The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government will have spent more than $11m on employee termination packages and support by the time it closes the Grand Lucayan’s sale, it was revealed yesterday.

Michael Scott QC, the resort’s chairman, told Tribune Business that the latest separation round involving around 175 employees will cost “about $3m” in due severance pay and benefits after the hotel confirmed this newspaper’s revelations that terminations had begun ahead of completing its sale to the ITM Group/Royal Caribbean joint venture.

Lucayan Renewal Holdings, the special purpose vehicle (SPV) that holds the resort, said in a statement that prior employee severance and COVID-19 support packages had cost the Government some $8.542m.

It broke this down into $6.705m paid to workers during the two voluntary separation exercises carried out in 2019, and $1.837m in vacation bonuses, emergency welfare fund payments and NIB benefits paid during the pandemic.

“The formula for the payments to the presently departing employees, some of whom have been employed with the hotel for 20 years, is based upon the same ministerial-approved calculation as that of the former employees who received separation packages totaling $6.705m under the two voluntary separation exercises held in 2019,” Lucayan Renewal Holdings said. It originally had 419 staff when it took over.

Add in the $3m due to be paid out to the newly-departing staff takes the total employee severance/support outlay to more than $11.5m in less than two years since the Government acquired the Grand Lucayan from Hutchison Whampoa in 2018.

The figures give an insight into the burden Bahamian taxpayers have had to shoulder beyond the $65m purchase price in a bid to rescue Grand Bahama’s ailing resort product and economy. Tribune Business records show that the Government injected $13m into the property during the six months to year-end 2018, while a further $16.1m outlay was approved in February’s supplementary Budget for 2019-2020.

It is unknown if the previous $8.542m termination payments were included in these figures, but the sums involved suggest the Government - via the taxpayer - will have spent around $100m in total to facilitate the property’s long-awaited sale to ITM/Royal Caribbean and their Holistica joint venture. Operating losses running at between $1m to $1.5m a month will have been subsidised for much of the Government’s ownership.

Mr Scott yesterday said the Government and Lucayan Renewal Holdings Board had sought to be “as humane as possible” in their treatment of the Grand Lucayan’s remaining 208 staff given their commitment as part of the sale terms to finance the terminations.

Revealing that around 50 received their due severance pay and benefits on Wednesday, he added that between 30-35 will stay with the resort during the transition to cover areas such as administration, security, the golf course and property maintenance.

“With Dorian and the depressed economy up there, we’re trying to be as humane as we can and as thoughtful as we can,” Mr Scott told Tribune Business. “We’re trying get this wretched deal closed, and but thought as we head in that direction it would be a good time to start the process.”

“Unlike when the Government bought the hotel from Hutchison, because they should have done this but didn’t, we’re making sure we protect Grand Bahamians by supervising and undertaking this obligation that is owed to them. It’s an obligation of the seller whenever a business is sold, be it a hotel or restaurant. It’s deemed an automatic termination of employees unless the parties agree to a deemed continuation.”

Mr Scott said the ‘bigger picture’ issue remained completion of the Grand Lucayan’s sale to facilitate its $300m redevelopment, and that of Freeport Harbour, by ITM/Royal Caribbean. “We’re still having discussions to iron out a few things,” he said of the negotiations, “but we’re close. I don’t want to say any more than that so that I don’t prejudice discussions between the Government side and theirs.

“My main focus and tremendous anxiety is to re-open our economy and the US economy, and get some activity going. The sooner things get done and construction starts, the happier I will be.”

However, Obie Ferguson, president of the Bahamas Hotel Managerial Association (BHMA), yesterday reiterated his accusation that Lucayan Renewal Holdings had breached the Employment Amendment Act which requires employers to negotiate and inform union bargaining agents in advance if they plan to make more than 20 workers redundant.

He warned that the Association would initiate legal action if its members did not receive the correct severance pay and benefits due to them, as he again hit out at the resort’s failure to consult over a series of phased terminations that are due to be completed in 2020.

Mr Ferguson, also complaining that he had initially assured his members there was nothing to fear, after Dionisio D’Aguilar, minister of tourism and aviation, said he was unaware of the terminations, blasted the episode as “not good industrial relations”.

He said: “I’m going to have a meeting with my members tonight by Zoom, and if we have to go to court we will if they don’t pay the workers what they’re entitled to. Failing which we will have no alternative but to go to court because they’re in breach of the industrial agreement and in breach of the law.

“There’s no issue about that. We are the legitimate bargaining agent. If you’re going to do something with the workers, you’re obligated to tell us that and sit down and work out what is due to them.... That is not the relationship I thought I had with the minister. I’m going to talk to my people this evening, find out what the deal is, what they want me to do, and based on that I will take the necessary action.”