The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

THE Government must "move forward post haste" with the Oban Energies refinery if it concludes the Bahamas will benefit, the DNA's former leader arguing: "The horse has already bolted."

Branville McCartney told Tribune Business that the $5.5 billion oil refinery/storage terminal's chief promoter, Peter Krieger, "cannot be held guilty all his life" for past indiscretions, and the project should be allowed to proceed if it satisfies the Government's due diligence checks.

He said it was "desperately needed" by a Grand Bahama economy that was on "life support", adding that the island needed "everything possible" to reduce unemployment as shown by the large attendance at the Department of Labour's recent 'Labour on the Blocks' recruitment drive.

Mr McCartney suggested the Minnis administration may have been "over-zealous" in its desire to revive Grand Bahama, which was a key election campaign pledge, and thus paid too little attention to the background of some Oban Energies' principals before last week's Heads of Agreement signing.

But, should the developer produce proof of financing and the project's viability, and satisfy all environmental concerns and planning permits, the former Democratic National Alliance (DNA) leader said he saw "no reason" why Oban Energies cannot be allowed to proceed.

"It's a difficult question," Mr McCartney said of recent revelations concerning Mr Krieger and other Oban principals. "I think the Government is trying to get the economy going in Grand Bahama. They could have been a bit zealous in trying to do that and, as a result, you have this situation with people having done something in their past.

"I tend to agree with Brave Davis: I don't want to hold a man guilty all his life if he's addressed that concern and paid debt. If this person, and this company, are able to benefit the country at the end of the day, him having paid his due to society I see no reason why - once all checks and balances are done, and environmental standards complied with - I see no reason not to move forward."

The Tribune and other media last week revealed that Mr Krieger, Oban Energies non-executive chairman, was previously named as a defendant in two US lawsuits alleging that he misappropriated investor monies.

Mr Krieger, who has acted as the developer's chief spokesperson and 'point person', signing the project's Heads of Agreement with Prime Minister Dr Hubert Minnis last Monday, settled a Securities & Exchange Commission (SEC) lawsuit by paying a $110,000 civil penalty in 2008 and agreeing to be bound from committing securities laws violations.

The US federal capital markets regulator had alleged that Mr Krieger, together with his father and another defendant, "misappropriated more than $3.7 million of investor funds" from a "defunct hedge fund" they ran, called the KFSI Equity Fund.

The Oban Energies non-executive chairman also pled guilty in November 2006 to a criminal case brought against him by the state of Florida involving the same fund. He was barred from acting as a broker/dealer investment adviser for seven years and, together with his father, ordered to pay a $1.292 million fine.

The Tribune then revealed that Mr Krieger was sued by the Bahamas-based judicial manager for British American Insurance Company (BAICO), who accused him of misappropriating $8.7 million of the collapsed insurer's funds for his own personal use. That case was dismissed on a legal technicality.

This newspaper's revelations about Mr Krieger, and the backgrounds and seemingly 'overstated' qualifications of other Oban principals, raised serious questions about the level of government due diligence conducted on the Oban Energies project before the Heads of Agreement signing.

Queries were also raised over whether Mr Krieger was a 'fit and proper person' to be leading such a major investment in the Bahamas, although he told this newspaper his role was "more of an ambassador" and he was not a shareholder in Oban Energies.

Tribune Business sources, speaking on condition of anonymity, subsequently suggested to this newspaper that there was another layer of beneficial ownership at Oban Energies standing behind Mr Krieger and the other named principals.

As much has been said by Candia Ferguson, the Bahamas Investment Authority's (BIA) director of investments and other government sources, although the identities of these 'beneficial owners' have yet to be revealed.

The Prime Minister and others have sought to reassure by promising that the Heads of Agreement for the $5.5 billion project would reveal all once it is tabled in the House of Assembly, which is supposed to happen this Thursday. It is unclear, though, why the Government has decided to wait until then given the ongoing controversy.

Mr McCartney, though, said the potential benefits to the country and Bahamian people from the Oban Energies project should be uppermost in the Government's minds, especially since it had already signed the Heads of Agreement.

"The fact is the horse is already out the gate," he told Tribune Business. "They've signed the Heads of Agreement, so I think it's a situation now that, for the benefit of the country, we'd want it to be successful; we'd want it to work.

"I think the intention of the Government was to get some stimulus in that economy. Things are bad in Grand Bahama, and the Government is anxious to stimulate it and get people back to work.

"At the end of the day, they have to do the checks and balances, do the due diligence in terms of the company and its viability, see if it's able to finance the project and, of course, address the environmental concerns. That's critical."

Mr McCartney's comments reflect the growing 'nothing ventured, nothing gained' view, which believes the Bahamas' - and especially Grand Bahama's - dire need for economic activity and jobs makes it imperative that the Oban Energies project be allowed to proceed if it can provide proof of financing and satisfy all other concerns.

Questions over whether it had the necessary financing are understood to have held the project back under the previous two administrations, but Mr Krieger has repeatedly pledged that proof of funding has been presented to the Government with more documentation soon forthcoming.

Oban Energies' financing partners are Stifel, Nicolaus & Company, the St Louis-based investment bank, and Drexel Hamilton, another finance house, according to the developer's website. A Drexel Hamilton representative was at Monday's Heads of Agreement signing.

"The ultimate concern should be the benefit of the country", Mr McCartney said, echoing arguments advanced by K P Turnquest, the Deputy Prime Minister, and others.

"If, having done its due diligence - the Government, that is - and checks and balances; if it comes up in favour of the country I suggest they move forward post haste. It's [Oban] desperately needed. Grand Bahama's economy is on life support. It needs everything possible to build it up and get people back to work and, by extension, the Bahamas."

Mr McCartney said "the biggest task" facing the Minnis administration was to get unemployed Bahamians back to work, "so they have money in their pockets and can put bread on the table".

He argued that Grand Bahama's economy was "in a depression", while the Bahamas as a whole had yet to fully recover from the depths of the 2008-2009 recession.