The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Cable & Wireless Communications (CWC) “backdoor” entrance should have been “a red flag” to the Ingraham administration that the Bahamas Telecommunications Company’s (BTC) 2011 privatisation was ill-timed, a well-known businessman said yesterday.

Sir Franklyn Wilson, who headed the committee that negotiated the ‘2 per cent BTC Foundation’ deal on behalf of the Christie administration, said that among the unresolved questions arising from the privatisation was whether the timing was “appropriate”.

He suggested to Tribune Business that a better purchase price and terms may have been sacrificed by the Ingraham administration for reasons of “political expediency” when it came to the timing of BTC’s 51 per cent sale.

Sir Franklyn, while agreeing that no one associated with BTC’s privatisation should be “condemned” for permitting CWC’s late admission, argued that the inability to conclude a deal with any of the original bidders should have warned the-then government not to proceed.

“I certainly don’t condemn anyone who sought to entice CWC to come in, but the fact it was proving so difficult to get credible bids was reason enough to ask: Are we doing it at the right time,” Sir Franklyn told Tribune Business.

“That was a red flag, a sign that we should slow down, forget philosophy.”

CWC was not among those who responded to the Government’s initial ‘beauty contest’ process for BTC’s privatisation. The Ingraham administration eventually acceded to its requests to enter the process late, although it is unclear whether this occurred before all other offers had been rejected.

Julian Francis, the former BTC chairman, who headed the privatisation committee, told Tribune Business at the time that it had tried hard - but failed - to reach acceptable terms with the lead ‘beauty contest’ bidder, the JP Morgan/Vodafone group.

He explained that a potential deal broke down over Vodafone’s refusal to take an equity stake in the bid - something the Government was insisting on to give it confidence that BTC would have consistent operator support.

It was then that the Ingraham administration turned to CWC. Sir Franklyn, whose negotiating committee had been the first urged the formation of a select committee to probe the BTC deal, said the former government could not be faulted for this.

“They got into the process pretty much through the back door,” he said of CWC. “In my humble opinion, no one’s to be condemned for that.

“You set out a certain process, and if the outcome is not producing the results you want, you tweak it a little bit. I don’t condemn them; in fact, I commend them, those involved with the process, for trying to do the best they could in the circumstances.”

Sir Franklyn, though, accused the Ingraham government of “political expediency” when it came to the timing of its decision to sell a 51 per cent controlling interest in BTC to CWC.

“It was just unwise public policy that said: ‘We have to do it now’,” he told Tribune Business of the April 2011 privatisation.

“Frankly, the lesson for the Government is that sometimes with public policy you could have an idea, but timing is not irrelevant to an idea.

“The fact you want to sell this asset: That’s a decision to be made, but when you’re doing something is not irrelevant,”he added.

“The question is: Was that a reasonable, appropriate time to do it? That’s relevant in public policy, as political expediency comes into play as a factor that influences public policy.”

Sir Franklyn also echoed the concerns raised by current government ministers over the total $1.5 million in bonuses paid to 15 BTC executives for work carried out to assist the privatisation, questioning if the payments were designed to silence internal dissent at the communications carrier.

And he suggested that the sales price received from CWC significantly undervalued BTC, with the Bahamas receiving relatively little despite the $206 million that the former paid for its 51 per cent equity holding.

In particular, Sir Franklyn said the CWC deal’s benefits had been undermined by allowing the former BTC pension plan’s deficit to soar to near-$100 million.

“When people today ask what the country got from it, you scratch your head,” he told Tribune Business. “What did we get? What did we net? The answer is: Not a lot.

“It was an horrendously unwise transaction - not from a matter of philosophy, but from a matter of execution, and if the country can understand that it will be better off.”

The House of Assembly this week approved the creation of a select committee to investigate BTC’s 2011 privatisation, headed by Shane Gibson, the minister of labour and national insurance, and former head of the union that represented the carrier’s line staff.

The other governing party members are Cleola Hamilton, the South Beach MP, and Leslie Miller, the representative for Tall Pines. The Opposition members are Loretta Butler-Turner and Richard Lightbourn.

The FNM, and many observers, regard the timing of the committee’s formation as political, and designed to distract public attention from the Bahamas’ many current problems with a general election just six months away.

Sir Franklyn urged the select committee to avoid a “partisan political approach”, and instead concentrate on resolving the unanswered questions stemming from the privatisation and what the country can learn.

And as to whether the select committee is too late, given that the BTC privatisation was completed more than five-and-a-half years ago, he added: “It’s never too late to do the right thing.

“It’s obviously the sooner the better, but there’s validity in the position that it’s never too late to do the right thing, so let’s see where it goes.”