The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Freeport business owners fear they will be “wiped out” by a new mega hardware store that is allegedly owned by the Grand Bahama Port Authority’s (GBPA) new foreign partners.

Numerous Bahamian-owned retailers and wholesalers have voiced concerns to Tribune Business that this nation’s National Investment Policy is being breached by a 130,000 square foot store under construction at the Freeport Light Industrial Park (FLIP).

They claim that the store, whose foundations have already been poured, is owned by the Florida-based Del Zotto family - who are entering a sector supposedly exclusively reserved for Bahamian ownership under the Policy.

The Del Zottos already have significant Freeport-based interests through their Gold Rock Corporation’s block and concrete business.

And the GBPA this week unveiled them as its new joint venture partner on the FLIP project. While the Port Authority will act as regulator, and provide the land via its Freeport Commercial & Industrial subsidiary, Gold Rock Corporation will be the Park’s developer.

The tie-in with Gold Rock and the Del Zottos, which GBPA executives confirmed at last week’s Grand Bahama Business Outlook conference, has only heightened the concerns harboured by companies such as Dolly Madison and Furniture Outlet.

They fear that the Del Zottos, with businesses in four US states, will exploit their financial muscle and the natural competitive advantages enjoyed by foreigners to squeeze existing Bahamian businesses out of the hardware/retail sector.

Gold Rock Corporation’s senior Bahamian executive said he knew “nothing about” the purported mega hardware store when contacted by this newspaper, but every Bahamian-owned business spoken to described it as ‘an open secret’ and harbours the same concerns.

Don Roberts Snr, Dolly Madison’s principal, told Tribune Business: “It’s like a whole city that they’re [Gold Rock] building. It’s humungous.

“From what I understand, the size of their hardware store is going to be the size of mine and Kelly’s put together.”

He added: “What disturbs me more than anything else is that this man has got more money than God.

“If this was a Bahamian, I can’t say a word, but here I see a foreigner coming in to take over the retail business that is supposedly reserved for Bahamians. That upsets me.”

Gold Rock already operates a furniture store, the Home Design Centre, which Freeport-based retail/wholesale sources confirmed has been in operation since August/September 2014.

Its website, www.bahamafurniture.com, makes no effort to disguise the foreign ties in an industry supposedly reserved exclusively for Bahamian ownership.

The wesbite starts off by tracing the family’s 50-year business history, and adds: “Since 1999, our Bahamian business partnerships and the Del Zotto family investments have resulted in greater and greater family commitments to the Bahamian community, as well as attempting to improve the Bahamian economy.”

“They launched that website four months ago, and I’m shocked that they allowed that to go on the site,” one competitor said of the Del Zotto ownership connection. “They seem to think they’re untouchable.”

The Home Design Centre website then launches a full-frontal assault on Bahamian-owned businesses, branding them as “greedy” and blasting rival Grand Bahama furniture stores for offering “cheap quality”.

“Quite frankly, the Home Design Centre was conceived as a business opportunity where we could counterpoint the greedy-priced and cheap quality furniture offerings in Grand Bahama,” the company’s website continues.

“We are alarmed at the cost of goods sold in Grand Bahama. We are amazed that Bahamians accept this adversity.

“We are dumbfounded that a trip to the US could result in that much savings once you pay for the fare, hotel, car, and shipping.

“We are committed to not taking advantage of Bahamians; rather, to doing our part to end this greedy madness.”

One Bahamian wholesaler/retailer, speaking on condition of anonymity, said of the comments: “It’s a very broad brush that they’re slapping around. It’s very wrong to tar everyone in the country with the same brush.”

The Home Design Centre’s website goes on to profess the love that the company, and its owners, have for the Bahamas and the Bahamian people.

“We want to look you in the eye and know we have done our best for you,” it concludes. “Home Design Centre… providing excellent quality furniture, accessories and home-goods with service, honesty and fairness.”

The website gives the Home Design Centre’s address as ‘No. 33 Freeport Light Industrial Park’, with the ‘About Us’ section reading almost like a justification for foreign ownership in a sector normally reserved for Bahamians.

It also confirms that the Del Zottos have their sights set beyond Freeport, as the Home Design Centre is offering mailboat delivery of its products to Nassau.

“It’s going to knock the hell out of Freeport,” Dolly Madison’s Mr Roberts said of the alleged new, larger store. “We’re suffering like hell now.

“But when they let guys with unlimited money come in here like this, it’s going to wipe us out. We may as well close the doors. I just think this is going to knock every single business in Freeport.”

Apart from Dolly Madison and Furniture Outlet, the likes of Kelly’s (Freeport), Bellevue Business Depot and numerous Bahamian-owned small businesses will also likely face competitive pressures as a result of the new mega store’s impending market entrance.

“They’re going after everyone,” one Bahamian rival said of Gold Rock. “The existing business [Home Design Centre] has gone into so many different aspects, selling lumber and building supplies. They’re doing everything as far as retail is concerned.

“It is bad news. It has affected all the major retailers in Freeport already. Our sales have been impacted already.”

Tribune Business was told that complaints were submitted to the GBPA several years ago over the Home Design Centre’s then-alleged foreign ownership, and its entrance into a retail/wholesale market supposedly reserved for Bahamians only. Those complaints, though, were dismissed.

Meanwhile, the businessman added of Gold Rock’s alleged new, expanded hardware store: “They’re propping the walls up already. The floor plan is right there, and the walls are going up.”

Mr Roberts said opposition to Gold Rock’s plans was starting to galvanise. He confirmed that a legal opinion had been sought from Fred Smith QC, the Callenders & Co attorney and partner, on the possible legal challenges that could be mounted to halt the Home Design Centre venture.

Tribune Business understands that Mr Smith has yet to respond. However, a copy of the letter sent to him, reads: “Gold Rock is apparently embarking on a 130,000 square foot retail store (twice the size of Dolly Madison/Kelly’s) which will seriously impact both those businesses.

“We have good reason to believe that the Del Zotto family are not Bahamians, and who on the face of it would not be able to operate a business reserved for Bahamians.”

Rival Bahamian businesses are set to meet this week to discuss the situation further, and this newspaper was also told that an unofficial complaint has been made to the US Embassy in Nassau. A protest to the Government in Nassau is also likely.

“It’s being talked about. This has only come to light in the last month or two,” Mr Roberts confirmed.

Tribune Business was told by several sources that Gold Rock Corporation, and the issues surrounding its alleged mega hardware store investment, were raised recently with Khaalis Rolle, minister of state for investments.

Mr Rolle, though, denied this when contacted by this newspaper. “I can categorically say it hasn’t been brought to my attention,” he responded, when contacted by Tribune Business.

He indicated, though, that Gold Rock/the Del Zottos would require National Economic Council (NEC) approval for something such as their purported new store, given the issue of foreign ownership in a sector supposedly reserved for Bahamians only.

“They would have to get approval for something of that magnitude,” the Minister added.

It is unclear whether the Home Design Centre has received such approvals. Henry St George, the GBPA’s vice-president, said last week that the FLIP project had received the necessary Buildings and Development and Town Planning approvals from the GBPA.

Jamaal Gomez, Gold Rock Corporation’s general manager, was tight-lipped about the new hardware store venture and the ‘Bahamian ownership only’ issue when contacted by Tribune Business.

“I don’t know what you’re talking about,” he replied. “I cannot speak about something I do not know anything about. There isn’t anything to comment on at this particular point in time.”

When asked about the foundation pouring, Mr Gomez added: “We’re doing expansions around here all the time, building sheds and all sorts of things.”

He did, though, confirm that Gold Rock was in negotiations with the GBPA to acquire more land.

Tribune Business sources had suggested the company was seeking another 40 acres, and Mr Gomez replied: “That’s under negotiation. I cannot speak on that.” He then hung up the phone.

Mr Gomez’s reticence is puzzling, since Mr St George had revealed numerous details on the FLIP project the day before.

FLIP’s 300-acre site, which runs directly west along the highway from Grand Bahama International Airport’s domestic terminal, was selected because Gold Rock’s existing businesses can serve as ‘anchor’ tenants.

“It is a 300-acre light industrial park, being developed between Freeport Commercial & Industrial (the land owner), GBPA (the regulator), and Gold Rock Corp (the developer),” Mr St George told the Business Outlook conference last week.

“The site was chosen as it surrounds the existing footprint of Gold Rock Corporation, and to allow prospective tenants at FLIP to see an already-established, large-scale light industrial operation in action.”

Mr St George explained that the FLIP project was designed to smooth the entry of international businesses to Freeport, adding that there had already been interest from potential tenants.

FLIP tenants will be provided with sites ranging from three to 11 acres, with a “customisable turnkey business headquarters” then built for them.

Mr St George said there would be a $7.5 million investment in FLIP’s infrastructure, with phase one vertical investments totalling $18 million.

“The site has been divided into four phases, and the transaction has been structured so that the development of 75 per cent of Phase 1 has huge economic benefits to the developer if it is completed within the targeted three-year window,” he added, in reference to Gold Rock Corporation.

Inevitable questions will arise, though, as to whether the GBPA has agreed to Gold Rock’s retail hardware expansion as part of the FLIP joint venture.

One Freeport businessman, speaking on condition of anonymity, suggested to Tribune Business that the GBPA had “pulled the rug out from under its licensees”.

“It’s a massive piece of land they’ve given them [Gold Rock]. It runs all the way up to the domestic terminal [at the airport],” he added.

The businessman said Gold Rock seemed to have entered into a distribution/sales partnership with Do It Best, a US-based hardware store co-operative, through which it would buy and source product.

Kelly’s (Freeport) and Dolly Madison have similar arrangements with True Value and ACE, respectively, and the source said the ‘Do It Best’ logo currently featured on Gold Rock/Home Design Centre vehicles.

Tribune Business has also obtained Companies Registry records for a Bahamian-domiciled entity called Contractors Direct Ltd. Of its 5,000 issued shares, 4,999 were shown to be held by Jamaal O’dari S. Gomez, Gold Rock’s general manager, as of May 2012.

A description of Contractors Direct’s business, also seen by this newspaper, says it will be involved in the “wholesale and retail sale” of building materials, hardware and imported roof trusses, “the retail sale of furniture”, and “the wholesale and retail sale of household decorative items and furnishings”.

The business description is very similar to that for the Home Design Centre, and Gold Rock Corporation’s purported new mega store.

Other documents seen by Tribune Business show that Contractors Direct and Gold Rock Corporation also share the same registered address and agent, GT Corporate Services (a subsidiary of the Graham, Thompson & Co law firm).

And the two companies also have the same secretary, David Jennette.

The concerns surrounding Gold Rock and its purported retail/wholesale expansion again highlight several key issues impacting the Bahamian business community, and which have remained unresolved for years.

The first involves the National Investment Policy, and its supposed reserving of several key industries for Bahamian ownership only.

Despite numerous promises, both the former and current governments have yet to transform this into statute law via a National Investment Act.

As a result, the National Investment Policy is subject to government/ministerial dictate and whim, and it ‘leaks like a sieve’.

There are numerous examples where it has been ‘waived’, most recently for Sysco’s acquisition of Bahamas Food Services (BFS). Before it, there were the numerous different foreign ownerships of City Markets and others.

One businessman also questioned how long the Bahamas could ‘hold back the tide’, given its entry into rules-based trading regimes such as the Economic Partnership Agreement (EPA), and impending accession to full World Trade Organisation (WTO) membership.

These agreements will require the Bahamas to open numerous industries to foreign ownership, and to treat overseas companies no less favourably than their Bahamian counterparts.

“Because of WTO coming in, it’s inevitable that these big companies, with a lot of money behind them, are going to come in here,” the businessman said.

While the Governments around the world have traditionally sought to ‘protect’ infant domestic industries, in a bid to ensure local entrepreneurship and ownership flourishes, the flip side is that this can work against consumer interests in the form of higher prices.

Finally, the Gold Rock/Home Design Centre issue again raises the question of who is the ultimate licensing authority for Freeport - the Government in Nassau or the GBPA.

This has recently arisen in the legal dispute between the GBPA and the web shops and, taken together, both situations could be interpreted as signs of a newly-assertive Port Authority pushing back against the Government’s pressure for its owners to sell.

The courts have frequently ruled against the Government when it comes to business licensing in Freeport.