Sol Kerzner hits out on Baha Mar
By BRENT DEAN
The Nassau Guardian
Deputy News Editor
brentldean@nasguard.com
Says Baha Mar deal violates agreements made with his company
The proposed deal between the Government of The Bahamas and Baha Mar violates previous agreements between the government and Kerzner International, charged Sir Sol Kerzner yesterday.
“Baha Mar proposes employing thousands of foreign Chinese workers, which would represent far more than 30 percent of the total labor force.
Approval of this arrangement by government would be a clear breach of an investment agreement with a developer that has become its largest private employer, and an investor who took a risk on The Bahamas when its economy was struggling far more than it is today,” said Sir Sol Kerzner, chairman and chief executive officer of Kerzner International in a statement.
The House of Assembly is scheduled to conclude debate on the Baha Mar resolution today. The company is seeking 8,150 work permits for Chinese workers to help construct the $2.6 billion resort. The government is seeking the blessing of the House as it grants the work permits. The opposition has said it supports the deal.
In previous heads of agreements between Kerzner and the government, it pledged to grant Kerzner most favored nation status, meaning no investor would be granted concessions greater than Kerzner.
However, in a rare public statement, Kerzner, who is the largest private sector employer in the country, said Baha Mar is being granted much more than his company received.
“When we made our largest single investment of approximately $1 billion for Phase III, we did so based on a heads of agreement signed with the PLP government in 2003. Among the many requirements that government imposed on Kerzner under this and prior agreements was a strict rule that at least 70 percent of the total construction labor force would be Bahamian,” said Kerzner.
“As was the case with the two previous agreements with government, our 2003 agreement included a most favored nation provision that assured Kerzner that our investments would be protected from subsequent investors receiving more favorable terms. These agreements represented a solemn promise by The Bahamas to us that any subsequent investor would only compete against us on a level playing field.”
Prime Minister Hubert Ingraham said on Sunday that the Baha Mar deal would be approved by the end of the month. It is unclear if Kerzner’s intervention will have any effect on that pronouncement.
Yesterday Baha Mar was not pleased with Kerzner’s public intervention.
“We are not going to comment on Mr. Kerzner’s public relations statement. The Baha Mar project has been well vetted with the public, the government and its investors. We are happy the Baha Mar resolution is being debated in Parliament today,” said the company in response to Kerzner.
Kerzner International said it intends to discuss with the government how to address its concerns. As a result of the deal, Baha Mar is to receive on the labor and land components of the proposed deal, Kerzner can argue it is entitled to the same.
The government is transfering 265 acres of public land at Cable Beach to Baha Mar as a part of the deal.
Kerzner International emphasized that the heads of agreement for each of the three phases of development on Paradise Island required that at least 70 percent of the total construction labor force had to be Bahamian.
Bahamian labor is more expensive than labor from countries such as China and Mexico.
The company and its chairman argued that the deal Baha Mar is to receive “would represent a material breach” of its agreement with the government.
“When Kerzner first invested in The Bahamas by acquiring what is now the Coral and Beach Towers out of bankruptcy in May 1994, we made our investment on the basis of agreements with the government that gave us contractual assurances regarding our investment. Although we were confident in our abilities to re-establish the Bahamian tourism industry at that time, we did so in the face of truly dire economic conditions,” said Kerzner in his remarks.
“Accordingly, we insisted upon most favored nation treatment, which would ensure that no subsequent investor would be given advantages that we never enjoyed. Since our first investment, we have always found government – irrespective of the party in office – to be a faithful partner who has justified our initial and subsequent confidence in The Bahamas as an investor. We have invested more than $2.3 billion over the course of our build-out of the three phases of Atlantis, increasing our room count from approximately 1,100 in 1994 to over 4,000 today.
“We have grown the Bahamian workforce from approximately 1,200 employees when we commenced operations in 1994 to nearly 8,000 full-time employees today, not to mention the indirect employment that our investment has generated in the community. Furthermore, we have spent millions on training programs to develop and improve the skills and professionalism of our work force, which has allowed Atlantis to be rated among the top resorts in the world.”
Both the governing Free National Movement and opposition Progressive Liberal Party support the Baha Mar deal.
11/18/2010
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