The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Government “agents” allegedly promised the group at the centre of the Renward Wells’ Letter of Intent (LOI) controversy that the Prime Minister would arrange a $40 million guarantee for them, adding: “We hold the key to the kingdom.”

Stellar Energy, in legal documents detailing its claim for $727.364 million in damages, alleged that ex-Cabinet minister, Algernon Allen, and businessman Frank Forbes, “were irrefutably agents acting” on the Government’s behalf in facilitating the proposed waste-to-energy plant deal.

The group’s statement of claim, filed with the Supreme Court yesterday and obtained by Tribune Business, sheds further light - at least from one side’s perspective - on the murky controversy that forced Mr Wells’ to step down as parliamentary secretary.

In particular, Stellar’s allegations place Prime Minister Perry Christie, and Deputy Prime Minister Philip Davis, at the centre of events leading up to the LOI’s disclosure and subsequent political firestorm.

And the group, which was seeking the Government’s agreement and approvals to construct a $600-$650 million waste-to-energy plant at the New Providence landfill, is claiming that the LOI’s July 2014 ‘leaking’ showed “clear intent at the Government level to sabotage” the proposed project.

Stellar’s legal filings allege that Mr Allen, the Urban Renewal co-chair, and Mr Forbes, who is also described as an accountant operating under the corporate name, Sigma Holdings/Management, were “two of the private individuals who claimed to be representatives of the Bahamas government and/or agents acting for and on behalf of the Bahamas government.”

Seemingly believing the duo’s representations, Stellar hired Mr Allen and his firm, Allen & Co, in October 2013 as its attorney, paying him a $15,000 retainer to help obtain the necessary project approvals.

“At the time, the fourth defendant [Mr Allen] assured the plaintiffs [Stellar] that they would have no problem in acquiring the contract,” Stellar alleged.

It then claimed that, following Mr Allen’s advice, it appointed Mr Forbes as honorary chairman, with the latter starting to represent Stellar in all matters relating to the waste-to-energy project’s necessary permits.

“The fourth and fifth defendants (Messrs Allen and Forbes) both operated a close business connection, and the two acted in unison,” Stellar alleged. “Further, the plaintiffs were advised, and verily believe it to be common knowledge, that both Algernon Allen and Frank Forbes belong to the very inner circle of Prime Minister Perry Gladstone Christie.”

Stellar’s apparent belief that these links would smooth the path to a government agreement appear to have been reinforced by a late October 2013 meeting that the duo purportedly arranged with Mr Christie.

There is nothing to suggest the Prime Minister (nor the Deputy Prime Minister) did anything wrong in meeting them, and he appears to have been conscious of the implications, given that Stellar was also participating in the ongoing tender to reform the Bahamas Electricity Corporation (BEC) and wider energy sector.

The group was advised that the Prime Minister “could not speak with them in any detail”, given that he did not want to “contaminate the process” associated with the BEC reform search.

Nevertheless, Stellar alleged: “Notwithstanding this, the Prime Minister spent quite a long time with [Messrs Allen and Forbes] discussing the plaintiffs’ project.

“During their negotiations, in order to induce [Stellar] to enter into the LOIs, the fourth and fifth defendants made.... the following representations to the plaintiffs jointly and severely.”

Messrs Allen and Forbes allegedly assured Stellar that they would “have no problem” in gaining approval for the project, and that the LOI and all associated documents would be executed by the Government.

“The fourth and fifth defendants [Messrs Allen and Forbes] used certain expressions like: ‘We hold the keys to the kingdom’,” Stellar alleged.

“The fifth defendant [Mr Forbes] told the plaintiffs that the Prime Minister would arrange for a government guarantee, direct or via the Inter-American Development Bank (IDB), to support funding of Front End Loading (FEL) studies for the amount of $40 million procured by the plaintiffs.”

These studies were critical to determining the feasibility of the proposed Stellar project, particularly whether there was sufficient - and the right type of - waste at the New Providence landfill to generate the energy the group was projecting.

Several industry observers have privately questioned to Tribune Business both the price tag and technology proposed by Stellar, but the LOI controversy likely means the Bahamas will likely never know whether it was feasible, creating an opportunity cost or loss.

Meanwhile, Stellar’s legal filings yesterday alleged that it was Mr Forbes who “caused” Michael Halkitis, minister of state for finance, to send the May 26, 2014, letter to the IDB seeking its guarantee/financing support for the Stellar project.

If true, this raises further questions as to how, and why, a person outside the Government was purportedly telling a Cabinet minister what to do. Mr Forbes also claimed that “the Prime Minister, and Mr Halkitis and his staff, were speaking with the IDB in this regard”.

However, the IDB’s then-Bahamas country head, subsequently told Stellar in June 20, 2014, that the bank had “no intention” in providing financing or a guarantee.

She followed that up with a July 10, 2014, e-mail “disclaiming any part in the proceedings or any consent to “financial support”.

Stellar’s latest legal filings allege that Mr Forbes was behind the LOI’s creation, with the document prepared by Maurice Glinton QC, his attorney.

Stellar’s documents suggest there was one LOI, but two versions, with the first dated June 30, 2014, and supposed to be signed by Mr Davis in his capacity as minister of works and urban development.

However, the group alleged that it was eventually summoned to Mr Forbes’s office at the British Colonial Hilton’s Centre of Commerce on July 7, 2014, whereupon it was presented with the version signed by Mr Wells some three days’ earlier.

“The plaintiffs found the LOI suspicious for three reasons,” Stellar alleged. “It was not signed in the plaintiffs’ presence by [Mr Wells], who was seen leaving [Mr Forbes’s] office immediately before the plaintiffs’ arrival.”

Stellar also complained that the document was not on Ministry of Works letterhead or stationary, and that it was both “heavily edited” compared to the June 30 version and attached to a ‘compliment slip’ from Mr Allen’s law firm.

Then came the LOI’s ‘leaking’ to the media, which Stellar acknowledged as creating “a large storm” that brought the group’s integrity into question. They were advised by Mr Forbes to ‘keep a low profile’ and “let the storm go away”.

“It would appear to the plaintiffs that, at the Government level, there was a clear intent to sabotage the issuance of the LOI and the related financing,” Stellar alleged, adding that it sought to hold Mr Forbes to a joint venture agreement where he had purportedly promised to secure the project’s financing.

Stellar alleged that it finally managed to obtain a $40 million loan from a UK-based hedge fund, Greensill Capital, but no guarantor emerged.

“The plaintiffs were put in a conundrum, particularly since [Mr Forbes] advised them in clear and certain terms that, under no circumstances, would the Prime Minister and Deputy Prime Minister agree to provide the plaintiffs with a more comprehensive LOI, including the assurance that the plaintiffs would be granted the permission to build the waste-to-energy plant and move to the point that BEC would enter into a 25-year (power purchase agreement)PPA after satisfactory completion of the FEL studies,” Stellar alleged.

It then pressed Mr Forbes to live up to the terms of their joint venture by providing his own guarantee or arranging his own financing, alleging that the accountant was now “very careful, cagey at times and very secretive”, appearing to avoid Stellar.

Mr Forbes then said he was in talks with an unnamed Canadian group that “could not be named because of his close connections with the Bahamas Government and the Deputy Prime Minister”.

Stellar also claimed Mr Forbes divulged that Mr Davis had, “for a long time”, been opposed to its project because he was “supporting an alternative project led by a company called Renew Bahamas, who were already the waste and recycling managers on the local landfill”.

Stellar, which is headed by Dr Fabrizio Zanaboni, said that by late 2014/early 2015 it had “began to suspect that there was a conspiracy” against it.

“The plaintiffs have reasons to believe that [Mr Forbes] and his political partners intended to disregard their contractual arrangements, which the plaintiffs feel were forced upon them in the first place, including the LOI, for the benefit of third parties close to the Government and, in particular, to the Deputy Prime Minister and other local business group(s) close to him,” Stellar alleged.

As a result, Stellar is demanding that the Supreme Court award damages, and seeking declarations that the Government both “honour” the LOI contract and not award a waste-to-energy contract to any other company until damages are paid.