The Tribune

BUSINESSMAN Frankie Wilson, one of the lead negotiators in the Christie government’s efforts to regain the majority shares in Bahamas Telecommunications from Cable & Wireless, admits that foreign investors are now looking at the Bahamas with a jaundiced eye.

Mr Wilson says that government’s attempt to break a signed and working contract could damage investor confidence in the Bahamas if negotiations were handled badly. He recently told Tribune’s Business Editor Neil Hartnell that there was “no doubt” that political risk was now being factored into Bahamas investment decisions. Investors were now questioning whether one administration would honour the agreements of another. With these questions being raised about a country once considered a safe haven for investment, the Bahamas will soon disappear into the backwater of insignificance.

Mr Wilson said that he had heard this fear expressed from “a very senior banker at the head office of one of the biggest banks in the world. I’ve heard that, so there’s no point in us Bahamians saying it’s not true or ignoring it. I have heard it.”

It could also create doubts in the minds of potential Bahamian investors, he said.

Mr Wilson is aware that he and his committee are walking on eggshells and any misstep could end in disaster.

“The key is that we’re conscious of it. How we deport ourselves, how these talks happen, is very important. We are so conscious of getting it right. ”

And how is he going to get it right?

He suggested that critical to investor confidence in the Bahamas, was the personality of Prime Minister Perry Christie, who is “seen as a calm type of guy that will not be reckless.”

What fools does Mr Wilson take us for? His fawning party supporters might walk lock-step behind him, but the rest of us have independent minds and know that a man’s personality and genial smile cannot be written into a contract nor can it pour holy water on the future of an investment.

The PLP has an unfortunate history of breaking contracts. Don’t forget Bahamas Airways and Swires. When the PLP failed to live up to that agreement, Swires swore not to invest “another dime” in the airline, packed its bags and left the Bahamas with an airline that — to the present day — has been a crippling drain on the Public Treasury. That was 42 year ago and the Bahamas is still saddled with the discarded baggage.

Nor can we forget the Pindling “bend or break” speech that broke Freeport. It ended in a breach of agreement with the Grand Bahama Port Authority’s licensees. The licensees turned to the late Sir Tasker Watkins, Lord Justice of Appeal and deputy Lord Chief Justice of England for advice. Sir Tasker, an expert in constitutional law, told them that any attempt by the government to repeal or amend the essential parts of the Hawksbill Creek Agreement would be “a rare abuse of the legislative powers which the government undoubtedly possessed. It would be a breach of faith. It would be a breach of contract.”

The government made the necessary legislative amendments and broke the contract. Many investors folded their tents and left. A Bahamian remarked yesterday that Freeport has never recovered from that blow of bad faith.

The only excuse that could be made for such a blunder in 1970 was that it was an inexperienced government — only three years in power whose members did not appreciate the consequences of their heedless arrogance. Today there is no excuse – not even trust in the genial smile of a “guy who will not be reckless” can save them from their obvious recklessness.

Of course, in typical PLP-style they have to find a scapegoat. And what better than the Ingraham administration. Mr Wilson referred to the “contractual relationships that existed with a high profile project like BahaMar that started this process” of renegotiating contracts. He also referred to the I-Group project in Mayaguana when the Ingraham government renegotiated the return of a large chunk of land for the Bahamian people.

What is being conveniently glossed over is the difference between these three contracts — BahaMar, I-Group and Cable and Wireless.

Before the Christie government was voted out in 2007, it had signed the First Heads of Agreement with BahaMar. However, difficulties arose concerning the roads, canal and the breakup of Skyline Drive. As a result a second heads of agreement was being negotiated. The project could not proceed without agreement and signature on the Second Heads of Agreement. Therefore, as this contract had not been finalised, the BahaMar principals had to continue their negotiations with the Ingraham government. In the course of these negotiations there were changes— some of those changes probably would have had to have been made under the PLP as, it is understood, Mr Christie was balking on the breakup of Skyline Drive at the time he lost the government. BahaMar also wanted changes and so there were negotiated changes on both sides. The big difference is that the Ingraham government did not go to BahaMar to renegotiate a contract already finalised and signed by the Christie government. The contract was still under negotiation. It was BahaMar that had to go to the new government to complete its contract.

Remember the Cable & Wireless (C&W) contract had been completed, signed and in operation for more than a year before the Christie government came on the scene. The Christie government in its wisdom decided that this contract had to be renegotiated so that government could buy back two per cent of the shares to make government – and not C&W – the major shareholder of BTC.

As for the I-Group in Mayaguana, the Ingraham government made no attempt to break this contract. However, the global recession resulting in financial difficulties and the passage of time made it impossible for the I-Group to live up to the terms of its contract and it was the I-Group — not the Ingraham government — that requested contract renegotiations. As a result the Ingraham government signed a new heads of agreement with the IGroup in which it had negotiated the reclamation of 5,825 acres of Crown land that it was felt the Christie government should never have sold. Again it was the developer asking for renegotiation, not – as in the case of Cable & Wireless – government asking the investor to negotiate a new contract.

There is a world of difference between these transactions, which intelligent business people understand. And because they understand, they have taken off their rose-tinted glasses and are now taking a new measure of this government.

So our advice to Mr Wilson and his committee is that they put on their soft shoes and tip-toe away from this ill-conceived foolish adventure as quickly as possible.