The Tribune

• Strategist: Gov’t has ‘negated’ Hawksbill Creek

• Fevered talk of MSC/Maersk/Fincantieri tie-up

• Licensee: Gov’ts ‘failed with every enterprise’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government’s bid to drive change at the Grand Bahama Port Authority (GBPA) was yesterday likened to “the person who did the vandalising now trying to buy the house from its owners for little money”.

Rob Millard, a business strategist who produced a Freeport revival plan for a potential GBPA purchaser more than a decade ago, in an article submitted to Tribune Business described The Bahamas’ second city as “a house that has been vandalised” due to multiple government measures that have “negated” the Hawksbill Creek Agreement and ensnared the Port area in ever-increasing bureaucracy and red tape.

As a result, and given the Davis administration’s demands that the GBPA and its owners either fulfill their obligations or seek an exit, he described the current situation as akin to “the person who did the vandalising now trying either to buy the house from its owners for little money (because it is damaged) or pushing those owners to sell it to somebody else while at the same time preventing them from fixing it”.

Mr Millard’s article (see “A response to the ‘saga of Freeport’” – right), written in response to calls by Freeport attorney, Terence Gape, for the Hayward and St George families to sell their GBPA ownership and hand control back to the Government so that the city is no longer regarded as a “separate fiefdom” within The Bahamas, comes amid fevered speculation that a new multinational consortium is targeting the purchase of either Freeport’s quasi-governmental authority or some of its key assets.

Multiple sources, speaking on condition of anonymity, yesterday told this newspaper that Mediterranean Shipping Company (MSC) and Maersk, the world’s two largest container shipping companies, were partnering with Italian shipbuilding giant, Fincantieri, to make an approach for the GBPA or its Port Group Ltd affiliate. The latter holds the majority of the two families profit-making assets, such as Freeport Harbour Company and Grand Bahama Development Company.

Several of these contacts suggested that the two shipping companies and their partner were likely to be more interested in acquiring Port Group Ltd’s half-share (50 percent) interest in Freeport Harbour Company given the nature of their businesses. One even suggested that Fincantieri, which mulled a potential offer to acquire the Grand Bahama Shipyard almost two decades ago, may be interested in developing a new ship building facility in Grand Bahama.

“I’ve heard that left, right and centre,” one contact said of such a joint venture. “My personal opinion on that is I pray to God it is true. You have the two biggest cargo shippers in the world, and Fincantieri outside of China is the biggest ship builder in the world. It jives with MSC expanding their cruise fleet here. Everybody is making noise about this, but if this is the case are we going to settle for the status quo or are we not.”

However, one well-placed GBPA source, speaking on condition of anonymity, yesterday cautioned that any bid for the GBPA, or assets held by its Port Group Ltd affiliate, has multiple obstacles and distance to overcome. “The Government doesn’t own the assets, and the families have not been approached, so I wouldn’t take it too seriously,” they advised. 

Efforts to obtain comment from the Government prior to press time last night proved unsuccessful. Prime Minister Philip Davis KC and his administration have yet to disclose the strategy, or road map, through which they will achieve the GBPA and Hawksbill Creek Agreement transformation they are seeking, but one route would involve finding private investors with the capital, vision and expertise to both acquire the GBPA, Port Group and take Freeport forward.

The three companies mentioned would fit that criteria. MSC brings an added advantage given its existing worldwide commercial relationship with Hutchison Whampoa, which holds the other half-share in Freeport Harbour Company and Grand Bahama Development Company, along with management control. While private investors acquire Port Group Ltd’s assets, the Government could then be free to take over the GBPA’s quasi-governmental and regulatory functions.

Meanwhile, GBPA executives last week revealed to some of their 3,000-strong business licensees that they are negotiating with the Government over the extension of Freeport’s real property tax, capital gains and income tax-related exemptions.

Kirk Antoni, the Cafferata & Company attorney and partner, who is a prominent member of the 25-30 strong licensee body that previously issued a public letter to both the Prime Minister and GBPA owners over their impasse, yesterday told Tribune Business that continued uncertainty over the status of Freeport’s investment incentives regime is “a big concern” for all the city’s businesses. 

The Grand Bahama (Port Area) Investment Incentives Act 2016 mandated that all GBPA licensees - besides the Port Authority itself and Hutchison Whampoa - apply to Nassau for the renewal of real property tax, capital gains and income tax-related exemptions. The Act has never been implemented but the Minnis administration, which promised to repeal it, never did, thereby creating concern as to whether - and for how long - these incentives will continue.

Referring to the licensee group’s meeting with GBPA executives last Wednesday, Mr Antoni said: “They did advise they are in discussions with the Government on extending the tax concessions and they’re speaking to the Ministry of Grand Bahama and Ginger Moxey, minister for Grand Bahama....

“That’s absolutely the big concern. It’s just the level of uncertainty right now as to whether the Government will decide to impose Business Licence fees on top of the Port Authority fees we now pay, whether we will pay property taxes on top of the service charges we now pay, and if they will take further steps on capital gains tax and corporate income tax. That’s the level of uncertainty we’re facing right now and are trying to get some response on.”

Fred Mitchell, minister of foreign affairs, who has been the most outspoken Cabinet minister in support of Mr Davis’ GBPA pressure strategy, last week warned the Port’s licensees not to become involved in the fight. He suggested they were also in danger of being ‘used’ by the GBPA and its two shareholding families to strengthen their position - something Mr Antoni vehemently denied yesterday.

Pointing out that two members of the licensee group had responded to Mr Mitchell’s accusations already, he asserted: “We are not being used. We hold no booking for the Government or the Port Authority. We are on the side of the Hawksbill Creek Agreement, and that’s the only thing we’re interested in right now.

“Quite frankly, personally I’m not in favour of the Government taking over Freeport, unlike Terry Gape. They’ve been a failure at every enterprise they’ve had since Independence, and they change every five years. How’s that going to work with the GBPA? They’ve failed at everything. Look at the Hotel Corporation, Bahamasair and the Water & Sewerage Corporation. It’s all been failures; government-run failures.

“The bureaucracy right now is just stifling us commercially and we’re not moving forward. Every day there’s a new form to fill out. What I want to see is a world-class management company come into Freeport and take over the city. That’s in the best interests of Freeport. Find someone to come in, buy some or all the ownership of the families, and grow the economy.”

Mr Antoni said last week’s meeting between the GBPA and licensees “went very well”, with executives both “guarded” and “candid” in their responses. “At least they met with us and answered our questions,” he added. “They gave us two hours of their time. They shied away from some of the questions, and others they answered very directly.

“They kind of gave us a potential view of their masterplan for Freeport. We’re continuing on. We’re going to try and educate the licensees tonight [last night] on the Hawksbill Creek Agreement, and keep them engaged and informed, and try and nudge both parties - the Government and the GBPA - to get together and resolve their differences outside the public domain.

“We’re going to nudge them along and not take any sides. We will give them a gentle reminder that to change or amend the Hawksbill Creek Agreement they will need the support of 80 percent of licensees.” Mr Millard, who produced a road map for Freeport’s development for Fleming Family & Partners when it was seeking to acquire the GBPA, echoed Mr Antoni’s call for unity and collaboration.

Admitting that he greeted yesterday’s article by Mr Gape with stunned “disbelief”, he wrote: “Freeport is like a house that has been vandalised. The person who did the vandalising [the Government] is now trying either to buy the house from its owners for little money (because it is damaged) or pushing those owners to sell it to somebody else (again, because it is damaged) while at the same time preventing them from fixing it.

“From the view of investors, almost every clause in the Hawksbill Creek Agreement (HCA) that was designed to attract them into the Port area has, over decades, been negated by Government measures that duplicate or frustrate responsibilities delegated by the treaty to the GBPA.

“The result is unsurprising. Besides licensee businesses that depend on things outside The Bahamas, like the Freeport Container port, the Grand Bahama Shipyard and BORCO (Buckeye Bahamas), it is difficult to find any that operate at anything close to their potential.”

Calling for an end to the blame game and finger-pointing, Mr Millard wrote: “The only way that Freeport will thrive (or even just survive) is for Government, GBPA, licensees and other key stakeholders to join forces and together develop solutions for the problems that prevent the city from being the most exciting investment destination in the region. Which it could be – of that I am certain.....

“Will narratives ever shift, though, from who is to blame for Freeport’s travails to what must be done to fix them? Will different stakeholders ever work together to solve problems rather than taking pot shots at each other to advance what they think are their own best interests? Until that time comes, Freeport’s travails will continue.”