The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A WELL-known contractor leveraged prime commercial real estate on Gladstone Road into a $7 million Bank of the Bahamas loan within months of acquiring the same property from the Crown for just $221,000.

Documents obtained by Tribune Business from the Registrar General’s Department show that Edward Penn, head of Penn’s Renovation and Construction, originally acquired the 7.366-acre site for what is now Phil’s Food Services from the first Christie administration via a Crown grant.

The $220,980 deal, consummated on May 3, 2006, was signed off by Prime Minister Perry Christie in his capacity as minister responsible for Crown Lands.

A ‘confirmatory grant’, again bearing Mr Christie’s signature, was signed on November 6 that year in order to clear up any confusion arising from Mr Penn’s company changing its corporate name.

Yet, within three months of the latter grant, Bank of the Bahamas had taken a debenture over the same 7.366 acres “to secure advances up to $7 million”.

The February 21, 2007, debenture, made with Oscarkath Home Depot Ltd, was likely security for the BISX-listed bank agreeing to finance the Home Depot-style retail business that Mr Penn and his family intended to construct on the property.

Mr Penn, a well-known and long-time Progressive Liberal Party (PLP) supporter, was described in the documents obtained as Oscarkath Home Depot’s president. He had at the time, though, told Tribune Business that his brother owned the project.

Among the attorneys listed on the grant and debenture documents as being involved in the transactions were Graham Thompson & Co (likely representing the bank in the $7 million loan talks) and Davis & Company, the law firm of now-Deputy Prime Minister Philip Davis.

The vast disparity between the $7 million loan security taken by Bank of the Bahamas, and the $221,000 purchase price paid for the Crown grant by Mr Penn, is likely to raise questions among observers.

For it suggests that either Bank of the Bahamas’ appraised valuation of the underlying real estate was extremely optimistic, or that Mr Penn obtained a fantastic cut-price deal on the Crown grant - something that may have cost the taxpayer and Treasury several million dollars.

The deal’s terms again highlight the lack of any clear policy or statute governing the sale and lease of Bahamian Crown Land, which is held on trust for the Bahamian people by the Government.

In particular, there appear to be no policies determining the price (valuation method) to be employed in the sale or lease of Crown Land, and who is worthy of receiving consideration for a grant.

David Davis, when permanent secretary in the Prime Minister’s Office under the former Ingraham administration, conceded that successive governments of both parties had tended to use Crown Land as a political tool. Hence the seeming lack of transparency and accountability.

In the Penn transaction, the initial Grant document, recorded on June 22, 2006, reveals that he and Oscarkath Home Deport acquired Allotments ‘B’, ‘C’ and ‘D’ from the Government’s Gladstone Road Crown Allotments for a purchase price of $220,980.

The November 6, 2006, ‘confirmatory grant’, which bears the name and address of Davis & Company, was made to clear up any confusion that may have arisen from Mr Penn’s company changing its name from Oskath Home Depot Ltd to Oscarkath Home Depot Ltd.

And the February 21, 2007, debenture between Oscarkath Home Deport and Bank of the Bahamas gave the latter a mortgage and fixed charge over all the company’s real estate assets, plus a floating charge over the business’s furnishings, fixtures and equipment.

The following year, on June 18, 2008, Mr Penn and Penn’s Renovation and Construction gave Bank of the Bahamas a $6 million guarantee to cover all present and future debts. An 8.5 per cent interest rate was applied, and the document shows that the guarantee was initially for $2 million, only for that to be crossed out and replaced with a handwritten $6 million.

Mr Penn’s Home Depot-style project was never completed. The property was ultimately taken over by Bank of the Bahamas, and Philip Lightbourne’s Phil’s Food Services moved in instead.

Mr Lightbourne, Premium (Phil’s) Food Services and H&B Investments are among the 13 ‘bad’ Bank of the Bahamas’ borrowers who were ultimately transferred to Bahamas Resolve as part of the bank’s $100 million ‘bail out’.

Documents previously seen and reported on by Tribune Business reveal that Bank of the Bahamas advanced at least $2 million that was secured on Premium Food Services’ real estate and other assets.

It is unclear whether this sum was in addition to the $7 million security taken over the same real estate acquired by Mr Penn.

Meanwhile, Bahamas Resolve also appears to have inherited a mortgage covering residential real estate owned by Mr Lightbourne in Freeport’s Lincoln Green subdivision, and a $1.5 million advance made to H&B Investments - a company for which Mr Lightbourne is named as president.

The latter advance is secured, according to the documents, on 2.362 acres at Love Estates in western New Providence.