger vehicles which are registered and the name of SIH as well as numerous infringements in the attribution of study and construction contracts”.
In the wake of the destitution president Bouteflika in 2019, Abdelhamid Melzi was prosecuted for “illicit transfer of foreign currencies abroad” as general-director of EGT-Sahel which manages the state residency “Club des pins”. He was sentenced in the first instance to three years in prison. On April 9, 2023, however, the Algiers Court decided to cancel this sentence, in addition to declaring the invalidity of prosecution procedures that targeted Melzi.
