The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Opposition’s House of Assembly leader yesterday said Prime Minister Perry Christie had failed to deliver on his promise to table The Pointe’s Heads of Agreement on Monday.

Loretta Butler-Turner said Mr Christie had not come through despite telling her, and the House, that he would disclose the Government’s agreement with the developer of the downtown Nassau project.

The multi-million development is being constructed by its owner, China Construction America (CCA), which also owns the adjacent British Colonial Hilton property and is Baha Mar’s main contractor.

Mrs Butler-Turner said she was especially keen to confirm what had been agreed between the Government and CCA over the ratio of Bahamian to Chinese workers on the construction, plus other aspects of the investment project.

“The Prime Minister had promised to bring the Heads of Agreement for The Pointe to the House on January 9,” the Opposition’s House of Assembly leader told Tribune Business. “He said that at the previous sitting in December, but there was absolutely nothing.”

Explaining why she was particularly eager for the Christie administration to fully disclose the agreement with CCA, Mrs Butler-Turner added: “I want to look at the workforce component at The Pointe. They said they had a workforce comprised 6040 in favour of the Chinese, but I never saw many Bahamians going there.

“I believe that a part of the deal includes the western tip of Paradise Island just beyond the lighthouse. I believe that is somehow incorporated into the Heads of Agreement.

“I also want to determine if there was a clause in their to demolish part of the British Colonial Hilton. These are the things I wanted to check. That building is very historic.”

Mrs Butler-Turner also revealed that she plans to raise questions in the House of Assembly, when it next sits on Wednesday, January 18, over the Government’s increased use of off-balance-sheet special purpose vehicles (SPVs).

Tribune Business raised the issue earlier this week after the Christie administration used just such an entity to acquire UBS House on East Bay Street from the Swiss bank.

Mrs Butler-Turner suggested that the Government typically “overused” new products once it became familiar with them, and questioned whether SPVs were being used to conceal the true extent of its debt liabilities.

“The SPVs seem to be becoming a very common product for them to use to hide so many things,” she told Tribune Business, pointing to the Bahamas Resolve vehicle that played the key role in the Bank of the Bahamas ‘bail out’ in October 2014.

“We don’t know what is going on with that,” Mrs Butler-Turner said, “so that has to be questioned. We must ask. It seems that when the Government becomes acquainted with a new product they overuse it.”

In the case of UBS House, Mrs Butler-Turner queried whether the use of Poinciana SPV, the property’s new owner, was also a device intended to ensure the acquisition - and possible use of taxpayer monies - was not debated in Parliament.

“I’m going to discuss it with my colleagues tonight, and I’m going to see if we cannot get ourselves together to have this thing questioned when we go back into Parliament on the 18th,” she told Tribune Business.

“I’m going to speak to Mr [Hubert] Chipman and let him know we need to look at this thing. We’ll look into it, and I think it will be important for us to deal with this thing.”

Bahamas Resolve was the entity to which 13 ‘bad’ Bank of the Bahamas loans worth a net $45.2 million were transferred as part of the October 2014 ‘bail out’.

Those loans, and the responsibility for collecting them, are now the Bahamian taxpayer’s via the Government and Bahamas Resolve.

The latter also issued $100 million in government bonds to Bank of the Bahamas to cover the balance sheet ‘hole’ created by the loans’ removal, with the payments supposed to be made via recovered loan collateral. If Bahamas Resolve is unable to realise the loans, then payment has to be covered by the Government/taxpayer.

Another SPV is Coral Insurance Company, which has been created to assume the remaining CLICO (Bahamas) insurance policy portfolio, again leaving the Government and taxpayer with potential liabilities.

And the same type of entity will also issue the $650 million in rate reduction bonds (RRBs) to refinance the Bahamas Electricity Corporation’s (BEC) debt.

Tribune Business sources are also questioning how the Government has financed the UBS House purchase.

It was originally supposed to raise capital from a $20 million bond issue to Bahamian investors, placed by Providence Advisors, with the securities carrying a 5.5 per cent interest coupon and 15-year maturity.

However, Providence Advisors was ultimately told to “hold off”, and the Government financed the acquisition through alternative means.

Mrs Butler-Turner acknowledged that it would be “very interesting” to uncover the purchase price paid by the Government for UBS House, adding that this was the first step to determining whether Bahamian taxpayers received ‘value for money’.

UBS (Bahamas) had been seeking more than $22 million for its three-storey, 33,000 square foot headquarters building and two other properties combined.

UBS House was initially marketed by Bahamas Realty as a three-storey trophy office building with a total rental area of 33,162 square feet, and a 240 space car park.

UBS Annex, which sits at the rear of the bank’s corporate office on East Bay Street, was marketed as a ‘two-storey, class A’ office building with 23,544 square feet of office space and 162 car parking spaces.

The total area consists of about 56,876 square feet or 1.31 acres, with 247.8 linear feet of frontage on to Shirley Street.