The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Freeport’s marine pilots have accused the Grand Bahama Port Authority (GBPA) of “neglecting its duties as a regulator”, and will likely initiate a Judicial Review legal action if it fails to reactivate their Business Licence.

Erin Ferguson, the Bahamas Marine Pilots Association’s (BMPA) managing director, told Tribune Business that by refusing to follow through on processes to activate the pilotage company’s Business Licence, the Port Authority was in breach of its Hawksbill Creek Agreement obligation to maintain Freeport’s harbour to international standards.

And he questioned why the Port Authority would fail to follow applicable law and regulations at this time, arguing that it would invite the Government not to extend Freeport’s Business Licence and real property tax breaks which expire in 2015.

The BMPA, which has been formed from marine pilots who have resigned from both the Freeport Harbour Company (FHC) and Bahamas Oil Refining Company (BORCO), is arguing that its members’ departures - coupled with the roadblocks placed in the way of their Business Licence - have placed Freeport’s entire economy in peril.

With its members unable to offer their services, the BMPA is arguing that both FHC and BORCO do not have enough remaining pilots to meet the demand created by the shipping traffic flowing both ways through Freeport harbour.

This, they contend, could bring Freeport’s maritime (Container Port), industrial and cruise ship sectors - all of which rely heavily on the harbour to facilitate their products - to a grinding halt.

“They still have delays on our Licence,” Mr Ferguson told Tribune Business. “Ian Rolle [the Port Authority’s president] is refusing to answer as to why they have not done an inspection, which should happen in one-two days.

“We checked with some inspectors, and our name was not even in the business log.”

Tribune Business revealed last week how the BMPA’s members were planning to provide their services, and be hired, through the Freeport Pilotage Company, an entity first established in 1986.

Mr Ferguson said Freeport Pilotage Company’s Business Licence was in good standing, with fees paid up-to-date, but needed to be re-activated from dormant status.

He alleged that several roadblocks were being placed in the way. Before a Business Licence is granted, GBPA inspectors are supposed to inspect the applicant’s physical premises - something the BMPA says is being delayed in the case of Freeport Pilotage Company.

Mr Ferguson also alleged that the Port Authority wanted a sign-off by the Port Director, authorising the Pilotage Company and pilots to provide the services, before it would move on the Business Licence. The Port Director, while answerable to the GBPA in his regulatory capacity, has his salary paid by the FHC.

The BMPA managing director said the Association had visited the Port Authority and gained oral confirmation that the Pilotage Company’s Business Licence fee was paid “up-to-date”.

However, he alleged that the official they dealt with told them Port Authority management had “instructed her not to show us any written statements”.

“The challenge here is that the Port Authority is essentially neglecting their duties as a regulator,” Mr Ferguson told Tribune Business. “They’re trusted to be objective in executing the law, but clearly Ian Rolle is acting in his capacity as president of Port Group Ltd.

“The Port Authority is neglecting their responsibilities to protect the public, and now they’re turning their backs on one of their licensees to protect their own interests.”

A glimpse of the BMPA’s likely strategy is laid out in an analysis document prepared by its attorney, Carey Leonard of Callender’s & Co.

Mr Leonard, the Port Authority’s former in-house counsel, said the Port Authority was delaying its premises inspection to put pressure on the BMPA, knowing the licence granted to Freeport Pilotage Company in 1986 was valid.

He added that the Port Authority was effectively ‘conflicted’ because, while it held the regulatory responsibilities, its Port Group Ltd affiliate holds a 50 per cent equity stake in Freeport Harbour Company.

Both entities, the GBPA and Port Group Ltd, have the same shareholders in the Hayward and St George families. Hutchison Whampoa owns the remaining 50 per cent stake in the Harbour Company, and has management control.

Meanwhile, Mr Leonard said that as an entity given quasi-governmental powers by the Hawksbill Creek Agreement, the GBPA’s decisions were open to Judicial Review.

He added that the Port Director, who is appointed by the Port Authority, represents it on all regulatory matters as opposed to the Harbour Company.

Therefore, according to Mr Leonard, the Port Director has to act in the “public interest” under the Hawksbill Creek Agreement.

“The Hawksbill Creek Agreement calls for Freeport Harbour to be operated ‘as will comply with accepted international practice’,” he wrote. “Pilotage and safety standards of today, not 10-50 years ago.

“Freeport Harbour is no longer a sleepy harbour. In the last 20 years it has become a busy harbour. What do busy harbours do?.......

“The rules that the Port Director follows are created by statute law, not what Freeport Harbour management feels today. He must act in the best interests of the public, which may not necessarily be those of Freeport Harbour Company.”

With a potential Judicial Review action strongly hinted at, Mr Leonard then effectively called for government intervention to resolve the dispute.

“The Government can write and state what it believes should be happening, and can let the GBPA know that action will be taken if the GBPA does not act in accordance with the interests of the public,” Mr Leonard wrote.

“I can understand that in the normal course of events, government does not interfere with the private foreign investor, but this is not the normal course of events and the GBPA is not a normal foreign investor.

“It needs to be prodded to do what it needs to do. Government should write and say that Cabinet has expressed their concerns and feels that the following should be done.”

Mr Ferguson, too, hinted at the BMPA’s preference for a central government intervention, suggesting that next year’s expiration of key Freeport business incentives (Business Licence and real property tax) gave the Christie administration extra leverage.

“I don’t know why they’d want us to entertain them and put them before the court before 2015,” Mr Ferguson told Tribune Business. “Why would the Government extend any privileges to the Port Authority, especially on an asset as important as their own waterway.”

The situation now seems to be gearing up for a protracted, and increasingly bitter, dispute between the two sides. Both the Freeport Harbour Company and BORCO feel the BMPA’s pilots, their former employees, are attempting to ‘bounce’ them into re-hiring their services through the Pilotage Company on less favourable commercial terms.

The two firms also believe that their reputations and safety records are being unfairly, and inaccurately, tarnished by the BMPA as the latter attempts to justify its case. This, in turn, has unsettled customers and maritime traffic into Freeport, threatening to disrupt commerce.

They have accused the BMPA of attempting to create a private pilotage monopoly in Freeport Harbour, and are unhappy that the allegations are coming from a person, in the shape of Mr Ferguson, who is not a pilot himself.

The BMPA is taking on two multinational companies, in the shape of Hutchison Whampoa and BORCO’s owner, New York Stock Exchange (NYSE) listed, Buckeye Partners.

Positions on both sides appear to be hardening, as evidenced by a March 5, 2014, letter sent to shipping agents and vessel owners by Freeport Harbour Company’s chief executive, Godfrey Smith.

Emphasising that pilots were in place, Mr Smith said the company was “the only provider of pilotage, mooring and certain related services” in Freeport.

“Freeport Harbour Company is aware of the intentions of certain pilots to challenge the authority of the company, and does not support, does not authorise and will not approve the entity referenced as Bahamas Maritime Pilots Association to operate within the confines of Freeport Harbour,” Mr Smith wrote.

However, Mr Ferguson said of the two companies: “They’re shutting down the harbour themselves.” He added that Freeport Harbour Company had “changed the game completely” by releasing all five of the resigning BMPA members, together with what they were owed, last week.

This, Mr Ferguson said, was well in advance of the March 28th resignation date given by the five themselves. Suggesting that the Freeport Harbour Company did not now have enough pilots, a claim rejected by Mr Smith’s letter, he added: “They just speeded up the timeline.

“It’s really detrimental, and what is at stake here is the entire economy of Freeport, whether by safety or shutting the harbour down by not using the pilots available,” Mr Ferguson told Tribune Business.

“I’ve not seen this type of engagement by companies. They usually fight the good fight, but when it becomes obvious they cut a deal to solve the problem.

“Freeport hangs in the balance, and this company [Freeport Harbour Company] seems to be saying we’ll do what it takes, go in whatever direction they see fit, regardless that the Hawksbill Creek Agreement requires them to maintain international standards.”

Mr Ferguson said the BMPA had proposed “a stop gap measure” to handle marine pilotage in Freeport Harbour until the situation was fully resolved.

It was suggesting that pilots from all three entities - BMPA, Freeport Harbour Company and BORCO - be placed on the same schedule, each working four days on, four days off, at the existing fee rates.

Emphasising that the BMPA wanted to avoid a situation where all three were competing for maritime business, Mr Ferguson said: “If we allow it to go to competitive pilotage, it will be a free-for-all where the BMPA pilots have to wait at the docks for the ships and race to them as fast as they can.

“It’s happened in other ports, and incidents are off the chart.”