The Tribune

By ADRIAN GIBSON

ajbahama@hotmail.com

WITH the government signing yet another Heads of Agreement (HOA) on Monday, it appears that Prime Minister Perry Christie has returned to his old ways.

These HOAs are aberrations and, considering the law of averages, are failing and an impractical means of developing our economy.

Considering the slew of recently signed HOAs, are we fool enough to be basing our country’s development on HOAs with foreign developers for projects that are too large and usually result in land speculators jumping the crown land line and grabbing thousands of acres of land?

Once again, rather than seeking to diversify our economy, we have yet another government that is visionless and reliant on our two-pronged economy (tourism and financial services), a model that was launched in the 1950s. In 2016, we continue to have a government exuberant and excited about foreign direct investment rather than developing its human capital and creating environments for one to easily do business and become an entrepreneur. We are yet again seeing the furtherance of the plantation economy.

Over the years, we have seen the landscape of our archipelago littered with the carcasses of failed, stalled or limbering anchor projects birthed by HOAs that were secretly cut in the Office of the Prime Minister (OPM) without consultation. Many Bahamians can recall the Ginn Sur Mer development in West End, Grand Bahama.

In 2008, the original developer, Bobby Ginn, defaulted on a construction loan which resulted in the property being foreclosed by the bank Credit Suisse and Lubert-Adler, the Philadelphia-based investment bank that was Ginn’s financing partner. Last year, we were told by excited Cabinet ministers that the property was being “very aggressively marketed” to target potential purchasers though the existing two ownership groups would seemingly need to work together to sell their interests in the development as a single entity or seek to achieve two simultaneous closings. That way, it ensures that one vendor does not hold a whip in hand, and seek to leverage its advantage into a higher purchasing price.

Just last year, Mr Christie sought to interest Chinese state-owned interests in acquiring the former Ginn development on a trip to the Far East. There were reports that Obie Wilchcombe, the Minister of Tourism, even took a Chinese investment group to West End to see the property, but no formal offers or information requests had been made from that source. We sure love the Chinese! The entire archipelago - at the rate our government is going - will soon be owned by Chinese state entities.

What would have been the core project is owned by Lubert-Adler. It holds 280 acres that were earmarked as the site for the hotels and casino, and its landholdings also include key amenities such as the airport, marina and utilities. Lubert-Adler also controls the Old Bahama Bay Resort, the golf course, the existing marina, commercial facilities such as the restaurants and retail, and associated operational facilities. But a Credit Suisse-led lending syndicate took possession of the remaining 1,476 acres at the former Ginn Sur Mer project after Ginn Development Company defaulted on its $276m loan. It effectively inherited the real estate component of the Ginn project.

Today, both sides are looking to sell their investment and, frankly, will make out like bandits, selling hundreds of millions of dollars of Bahamian land. This is another failed anchor project, birthed by a HOA which Bahamians hardly get the crumbs from what appears to be a very prosperous table.

And then there is the stalled I-Group Project in Mayaguana. And the withdrawal of the Bimini Superfast after much digging and cutting into the shoreline. And the stalled Baha Mar resort that is now in receivership and that, having stalled, has left 2,000 Bahamians without jobs and wondering how they will eat and pay their bills! Yes, there are many more but these are but a few examples of this reckless HOA policy that consecutive governments have adopted.

I have long held the view that many of the anchor projects throughout the Family Islands are unsustainable white elephants. Frankly, such HOAs - which are not truly representative of capitalism and a free market economy - are demonstrative of the Prime Minister and his Cabinet’s unmitigated incursions into the realm of big business where they, for the most part, are out-negotiated, out-foxed, out-manoeuvred and easily impressed by fancy talking investors (many of whom are land speculators) who present glossy brochures and flashy graphical mock-ups of what could be.

I have always said that my son - who turned six in December - could negotiate a better deal than many of those who sit at the table in the Bahamian people’s name and pan for investment dollars. What our so-called negotiators and government leaders don’t seem to realise is that any investor looking at the Bahamas has already calculated the advantages of coming here, they are doing us no favour, they have done their research and seen where they could profit. Our close proximity to the United States, history of stable parliamentary governance and beautiful environment are major factors.

Why is that lost on many of those who sit at the negotiation table on our behalf? Or, could it be that they just want to be able to run to the public with an announcement, to gain political brownie points and extend their political lives?

There is a need for greater checks and balances in this country. The Bahamas Environment Science and Technology Commission, the Bahamas Investment Authority and the National Economic Council do not provide such checks. These entities are merely constructs in the OPM/Ministry of Finance. These entities are making decisions on behalf of Bahamians but they arise from no statute. None of these make-believe regulatory bodies exist in statutory law. They are merely appointed committees.

If the OPM was a restaurant, the Prime Minister would be the head chef who is in full control of the menu, essentially ensuring that all foreign investors with an interest in The Bahamas come to that restaurant to consult the chef and dine before any moving on.

I recall a recent conversation with a taxi driver whilst on a flight from Eleuthera. We discussed how the government continues to maintain a moratorium on taxi, livery and jitney plates. I think that such a stance is ludicrous. I told him then that when I visited Panama last summer, one of the biggest entrepreneurial undertakings was cab driving. The free market forces took effect as those drivers who offered the better rates thrived whilst those who price gouged did not experience the same level of business.

Why do we not embrace competition in The Bahamas? Why can’t the moratorium be lifted and those persons who have the best cars, provide the best service and offer the best rates will prosper. Isn’t that truly representative of capitalism? Why do politicians always seek to stick their noses into private enterprises?

The signing of HOAs over the years is believed to have led to kickbacks and unjust enrichment. If we had a Freedom of Information Act, coupled with strict enforcement of the Public Disclosures Act and, of course, the enactment of an Anti-Corruption Act, we might be shocked with our findings.

Fred Smith QC shares my view on Heads of Agreement. He said: “I don’t need lawyers who have been unable to succeed in their own private practices and who have suddenly become Cabinet ministers to now tell me how I can or can’t do a business deal or to feel that they have some capacity to be involved in business deals involving hundreds of millions of dollars of investments by businessmen. Politicians are not elected based upon their expertise as businessmen. They should not be involved in the negotiation of business deals between private enterprises.

“The government should regulate, for example, through the Securities Commission or the Public Utilities Commission or a statutory environmental protection agency; or to ensure that the Health and Safety at Work Act is respected; or that the Department of Environmental Health Services is properly staffed and funded to be effective to prevent pollution such as at Clifton Pier, or oil companies leaking benzene into the ground. Or, that there are sufficient inspectors to properly maintain the standards of building regulations. Or, to ensure that proper permits are issued.

“It’s actually the functions of specific Cabinet minister and regulatory bodies and government agencies and statutory authorities to ensure that the laws which the legislature pass are put into effect; not ignore the laws passed by Parliament (to) operate in their own independent spirit of ‘policy’” he said.

I couldn’t agree more.

Whilst one has no proof that certain politicians have profiteered from HOAs (and yes, we have all heard the stories), we know that HOAs allow for fronting, institutionalised corruption, contracts for politicians and their family members, get-rich-quick deals, lack transparency and accountability and ultimately result, in many cases, in economic strangers profiting at the expense of our environment, our culture and our communities and pulling out whenever it becomes economically unsuitable for them to remain (think Bimini Superfast).

Did the Progressive Liberal Party (PLP), in its Charter for Governance, indicate that they would be abandoning the failed anchor project gimmick?

In the governing party’s 2012 charter, they promised to create opportunities for Bahamian ownership.

They asserted: “The primary model for hotel development in The Bahamas has mainly been through foreign investment, which served as a catalyst for Bahamians to create enterprises to support hotel services from taxicabs, tour cars, and operating retail stores in foreign owned hotels. The time has come to seriously and objectively search for ways to change this model.”

The PLP subsequently claimed that they would “launch a new National Resort Development Initiative in which public and private sectors will co-operate to create sustainable new resorts, based on the following key principles: Bahamians will become major investors in the hotel and resort business created by this initiative; the scale of the initiative will be important to ongoing viability, particularly for gaining and sustaining presence in the international tourism market place; over time the hotel brands created by this initiative will become important national assets; funds spent on marketing the resorts will be an investment in nationally-owned assets.” Wow! Where’s the proof?

In their charter, they pledged to adopt an “economic initiative which (they would) implement to reinvent the model of tourism in The Bahamas.” Does anyone see any evidence of this?

PLP chairman Bradley Roberts bragged recently that the “government has executed at least twenty-two (22) Heads of Agreement for tourism related projects to further strengthen the tourism project and brand, stimulate the economy and create jobs.” But how many of those were with Bahamians? How does this, in anyway, reinvent tourism in the Bahamas?

In its charter, the PLP also reference HOAs signed between 2002 and 2007. However, whatever happened to the $300m re-development of the Cotton Bay Club on South Eleuthera that they referenced? Or the $243m resort development on Crab Cay and Little Crab Cay, Exuma? Or the $90m HOA signed to create a resort in Rum Cay? Or, the $76m Gold Creek development?

On the campaign trail, the PLP pledged that they would take a “new direction” and vowed that they will “conduct research to determine the potential environmental impact of all development projects and collaborate with investors on the elimination of major environmental concerns and the continued monitoring of such issues; hold public town meetings to present environmental impact assessments for purposed developments; emphasise the importance of the protection of our environment and the conservation of our natural resources, oceans and undeveloped land”. Could someone please point me in the direction of any report featuring the research done relative to the recent Heads of Agreements? Or, the town hall meetings?

This week, Mr Christie signed an HOA with billionaire Swiss businesswoman Dona Bertarelli for the development of a $200m project on Children’s Bay Cay and Williams Cay, Exuma. The project, Prime Minister Perry Christie said, could create about 250 jobs during its construction phase and between 350 and 450 jobs during its operational phase. According to the developer, the development promises to include a five-star resort and golf club, a boutique 50 pavilion-room hotel, five over-the-water pavilions, five estate homes, a clubhouse comprising a restaurant, boutique library, screening room and bar and lunches.

However, in an effort to sell yet another touristic agreement born of an HOA, Mr Christie said (for our consumption): “For the benefit of both Exumians and the resort, the developer will construct and fully outfit a medical clinic, police station and a fire station at Barratarre, which will be transferred to government and staffed and maintained by the relevant agencies .... Also planned for development on acquired private land at Barratarre is the project’s back-of-house facility, a solar farm, support services and a residential subdivision for resort employees.” Mr Christie would have us believe that these amenities are being put in place for us, rather than in the interest of the resort’s developers.

Perhaps aware of the environmental questions that would arise, Mr Christie addressed the impact the development could have on the area and stated that considerable effort was made by those involved in the signing to protect the environment. To assuage environmentalists, Mr Christie stated that such efforts include creating a Marine Protected Area “wherever potential exists” and employing the best practices in golf course design. He said that the development will involve the use of solar power where appropriate.

However, I say to Mr Christie ... please! We want to see the report of the Environmental Impact Assessment and nothing else will suffice!

Here’s the kicker: having signed the HOA, Mr Christie then claimed that consultation is ongoing. As for resident consultations, Mr Christie said this is “ongoing” and will involve “direct community involvement” that seeks to be transparent while addressing the concerns of residents. If the government truly wants to be transparent, why didn’t they consult before signing off on the HOA?

When the HOA was signed to develop the Baker’s Bay resort in Guana Cay, the environmental impact assessment stunningly stated that there would be no consultation with local residents until after all approvals have been given by the Office of the Prime Minister. So, here we see such an approach yet again.

In December, Mr Christie also signed a $168m HOA for the expansion of the Deep Water Cay resort in Grand Bahama and signed and concluded a HOA with foreign developers South Cat Cay Properties (Bahamas) Ltd for the development of a $94m luxury boutique resort at South Cat Cay, near Bimini.

Interestingly, Heads of Agreements - signed at the OPM - also always allow foreign investors to jump ahead of the line for crown land, getting many of the best pieces of land whilst some 30,000 Bahamians continue to wait for their requests to be answered.

What’s more, beyond the gross giveaways of Bahamian land, we see billions of dollars in concessions being given away, from casino taxes to business licence fees to customs duties to real property taxes and so on. We see government entities failing to collect utility payments as these developments are apparently on an untouchable list.

Even more, the Conveyancing and Law of Property Act calls for a resolution to be passed by Parliament relative to the leasing or sale of crown land. Yet, we see no debates and no evidence of the law being followed.

Mr Smith describes HOAs as “the political and economic AIDS virus in our body politic. Even though such agreements were not enforceable in law, and were basically statements of intended policy and recognition of the development that was going on [for instance the shipyard in Freeport] that in and of itself has many problems and was the basis upon which I challenged the HOA in Guana Cay,” he said, claiming that “the current manifestation of HOA and the anchor project policy has been the culmination and the perfection of the art of corruption by the PLP.”

Will these projects materialise? Will Bahamian governments seek to move away from this farcical HOA scheme that consecutive governments have adopted? We shall see. It certainly serves as a breeding ground for corruption and, whilst developers pawn off Bahamian land for major profit, we sit on the sidelines unaware of what was agreed on our behalf at the OPM.

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