The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A FREEPORT attorney yesterday asserted it was “mind-boggling” that the Government should again “throw darts” at the Grand Bahama Port Authority (GBPA) given the island’s $2bn investment pipeline.

Kirk Antoni, the Cafferata & Company partner, told Tribune Business that the Government’s demand for the GBPA to pay it $357m within the next 30 days was “such bad timing” given that Freeport and wider Grand Bahama economy finally appear poised for economic revival after two decades in the doldrums.

Predicting that the Government’s demand for reimbursement, which would enable it to cover the costs of providing public services in Freeport over and above the tax revenues generated by the city, will likely be tied up in arbitration for three to five years, he argued that it should instead focus on facilitating investment approvals rather than confrontation.

Mr Antoni said he viewed the $357m payment demand, which represents a significant increase on the $152m previously claimed by the Government, as a squeeze play or pressure tactic designed to force the GBPA’s joint owners, the Hayward and St George families, to sell to it at “a pepper corn” price so that it can then “take control” of the city and all future investment activity.

Agreeing that the GBPA “is not perfect”, he nevertheless argued that increased investment and economic activity would generate more revenues that Freeport’s quasi-governmental authority can use to promote and develop the city.

Disclosing that he is “waiting for the next volley of missiles from Nassau trying to destroy Freeport and decimate its middle class”, Mr Antoni, who has figured prominently in efforts to form a Licensee Association amid the Government’s battle with the GBPA, said of the demand letter: “The timing is so bad that it appears the Prime Minister and his administration do not want to see Freeport succeed.

“He can ask whatever he wants of the GBPA but the truth of the matter is it’s going to end up in arbitration. I do know the GBOA has formidable attorneys [Fred Smith KC and Robert Adams KC] representing them, so this could go on for three to five years. In the meantime, what’s going to happen to Freeport?”

Both the Government and GBPA have recently touted Grand Bahama’s $2bn investment pipeline, featuring Carnival’s $600m Celebration Key private cruise port and the Grand Bahama Shipyard’s acquisition of two new dry docks for the same sum. However, while such projects are now ‘baked in’ and unlikely to be deterred, the outbreak of renewed hostilities between the GBPA and government may unsettle others.

Uncertainties over Freeport’s future governance may drive potential investors to look elsewhere, and Mr Antoni added: “Things are picking up here, and all we need is government to play its part in facilitating the approval of investments and the approval of investors, and not throw darts at the Port Authority and, of course, Freeport.

“It’s mind-boggling from Freeporters’ point of view. It doesn’t send a good message to investors looking at Freeport and a lot of people are. The whole thing is political; it’s all politics honestly.” Prime Minister Philip Davis KC and his administration, though, believe change is required in Freeport and at the GBPA because the latter has failed to live up to its development and other obligations.

However, Mr Antoni revealed that, in meeting with the Prime Minister’s wife when she recently visited Freeport, he had advised her that if Mr Davis “wants to extend his legacy do something immediately with the airport and the hotel, and accommodate that investors looking at Freeport”.

Suggesting that his advice had not been taken, Mr Antoni said the $357m demand letter was simply another step in an arbitration process that the Government intends to use to force out the Hayward and St George families and take control itself.

“I think it’s a combination of both things,” he added. “They want to see if they can buy out the families at a pepper corn price, and the second thing is they want to take control of Freeport and future investments. They want their boys to take charge.”

While many in Freeport agree that change is needed, they do not want to see the Government take control and replace the GBPA. Mr Antoni said east and west Grand Bahama were clear examples of why the Government should not run Freeport, and added: “The Port Authority is not perfect, and has limited funds, but if we get more investment coming in here and more licensees there will be more money to improve infrastructure....

“The increase in taxes... the new boat registration fees, the NIB contribution rate increase coming up, it’s killing the middle class. We have no middle class here. They cant keep up with inflation.”

Meanwhile, James Carey, the Grand Bahama Chamber of Commerce’s president, told Tribune Business that “the timing couldn’t be worse” in relation to the Government’s demand letter given that optimism surrounding Free- port’s economic prospects has become more upbeat in recent months due to the investment projects moving ahead.

“Will it put a damper on them? I certainly hope not. It cannot be positive or conducive to development,” he added. “It will be a stop and look again on behalf of potential investors. Keep in mind the Port Authority opened an office in Nassau to encourage investment coming out of Nassau business houses. It’s just not very positive when these things happen.

“You just don’t know what will happen because you don’t know if the Port Authority legitimately owes the Government $357m. If they do, and the Port Authority has to fork out over $300m, what does the Port Authority have left?

I don’t know what their reserves are but what will they have left to promote and develop the city of Freeport?

“Is this part of the design that the Government intimated last year that they want new investors in place? Is this part of the plan? I don’t know. If I were a potential investor in Freeport I certainly wouldn’t look favourably at Freeport until this matter is resolved.”

Mr Carey said the dispute between the Government and the GBPA had gone quiet in recent months, although Freeport’s private sector and licensees knew it had not gone away. While some had dared to start hoping it may be resolved quietly, the latest eruption “doesn’t bode well in terms of what we’re trying to accomplish in Freeport and Grand Bahama at the moment”.

Questioning whether arbitration is necessary, the Chamber president contrasted Freeport’s predicament with Jamaica, where he said central government, local municipalities and the private sector were working together to make infrastructure and other projects happen rather than “working against each other as appears to be the case in Freeport”.