The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Baha Mar’s Heads of Agreement “doubles down on the lack of transparency” surrounding the Government’s earlier deal with the China Export-Import Bank to complete the $4.2 billion project, an activist group alleged yesterday.

Transparency in Politics (TIP), which is seeking Supreme Court permission to intervene in “the public interest” and petition for the release of the still-sealed deal with the Chinese bank, claimed it was impossible to know what the Government had agreed on the Bahamian people’s behalf without these documents.

Francisco (Paco) Nunez, a TIP director and its secretary, alleged in a May 3, 2017, affidavit that the Heads of Agreement granted to Baha Mar’s prospective new owner, Chow Tai Fook Enterprises (CTFE), could not be properly understood without viewing the earlier ‘Heads of Terms’ agreement.

This was because CTFE’s Heads of Agreement allows the Hong Kong-based conglomerate, and its affiliates, to enjoy “all of the benefits and concessions” granted by the Christie administration to the China Export-Import Bank and its Perfect Luck vehicle, which currently owns Baha Mar’s assets, via the August 22, 2016, ‘Heads of Terms’.

CTFE’s Heads of Agreement also make clear that there are numerous ‘subsidiary agreements’ between the Government and China Export-Import Bank, referring to “addendums and attachments”.

TIP is thus arguing that the value of the tax breaks/investment incentives granted for Baha Mar’s resolution, and other key details, cannot be determined unless the Heads of Terms are ‘un-sealed’.

Arguing that the Christie administration was reneging on previous promises to release this agreement, Mr Nunez alleged: “April has come and gone, and it is clear to us that the Government now has no intention of releasing the Heads of Terms or other collateral arrangements, or of petitioning the court to unseal these documents.

“The repeated promises to release details of the deal have not been fully fulfilled by the disclosure of the April 2017 Heads of Agreement.

“On the contrary, the Heads of Agreement doubles down on the lack of transparency because, through clause 9.8, it extends to the CTFE entities the clandestine concessions, benefits and exemptions granted to the China Export-Import Bank, Perfect Luck and the contractor under the August 2016 ‘Heads of Terms’ without disclosing what these are.”

Justice Ian Winder, in a September 27, 2016, ruling revealed that he sealed the ‘Heads of Terms’, at the China Export-Import Bank’s request, for commercial reasons - namely to “preserve the integrity” of the Baha Mar sales process.

Mr Nunez and TIP are now arguing that since CTFE has obviously been selected as the purchaser, and has signed an agreement to acquire Baha Mar by buying Perfect Luck, the rationale behind Justice Winder’s decision has now fallen away.

They are also arguing that “the constitutional principle of open justice” applies to the Baha Mar case, and that there is nothing to justify “the eight-month wholesale blanket sealing” of an agreement that involves Crown Land and “millions of dollars of concessions, benefits and exemptions”.

Arguing that Baha Mar “involves issues of great importance to the Bahamian public”, Mr Nunez said Justice Winder acknowledged in his ruling that the Bahamian people were effectively “stakeholders” in the project, especially since it had received “a considerable amount of public funds via concessions”.

Fred Smith QC, the Callenders & Co attorney and partner who is acting for TIP, told Tribune Business that the Baha Mar agreements were “a terrible deal” simply because of the secrecy and unknown details.

“We don’t know who is behind all of this, and it incorporates by reference provisions in the previous Heads of Agreement which have not been disclosed,” Mr Smith said.

He accused the Government of trying to “pull the wool over the eyes of the public” by releasing the CTFE Heads of Agreement, rather than the promised ‘Heads of Terms’.

And Mr Smith reiterated his argument that so-called ‘Heads of Agreement’ deals were a device that allowed successive governments to avoid Parliamentary scrutiny and approval of their investment agreements with major developers.

He argued that “the power to tax or not tax” rests with Parliament and its MPs, as the Bahamian people’s representatives, meaning that tax breaks and incentives such as those given to Baha Mar need to be approved by both ‘Houses’ first.

“We have been fighting the secrecy and lack of transparency embedded in these secretive Heads of Agreement for anchor projects, which the Government enters into through the National Economic Council (NEC) and gives concessions for Crown land or exemptions from taxes,” Mr Smith said.

He added that the absence of a proper ‘separation of powers’, with members of the executive (the Government) dominating the House of Assembly (the legislature), made it extremely difficult to properly scrutinise investment deals such as that granted to Baha Mar.

Besides the ‘Heads of Terms’, there are numerous other ‘pieces of the puzzle’ relating to the Baha Mar resolution that have yet to be disclosed by the Government, CTFE or the China Export-Import Bank and Perfect Luck.

Michael Scott, an attorney and former Hotel Corporation chairman, yesterday wrote that the September 2, 2016, agreement transferring Baha Mar’s assets out of receivership to Perfect Luck had not been disclosed.

The same, he added, was true of the Share Purchase Agreement between CTFE and the China Export-Import Bank, signed on November 30, 2016, whereby the former agreed to buy Baha Mar by acquiring Perfect Luck.

And, perhaps most important, is the Hotels Encouragement Act agreement signed between the Government and Perfect Luck on September 9, 2016, and whose benefits will be assumed by CTFE.

Hotels Encouragement Act agreements contain the ‘nuts and bolts’ of investment deals, setting out each item, and its quantity, upon which tax breaks are being extended, and the value of such incentives.

Transparency in Politics appears to have links to Save the Bays and other like-minded civic activist groups, and has been responsible for some of the media advertisements attacking the Christie administration in the run-up to the May 10 general election.