The Tribune

Freeport's largest investor has confirmed that nine-figure investments have been delayed because the Government has left the city's expiring tax incentives "up in the air".

Fred Smith QC, the Callenders & Co attorney and partner, told Tribune Business that the Christie administration was "guaranteeing Freeport's continued recession, depression and eventual collapse" by its repeated failure to give investors certainty.

He said Hutchison Whampoa, by the Government's own admission, had delivered this message to the Prime Minister during their London meeting by tying the $250 million Phase V Container Port expansion and other projects to "certainty" that the expiring tax incentives will be extended.

Mr Smith urged that the real property tax exemption and other incentives due to expire on February 5 be extended for a further year, giving the Government and Freeport stakeholders time to properly plan the city's future.

"As I have been saying on behalf of myself and other licensees, and as highlighted now by one of Freeport's largest investors, an uncertain business environment prevents investment and development in Freeport," Mr Smith told Tribune Business.

"As predicted, investors are suffering from insecurity and anxiety because the Hawksbill Creek Agreement tax extensions are up in the air."

Obie Wilchcombe, minister of tourism, in his report to the House of Assembly confirmed that Hutchison Whampoa had explicitly tied the Container Port expansion - plus development of the Sea/Air Business Centre and other real estate projects - to the continuation of the expiring tax incentives.

"In committing to further investment in Grand Bahama, including the Phase V expansion of the Container Port, in pursuing the development of a logistics [Sea/Air Business] centre and the development of their extensive real estate holdings, Hutchison Port Holdings and CK Property Holdings indicated that such further investment would require certainty on the extension of the expiring real property tax, capital gains and income tax concessions," Mr Wilchcombe said.

Those three incentives, plus the Business Licence exemption, have already been extended once - from August 5, 2015, to February 5, 2016.

The six-month extension was designed to give the Government-appointed Hawksbill Creek Review Committee time to complete its work, and for the Christie Cabinet to then consider its recommendations and reach a conclusion on the 'incentive extension' issue.

With less than two months before the February 5 deadline, Mr Wilchcombe said the "timely completion" of the review into the expiring tax incentives was one of the issues discussed with Hutchison Whampoa.

Yet the Government appears no closer to reaching a decision than when the first extension was granted in the summer.

Highlighting what this is costing Freeport and its economy, Mr Smith told Tribune Business: "I continue to remind the Government that Freeport's economy is a fragile and easily marginalised construct.

"To have people in Nassau who know absolutely nothing about how this skeleton of an economy works is a recipe for continued disaster.

"As you can see, $250 million worth of investment, which can fund millions of dollars in investment spin-offs, is being held in abeyance precisely because the Government left these issues up in the air, addressing them too late and failing to disclose the McKinsey report, plus conducting a flawed consultation exercise."

Mr Smith urged the Government "to come clean" with Freeport and the rest of the Bahamas by publishing the McKinsey report.

The Christie administration has yet to do so, despite promising the Court of Appeal that it would as a result of the Judicial Review challenge launched by Mr Smith and his Callenders & Co colleague, Carey Leonard.

The report by the international consulting firm is seen as especially important,because previous statements by Prime Minister Perry Christie suggest it influenced the Hawksbill Creek Agreement Review Committee’s terms of reference, while also playing a vital role in determining the Government’s thinking on Freeport’s short and long-term future.

Mr Smith told Tribune Business that the attorneys representing himself and Mr Leonard had secured January 20-21,2016, as dates when the Supreme Court will hear their substantive Judicial Review application.

They are alleging that the consultation process undertaken by the Hawksbill Creek Review Committee was “fundamentally flawed and a sham” because key documents - especially the McKinsey report - were not released to those it interviewed.

Messrs Smith and Leonard are ultimately seeking Supreme Court Orders that prevent any decisions being made on the basis of the committee’s report; that require the McKinsey report to be made publicly available; and require that a new consultation process be undertaken with Freeport stakeholders.

"In the meantime, extend the expiring tax provisions for at least another year," Mr Smith told Tribune Business, "so that everybody concerned - the Government, Grand Bahama Port Authority, licensees/landowners and investors looking at Freeport in relation to Grand Bahama - can work together and plan Freeport's potentially booming future.

"Freeport, despite what Nassau may think , is the answer to the diversification of the Bahamian economy in the decades ahead. If we don't use Freeport's potential, it will be a tragic national loss."