By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The Government pushed the National Insurance Board (NIB) to examine acquiring the former City Markets head office on the East-West Highway, it was revealed yesterday, with appraisal values for the property gyrating between $7.2 million and $9.9 million.
A memorandum sent to NIB’s acting director, dated December 20, 2012, described the Government as “requesting” NIB to assess the potential purchase of the now-defunct supermarket chain’s head office and warehouse building.
The fact the deal appears to have been pushed by the Government, rather than the NIB Board, management or investment committee, is again likely to raise suspicions that it was initially conceived as a way to get the Christie administration out of a ‘political jam’.
The Government is effectively caught between the proverbial ‘rock and a hard place’, not wanting to push City Markets’ 78 per cent majority owners, the Finlayson family, who are among their political supporters, too hard over the severance pay and benefits - including pensions - that former employees claim are due to them.
The former head office and warehouse is owned by the City Markets employee pension fund, and its sale - at the optimum price - is key to the fund’s winding-up and being able to pay beneficiaries 100 per cent of what is owed to them. The property is the pension fund’s main asset.
The former City Markets employees have been putting pressure on the Government to help resolve their plight, holding a public demonstration in Rawson Square last week.
Thus getting NIB to acquire the property would have enabled the Government to effectively ‘get off the hook’ with both the City Markets staff and the Finlayson family.
The internal NIB memo was disclosed in the House of Assembly yesterday by Dr Hubert Minnis, the Opposition leader, during the debate on the Employee Pension Fund Protection Bill.
It prompted a swift response from Shane Gibson, the minister with responsibility for NIB, who confirmed that a key reason for the Government pushing the deal was helping the former staff to receive their pension fund money.
Referring to NIB management, Mr Gibson said: “They were recommending that we not make an offer, and of course we will not make an offer based on that recommendation.
“We were not trying to purchase it to assist the company that owned the building. We were trying to assist the employees so that they could be paid their pension money.”
Tribune Business exclusively revealed that NIB was contemplating the purchase of the former City Markets head office, and the fears that it might massively overpay for the property.
Those concerns were reinforced by the appraisal values supplied to both NIB and Mark Finlayson, the principal of Trans-Island Traders, the Finlayson family-owned vehicle that held the majority interest in City Markets. Mr Finlayson is also a trustee of the employee pension fund.
The NIB memo said: “The property is currently owned by the pension plan for the employees of Bahamas Supermarkets, and was appraised by Robin Brownrigg of Bahamas Realty on August 8, 2012, at $8 million on behalf of Mark Finlayson....
“NIB has had the property independently appraised by James Newbold, a government-appointed appraiser, assessor and licensed broker/appraiser, and Alvin Rolle, a licensed architect, construction manager and senior certified valuer.
“The property was valued at $9.9 million and $7.2 million respectively.”
All three values massively exceed an appraisal that was conducted by Morley Realty for Bahamian wholesaler Lightbourn Trading, which had previously been negotiating to acquire the City Markets head office from the pension plan.
Tribune Business previously revealed that Lightbourn Trading offered between $4.5-$5 million based on that appraisal - yet one of the appraisals presented to NIB was for almost double that sum.
This newspaper was also informed that the offices at the former City Markets headquarters are effectively unusable, and need to be demolished. The floor, which is laid over water tanks, is said to be collapsing, with a new roof also needed as the 28 year-old building starts to show its age.
In other words, NIB would also have to invest a substantial seven-figure sum - on top of the purchase price - to bring the property up to standard.
NIB appears to have taken these considerations into account when deciding not to go through with the deal.
The memo said: “The building appears to be structurally sound, but requires major repairs as it has been vandalised and stripped of all electrical/copper wiring...
“Previous offers for the property were around $4-$5 million.”
The rationale for the purchase had been leasing it out to Bahamas Customs as warehouse space, but the NIB internal memo said the Department did “not have an immediate need for the property”.
It added: “Management is recommending that an offer not be made for the purchase of the Bahamas Supermarkets warehouse and land located on the East-West Highway until the Government has identified a suitable tenant with acceptable repayment terms.”
Mr Gibson backed this line yesterday, telling Tribune Business: “The Government said if the Customs Department has interest in this building, then we should look at purchasing it.
“Of course, when we spoke with Customs, Customs said they had an interest. Subsequent to that, Customs obviously said they didn’t have an interest.
“Since Customs had no interest, since the investment manager at NIB is recommending to us and the Opposition that we do not purchase it, then it wouldn’t make sense to purchase it at this stage to help the [City Markets] employees.”
Comments
proudloudandfnm 11 years, 10 months ago
Well you know the PLP owes alot of folks money and favors. Guess they figure NIB will pay off their debts. The Finlaysons are filthy rich, they do not need bailing out from the government or anyone for that matter. What the government needs to do is pull Tiger and Mark in the PM's office and tell them to PAY THEIR BILLS! This whole City Markets thing is just slimey. These guys buy a food store chain and run it into the ground, steal their employees money and not one friggin word about prosecution!?!?!? Instead our government thinks they need to pay? Or help out? No! Make the FILTHY RICH, DISHONEST FINALYSONS PAY THEIR EMPLOYEES WHAT IS OWED....
Ironvelvet 11 years, 10 months ago
WHAT???!!! I renew what I said in a previous article related to this issue. The Government i.e. MY TAXDOLLARS are not resposible for bailing out a rich compay owner because he doesn't want to pay his employees what is rightfully theirs in a contract issued by the company and signed by the employee.
This is the most IDIOTIC reason that Shane Gibson is giving to 'give the employees some relief'. The Government did not employ the employees of City Market, Mark Finlayson or whomever did. That is a PRIVATE company. The government, customs or anyone has no use for this overpriced building that apparently is in a state of arrears and NO MONEY to buy it! Need I remind you of your colleage the Hon Michael Halkitis' recent financial report.
The employees didn't protest for the government to save them they did that so hopefully the police would arrest the owners of City Market since they have not acknoledged their end of the agreement. What needs to happen now is a very good lawyer should take on the case and add on some pain and suffering and any extra debt accrued by the employees for not receiving their payment. Unless the Finlayson family is bankrupt and let's be real, we know that's not true.
Get it together!!!!! Shane Gibson should be ashamed for trying to come up with that crazy line about saving the employees, you are trying to save your crony. PLEASE KEEP PRESSING THEM OPPOSITION AND DON't LET THEM GET AWAY WITH THIS RUBBISH!
spoitier 11 years, 10 months ago
Over on the Guardian paper, Shame Gibson is raising hell because the opposition got some insider information on the recommendation, the people should have that info also. Dr Minnis said he have a black book of corruption that he keep saftely in the bank safe and Shame Gibson is saying he have people on the FNM on camera doing corruption, these type of comments makes me wonder how does the Bahamian people think to keep following these two phony parties. The pot calling the kettle black and Bahamians don't reconized that both of them is full of crap.
John 11 years, 10 months ago
First off, I would think that when the Arawak Cay and Gladstone road freight terminals were designed and constructed, provisions would be made for a customs warehouse. The whole intention and purpose of this facility was to reduce the need to be dragging freight in 40 foot containers all over the island. Secondly both of these facilities already have security they would be much more suitable than a stand alone facility where a whole contingent of securitt would be needed to man the place. That being said if government had a genuine need for the former City Markets HQ and felt that purchasing it can bring resoution to the stand off between the Finlaysons and the former City Markets workers, then they should be buying at government's price and not at the Finlaysons price. Meaning they should be getting the building at a price well below market value, especially since its been on the market for sometime and has not been sold. But again the ideal situation was to have the developers of the Arawak Cay port development incorporate customs warehouse in its plan and design so as not to have the headache of manning a stand alone facility half way across the island.
Guy 11 years, 10 months ago
This entire fiasco stinks all the way to hell. Imagine Shame Gibson having the gumption to stand up in parliament and with a straight face say to the Bahamian people that the government wants to use the people's social security fund to make entitlement payments to the City Market employees, which is their employer's responsibility. I struggle to understand how and why the Finlaysons are not in jail for outright REFUSING to pay the workers what is legally entitled to them. These guys are FILTHY rich and sit by, along with the government, the courts, the oppostion, and the public while the city Market employees STARVE TO DEATH!!! What kind of madness is this??? The money in NIB is MINE Shame Gibson! We pay our contributions so that we can enjoy the benefits. It is not some slush fund for the govt to control to pay off PLP party supporters! This foolishness has got to stop! I am mad as hell!
elsastephen1 11 years, 4 months ago
I am a regular reader of your newspaper. Today’s article on city markets acquisition interested me very much. The revealing that this has been pushed by the government and not by NIB board was really shocking. I look forward to more such social issue articles from you in the future. http://www.myconstructionstore.com">construction estimating software
Sign in to comment
OpenID