The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A prominent Freeport attorney yesterday voiced fears that the latest bid to revive Freeport's economy will be "an exercise in futility" unless the Grand Bahama Port Authority's (GBPA) ownership changes.

Terence Gape, senior partner at Dupuch & Turnquest, told Tribune Business that the "wonderful ideas" proposed by the Revitalization and Economic Expansion of Freeport (REEF) committee would ultimately "get nowhere" without the Hayward and St George families being replaced by an investor with the capital and know-how to execute them.

He pointed to what he described as numerous broken promises in the April 2016 memorandum of understanding (MoU) that the GBPA, Hutchison Whampoa and the Freeport-based entities they control as one factor behind his scepticism.

That MoU, which appears to have been neglected by the Minnis administration, committed the two families to seek "a fair market sale" of their ownership interests in the GBPA and its affiliates; master plan the 3,000 acres of land owned by Freeport Commercial & Industrial within 12 months of the agreement; and work with the Government to create "a world class agency" to promote Freeport to investors.

The Grand Bahama Development Company (DevCo), which is owned 50/50 by the GBPA's Port Group Ltd and Hutchison Whampoa, with the latter having management control, was also supposed to "master plan" its more than 70,000 acre holdings within the same timeframe, and Mr Gape said the fact none of this has been done gives him little confidence the REEF initiative will succeed.

He also argued it was "ridiculous" that REEF, which was launched by the GBPA, was eagerly recommending that the Grand Bahama International Airport be sold to the Government for a "peppercorn" price when the Port Authority - as 50 percent current owner - had seemingly abandoned its civic and quasi-governmental obligations to build a new facility post-Dorian.

"As far as I'm concerned it's an exercise in futility," Mr Gape told this newspaper. "Don't get me wrong; they're wonderful ideas by REEF, but with the families you'll get nowhere and Hutchison will block you everywhere you turn.

"I asked the Port Authority and the Government to produce their master plans for Freeport three months after Dorian and they never did. This is the same group [the GBPA owners] that promised four times over the past 30 years to establish an international marketing organisation to promote Freeport. They made a renewed promise in 2016 to do that, and never did it.

"Let's remember that under the 2016 MoU the families promised to seek a buyer for their interests, about which they've done nothing. We badly need that investment group to make these changes happen."

Pointing to Freeport's 16-year stagnation, which was triggered in 2004 by hurricanes Frances and Jeanne, as well as the loss of the Royal Oasis resort which remains shuttered to this day, Mr Gape added: "The problem is the families have been in charge and failed Freeport since 2004, and nothing has changed. They need an investor group to come in and take over the place."

He also argued that the REEF initiative's success depends on the Government's "active participation" and full co-operation, as well as construction of a new international airport and hospital.

The REEF proposals place the latter issues as its second and third-highest priorities after clarifying Freeport's real property tax exemption. However, Mr Gape questioned why the proposals were so eager for the GBPA/Hutchison to offload the airport and its multi-million dollar post-Dorian repair bill to the Government rather than carry out this obligation themselves as existing owners.

"The problem with the REEF initiative is there's a bottom line," he told Tribune Business. "Nothing can happen in Freeport, and you can't start to make a move, without an airport and hospital being in place. The Port Authority is the group that should be rebuilding the airport. It's ridiculous. They have a duty to rebuild it, and the Government is not holding them to account."

The Cambridge Strategy Group report, conducted for the GBPA as part of the REEF exercise, also called for a new master plan to be developed as part of building "a new Freeport masterplan around a future-focused vision of The Bahamas".

"The Master Plan for Freeport needs to be a comprehensive blueprint for what the post-Hawksbill Creek Agreement future should be, and how to achieve that over the next 34 years," the report added.

Among the areas REEF is targeting reforms at is the ease of doing business, noting the "uncertainty, and the lack of security, that all current and future GBPA licensees face with respect to the extension of the tax concessions, namely property taxes and business license fees.

"Processes for establishing and operating businesses in Freeport are opaque, confusing and approvals can take a long time to be decided," it added, recommending that the GBPA be allowed to "approve specified low-risk business licenses without needing to refer these to the Bahamas Investment Authority (BIA)".

The proposals also call for the GBPA to "assess/approve the right for expatriate permanent residents to work in businesses 100 percent owned by them", with the "annual residency permit application process to be automated through an online portal that allows processing within 48 hours (and eliminates bureaucratic subjectivity/uncertainty)".

On the Immigration front, the REEF proposals added: "The Government immigration policies in place in Freeport are fundamentally uncompetitive with rival destinations targeting the same businesses and investors that we would like to attract to Freeport." They suggested creating an investor citizenship initiative targeted at high net worth individuals who reached a certain threshold for investment in the Bahamian economy.

As for the airport, the REEF proposals also called for "legislation to end the concession, and break the barrier, that monopolises the import and distribution of fuel within the Freeport area". However, Sir Franklyn Wilson, FOCOL Holdings' chairman, said he was unaware of any exclusivity and said the BISX-listed petroleum products supplier was not involved in any such arrangement.

Carey Leonard, the former GBPA in-house counsel, who like Mr Gape is not a member of the REEF committee, told Tribune Business of the proposals: "Most of what is in that brief has been what everybody has been asking for for years.

"The only other thing is I don't see any commitment by the Port Authority to do anything so it will be interesting to see how the general public reacts. A number of the ideas have been floated for years. It's a matter of seeing if they can get those to fruition."