The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Cabinet minister yesterday said the $5.5m payout demanded by Grand Lucayan managers was based on “faulty analysis”, and blasted: “I can go no further with the people’s money.”

Dionisio D’Aguilar, pictured, minister of tourism and aviation, told Tribune Business he was “confused” as to how the Bahamas Hotel Managerial Association (BHMA) and its president, Obie Ferguson, had concluded that the 91 members seeking to leave were due “the same lucrative privileges” as those offered by the government in previous voluntary separation (VSEP) exercises.

Arguing that the union was employing incorrect comparisons, Mr D’Aguilar said the Grand Lucayan was not a state-owned enterprise (SOE) similar to the Bahamas Telecommunications Company (BTC) and Bahamas Power & Light (BPL) - whose previous VSEPs it frequently cites to justify its demands.

Pointing out that the resort’s present immediate owner, Lucayan Resort Holdings, was a special purpose vehicle (SPV) designed primarily to ensure its rapid sale to a new private owner, the minister said the Government “cannot burden the taxpayer any more” in saving Freeport’s tourism/hotel industry and wider economy.’

Mr D’Aguilar added that the Minnis administration had already committed an extra $500,000 of taxpayer monies over and above what BHMA members are due under the law in a bid to settle, and was not prepared to go beyond its latest $3.1m-$3.2m offer.

While acknowledging that Mr Ferguson was bound to seek the best deal for his members, Mr D’Aguilar said he and the Government are “charged with looking after the interests of 400,000 Bahamians”.

Backing the stance taken by Michael Scott, the Grand Lucayan’s chairman, the minister told Tribune Business: “Mr Obie Ferguson keeps making reference to the fact the managers at the Grand Lucayan should be afforded the same privileges given to employees at state-owned enterprises.

“He often makes reference that the settlements are not as lucrative as those given to employees at BTC, BPL and the like, and former Hotel Corporation properties. I’m confused as to how he substantively believes that the managers at the Grand Lucayan, which up until September 10, some six to seven months ago, was owned by a private company, can suddenly be offered the same lucrative privileges and settlements that were afforded long-standing employees of state-owned enterprises.”

“I don’t understand how he [Mr Ferguson] drew the conclusion, given that the Government acted in the interest of saving the hotel from closure and dereliction similar to that experienced by the Royal Oasis, that this should somehow burden the taxpayer with huge, costly, increased expenses relating to a settlement.”

Distinguishing the Government-owned special purpose vehicle (SPV) that controls the Grand Lucayan from previous VSEP offers, Mr D’Aguilar added: “The Grand Lucayan is not a state-owned enterprise.

“Lucayan Renewal Holdings was really set up to facilitate the onward sale from one private employer to another, and were those employees still employed by Hutchison Whampoa they would have received what they were entitled to under the law [Employment Act], which is what the Government is proposing to do plus add an additional $500,000 of taxpayer monies to encourage them to take advantage of the VSEP.

“I don’t understand where he suddenly draws the conclusion that they’re entitled to the lucrative severance packages that may have been offered at SOEs in the past. That’s a faulty analysis and faulty conclusion.”

Tribune Business reported earlier this week that Mr Ferguson and the BHMA had gone back to the Industrial Tribunal in Freeport to seek redress for their grievances after rejecting the Government’s latest $3.1m payout offer, which was submitted via a letter from Mr D’Aguilar on February 27.

The two sides are still $2.4m apart on their valuations of the voluntary separation packages (VSEPs). The Government and Grand Lucayan Board say the union’s comparisons with previous VSEPs are also inappropriate because those involved operating businesses in the process of being sold or restructured while the Grand Lucayan has yet to be disposed of.

The Government is also basing the VSEP offers on the Employment Act, which caps payouts at 12 years of service, but the BHMA and its 114 Grand Lucayan members are arguing that this applies only to redundancy/terminations - not voluntary departures.

The union’s total $5.5m payout figure also includes the workers’ retirement annuity, but the Grand Lucayan Board’s position is that it needs to take this issue up with Hutchison Whampoa - not the Government.

Some observers will likely argue that the Government should have left the staff payouts to the Hong Kong conglomerate rather than take responsibility itself, as this could have avoided the present impasse.

Mr D’Aguilar, though, affirmed that the Minnis administration will be resolute in protecting the Bahamian public’s wider interests by minimising taxpayer exposure to the Grand Lucayan.

“The Government is just not wanting to burden the taxpayer with any more than it has to in facilitating the onward sale of this hotel,” he told Tribune Business. “It wants to be fair, give what everyone is entitled to under the law, have a little additional amount to encourage the staff to take the VSEP, and the only thing standing between the distribution of $3.1m to 90 workers...

“Mr Ferguson is hoping to get far more than the Government is prepared to give. The Government has gone as far as it can with the people’s money. It has taken the bold step of saving the hotel and preparing it for its onward sale, but it really doesn’t want to burden the taxpayer with any more than it absolutely has to.

“While Mr Obie Ferguson is looking out for his 91 members, the Government is charged with looking after the interests of 400,000 Bahamians.”

The Government is now taking increasing fire from the Opposition over the costs it is incurring over the Grand Lucayan’s purchase, and operations, as it bids to secure a buyer that will transform the resort into a profitable, sustainable tourism destination.

The Minnis administration’s six-month “fiscal snapshot”, covering the first half of the 2018-2019 fiscal year, revealed that it injected $45.4m into the Grand Lucayan resort, including $13m to cover its operational costs, during the period to end-December 2018