The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Grand Lucayan’s managerial union has been accused of “feasting on an economic tragedy” by demanding an extra $650,000 payout after the hotel had already upped its offer by $500,000.

Michael Scott, the Government-owned property’s chairman, warned Bahamas Hotel Managerial Association (BHMA) president, Obie Ferguson, in a December 6 e-mail that the union’s position was “straining the board’s goodwill to the point of exhaustion” because it was failing to grasp the resort’s limited financial realities as a government-owned hotel.

He argued that the association was “feigning reasonableness” by suggesting it had reduced its voluntary separation (VSEP) payout demands by $1m when its opening $5.4m offer was “absurd from inception”.

The e-mail, which has been obtained by Tribune Business, exposes the gulf between the two parties over the VSEPs total worth and conditions, with Mr Scott describing Mr Ferguson’s argument for the packages to be based on similar payouts at Bahamas Power & Light (BPL) and the Bahamas Telecommunications Company (BTC) as akin to “comparing apples and oranges”.

The Grand Lucayan chairman also added that the annuity retirement fund was a liability owed by the resort’s previous owner, Hutchison Whampoa, not the Government, but pledged to “stand shoulder to shoulder” with the union should it elect to pursue the Hong Kong-based conglomerate.

In an exchange revealing he was rapidly running out of patience with Mr Ferguson, the Trades Union Congress (TUC) leader who is negotiating on the BHMA’s behalf, Mr Scott wrote: “I am normally disinclined to be shrill and tart in professional exchanges with colleagues, but if you detect a tone of frustration in my manner at your apparent inability to grasp certain fundamental and inevitable truths, you would be spot on and accurate.

“Your continuing refuge in this air of unreality and illogical posturing, despite the stretched financial circumstances of the board, has strained the goodwill and patience of the board to the point of exhaustion.”

Suggesting that the managerial union was not being as generous as it suggested in reducing its collective payout demand by $1m, Mr Scott added: “The board’s initial proposal, $2.7m, was carefully and scientifically calibrated using the termination provisions in the Employment Act as a barometer or guide, because the V in VSEPs stands for ‘voluntary’, meaning this is an elective exercise; not a termination; not a redundancy; not unfair or wrongful dismissals.

“If your members have a change of heart, show up for work. This calculus was our heartfelt desire manifested to demonstrate to all that the Board was being compassionate in its approach, notwithstanding its limited budget and meagre resources.”

This highlights the main divide between the two sides, with Mr Scott and the Board basing their offer on the Employment Act’s termination pay. Mr Ferguson and the BHMA, though, are arguing that this is inadequate since such payments are capped at 12 years (one year’s pay) and do not account for managers who have worked for longer at the Grand Lucayan.

Besides wanting the payouts to be determined by years of service, they are also arguing that recent VSEPs offered at BPL and BTC, plus previous exercises undertaken in the hotel industry over 25 years ago, should guide the Grand Lucayan process.

This did not impress Mr Scott, who retorted: “This is just comparing apples and oranges, because in the case of the both BPL and BTC the most innocent of intellects knows that these were - and are - organically functioning operations which were in the process of reorganisation. The Meridien in 1992 was on the cusp of being sold to Sandals. In each case the financial justification existed.”

He argued that this was not the case with the Grand Lucayan. Besides its perilous loss-making financial status while a buyer is being sought, Mr Scott said the Government had also come under heavy public criticism for using $65m in taxpayer monies to acquire the resort and needed to minimise the Public Treasury’s further exposure.

“The SPV [Grand Lucayan Renewal Holdings], supported by this Government, is trying to help your clients in the wake of enormous criticism throughout the length and breadth of this country, even from the Official Opposition,” he told Mr Ferguson. “This is a bail out, a financial rescue of an economy in trouble.

“This is a disaster, and a testament to poor corporate citizenry. The Government has stepped in to rescue, and hopefully revitalise, this resort in the hope that the redevelopment of Port Lucaya will be a springboard to the renaissance of the Grand Bahama tourism sector. There is no avalanche of cash; this is a precarious financial position, and both you and your members need to wake up and smell the coffee.”

Turning to the impasse in their financial negotiations, Mr Scott then added: “Notwithstanding all of this, and because the Board is compassionate and being guided by our better angels (to mimic Abraham Lincoln), I was asked to obtain the consent of Cabinet to upgrade our offer to your members by an additional $500,000. That consent was obtained, and I put that supplemental proposal to you in conference.

“It appears that this is not enough, and you wish to gouge and feast on a national economic tragedy... by requesting $650,000 or thereabouts in more money. This is both sad and remarkable. In doing so you feign reasonableness by suggesting that you have conceded $1m, when your opening figure was nonsense to begin with. I am awfully sorry, but this is not acceptable to the Board.....

“To conclude, this is a very difficult period for the Grand Lucayan resort and casino and Port Lucaya generally. It is our shared duty, our collective responsibility, our common sacrifice in meeting this challenge which the Board of Lucayan Renewal Holdings and its officers contribute to every day seven days a week in answering this call to arms. I believe your members must do their part.”

Mr Ferguson, though, in an e-mail sent to Mr Scott the previous day, argued that the BHMA was doing its part to settle the voluntary separations desired by 90 of its 115 members at the Grand Lucayan.

“You indicated that we are apart by $600,000,” he told the Grand Lucayan chairman. “You should note that in order to reach an amicable settlement we have reduced our amount in excess of $1m, and have extracted all the other benefits excluding insurance, which we feel you should seriously consider and bring this matter to a satisfactory resolution.”

And, in a further e-mail sent the same day, the TUC president added: “We have no intention of reducing this exercise into a personality-driven matter. I disclosed to you the precedent of former separation packages with the Hotel Corporation as a guide to an amicable settlement.

“However, you said this is not a termination matter, but you seem committed to pay the employees according to the Employment Act. I have offered you a reduction in our initial proposal; however, you do not consider it adequate.”

Mr Scott yesterday confirmed in an interview with Tribune Business that himself and the Board regarded the BHMA’s demand for a further $650,000, just after they had obtained Cabinet approval to increase their offer by $500,000, as “bad faith” on the union’s part.

Bluntly affirming that “weakness is not a strategy”, he said any agreement made on the current terms sought by the Grand Lucayan’s two trade unions - the BHMA and the Commonwealth Union of Hotel Services and Allied Workers (CUHSAW) - would be made with the Government, not the Grand Lucayan’s Board.

“He’s being truly disingenuous,” Mr Scott said of Mr Ferguson. “We are constrained by budget. I had a meeting with him, and said this is the template being followed, and it would be all under the Employment Act which was being used as a guide.

“I said I would try to persuade the Government to be a bit more generous and upgrade the $2.7m by $500,000 to come up to $3.2m. I went through a similar exercise with the line staff. I thought we had a deal, and said we’d help you out with the annuity fund.

“He comes back and asks for another $600,000,” the Grand Lucayan chairman continued. “I said the Cabinet will not approve that; will not agree to that. We regarded it as bad faith.

“Now that we’re not going to succumb to him, he’s going to weaponise this in the public domain, but I told my colleagues: Weakness is not a strategy. The bottom line from a public perspective is if there is going to be an agreement, it will not be between the Board and the unions; it will be between the Government and the unions.”

The escalating battle between the Grand Lucayan Board and two staff unions, with both sides still seemingly far apart, is not good news for the 227 workers - 90 managers and 137 line staff - who wanted to exit and will likely have been hoping to receive their payouts before Christmas.

Mr Scott’s December 6 e-mail said the Board planned to make the VSEPs available today, based on its valuation determinations and terms, to all Grand Lucayan staff members who want them on the previously announced “take or leave it” basis. Those who do not accept are expected to appear for work on Monday, but it is not clear if these timelines will still proceed.

However, some spirit of co-operation still appears to exist, with Mr Scott offering to help the BHMA and Mr Ferguson go after Hutchison Whampoa for monies owed to the managers’ annuity retirement fund.

Mr Ferguson on Thursday disclosed to Tribune Business that outstanding issues left behind by Hutchison Whampoa also needed to be resolved, especially the breach of the BHMA’s past industrial agreement where the Hong Kong-based conglomerate failed to pay a sum equivalent to 4 percent of each union member’s salary into an annuity retirement fund.

Mr Scott, arguing that this was not the Government’s responsibility to rectify, wrote in his December 6 e-mail: “I am bound to make plain to you...... that this aspect of matters gives rise to a trust relationship between Hutchison, Family Guardian as administrators, and your members.

“I am told in a most pellucid way... that the way in which the plan operated was that unless the employee contributed to the plan he was not added to the plan. This may be a case of an undisclosed liability on the part of Hutchison if there is any residual responsibility under the plan to your members not now sufficiently accounted for, and you will have to pursue Hutchison in this regard.

“We will do everything we can to assist; we will stand shoulder-to-shoulder with you in the trenches against Hutchison, fortify the ramparts to ensure that they properly discharge their fiduciary obligations, but this aspect of matters is not the responsibility of the Board.” BHMA members also had to undergo eligibility and vesting periods as part of the plan’s terms.

As reported previously by Tribune Business, the two unions had initially asked for a total $8.4m payout, which represents a sum more than double, or 121 percent higher than the resort’s total $3.8m offer.

The lower the compensation payout, the greater the savings for the Bahamian taxpayer who has ultimately financed the Grand Lucayan’s $65m acquisition and a series of subsequent multi-million dollar payouts to former owner, Hutchison Whampoa, along with $3.5m in renovation costs.