Dame Joan Sawyer concerns about the government statements on the general election and Baha Mar

Dear Editor,

Please forgive me if I have misunderstood two recent stories which appeared in your respective newspapers.

The first is that the prime minister is reported to have said that he was not going to call the general election “any time soon”. I am not sure on what that statement was based, because article 66(3) of the constitution is quite specific about the duration of any Parliament following a general election. That paragraph reads: “(3) Subject to the provisions of paragraph (4) of this article, Parliament, unless sooner dissolved, shall continue for five years from the date of its first sitting after any dissolution and shall then stand dissolved.”

If my memory is correct, I think the present Parliament first sat on May 23, 2012. That would mean that unless the prime minister advises the governor general to dissolve Parliament before that date, the present Parliament will “stand dissolved” on May 23, 2017, with the result that there would be no legitimate government to advise the governor general and there would not be a Senate because, according to article 43(1)(a), each Senate seat “becomes vacant upon the next dissolution of Parliament after he has been appointed”.

In such an event, it is doubtful that even the powers which the constitution gives to the Cabinet under articles 29, 66(4) and (5), in a situation where war or a state of emergency has been declared, can be exercised at all or by whom, since in these circumstances there would not be a declared state of emergency or war.

I am aware that in 1987 the Parliament did not actually hold its first sitting following the general election that year until some three months later, and that it was for that reason that the date of the general election for 1992 was some three months after five years would have expired from the holding of the 1987 general election. Clearly that is not the situation now.

Article 66(4), which is referred to in article 66(3), would only apply if The Bahamas is at war or under a declared state of emergency under article 29; as far as I am aware there has been no declaration that The Bahamas is at war or that a state of emergency exists, so that could not be the basis for extending the life of the present Parliament.

I am also aware that article 67(1) provides that: “(67) – (1) After every dissolution of Parliament the governor­ general shall issue writs for a general election of members of the House of Assembly returnable within ninety days from that dissolution.”

That provision seems to contemplate a situation where the Parliament is dissolved well before its session is due to end and the 90 days is the outside limit for the writs of election to be issued and returned. After all, in the very words of that paragraph, the governor general could only issue writs after Parliament is dissolved. In addition, regard will have to be taken of section 32 of the Parliamentary Elections Act (Ch. 7), as well as the fact that the present budget will expire on June 30, 2017; and one cannot help but wonder how they will then deal with the preparation, presentation and passage of the necessary bills for the budget for the upcoming fiscal year which starts on July 1.

Section 32 of the Parliamentary Elections Act provides for writs of election to issue and to be returnable within not less than 21 days nor more than 30 days – both of those time frames are within the 90 days contemplated by article 67 (1) of the constitution. The time line is now quite short unless it is intended to ignore the above mentioned constitutional and statutory provisions.

The second issue that arises from the stories in the newspapers is that there is a great deal of confusion in the minds of some members of the general public about whether in truth, and in fact, Baha Mar has been sold and to whom. Is it in fact true that the assets of Baha Mar have in fact become the property of the Export-Import Bank of China by virtue of a foreclosure under a debenture to that entity? If so, clearly the debenture should have been registered in the Registry of Records, which would then make it open to inspection by members of the public.

There is also confusion as to how the judgement in a publicly heard civil case (the Baha Mar compulsory liquidation case) could be so “sealed” that no one, other than perhaps the learned justice who heard it, as well as the learned attorney general (whose daughters and husband have business interests housed in the building) and maybe the lawyers for other parties to the case would be aware of what was in fact decided.

It must be remembered that article 20 paragraphs (8), (9) and (10) of the constitution apply to that case as they do to all other civil cases heard in the Supreme Court or any other court of competent jurisdiction of The Bahamas. Those paragraphs read: “(8) Any court or other adjudicating authority prescribed by law for the determination of the existence or extent of any civil right or obligation shall be established by law and shall be independent and impartial; and where proceedings for such a determination are instituted by any person before such a court or other adjudicating authority, the case shall be given a fair hearing within a reasonable time.

“(9) All proceedings instituted in any court for the determination of the existence or extent of any civil right or obligation, including the announcement of the decision of the court, shall be held in public.

“(10) Nothing in paragraph (9) of this article shall prevent the court from excluding from the proceedings persons other than the parties thereto and their legal representatives to such extent as the court –

“(a) may be empowered by law so to do and may consider necessary or expedient in circumstances where publicity would prejudice the interests of justice, or in interlocutory proceedings or in the interests of public morality, the welfare of persons under the age of eighteen years or the protection of the private lives of persons concerned in the proceedings;

“(b) may be empowered or required by law to do so in the interests of defense, public safety or public order; or

“(c) may be empowered or required to do so by the rules of court and practice existing immediately before 10 July 1973 or by any law made subsequently to the extent that it makes provision substantially to the same effect as provision contained in any such rules.”

Clearly there was no matter of defense or public safety or public order to cause the decision not to be made public. On the other hand, it may be argued that because Crown land and money from the Consolidated Fund was used to pay employees of Baha Mar (money that was said to be owed to China Construction company for the construction of the new road from the airport) that the interests of justice required the decision and the reasons for it to be made public, especially when it appears to reasonable persons that there may have been a conflict of interest on the part of the government’s main adviser, the learned attorney general, who has subsequently reported that there was a sale to a Hong Kong entity and then that the sale is not complete.

These were also not interlocutory proceedings nor were they proceedings concerning the welfare of persons under the age of 18 years, nor for the protection of the private lives of persons concerned in the proceedings.

Furthermore, in The Nassau Guardian of Monday, January 30, 2017, pages A25 and A27, there were notices of voluntary winding up by 15 companies with the words “Baha Mar” in their names. The notices were apparently issued by Edmund L. Rahming. If those 15 companies are subsidiaries of Baha Mar, it raises serious questions about the whole saga of the winding-up proceedings of Baha Mar because voluntary liquidation is normally only appropriate where the company is solvent, and the compulsory winding up of Baha Mar would only be justified if that company was insolvent. Are we to accept that those 15 subsidiaries are solvent while the parent company (if it is the parent company) is insolvent?

It was also reported that the prime minister has said that he has instructed the attorney general to make public the contents of the judgment of the court in the Baha Mar case. There are two issues which arise from that. Firstly, if the attorney general, as attorney general, can say when a judgment by a justice of the Supreme Court is to be made public, that raises the very thorny question as to whether the attorney general is controlling the courts.

Secondly, it raises the question as to whether the prime minister, through the agency of the attorney general, is controlling the courts.

Neither of those possibilities would be consistent with the constitutional requirement for the courts to be “independent and impartial”.

I sincerely hope and pray that the information in the newspapers to which I have referred above is not quite correct, for if it is, then the concept of the rule of law would be otiose in The Bahamas.

 

– Joan A. Sawyer

Source - The Nassau Guardian

Chinese loans are cheap... and The Bahamas is borrowing... What's the catch?

The limitations of the Chinese love affair

thenassauguardian editorial




The Bahamas has fallen fully into the embrace of China. And the rising empire has been kind with its “gifts.”

The $2.6 billion Baha Mar project and the $70 million airport highway are being financed by China. Last week, the government announced that the China Harbour Engineering Company Ltd. will build the North Abaco Port and by-pass road; a bridge between Little and Great Abaco; a port and by-pass highway in Exuma; and the Eleuthera Glass Window Bridge and approaching embankments.

The airport highway money is a part of the $1 billion in loans set aside for the Caribbean by China. The Bahamas has been allocated $150 million of that amount.

Chinese loans are cheap. And The Bahamas is borrowing. What is tied to Chinese money in the developing world, however, is Chinese labor. When China lends or invests in poor countries, it sends lots of Chinese workers to construct the projects it finances.

For poor countries struggling to attract investment or to solicit financing, there is little resolve to make demands of the rising power.

Here in The Bahamas, Sarkis Izmirlian and Baha Mar needed financing. Baha Mar received that financing from China and it also received 8,150 foreign workers (who mostly will be Chinese).

The government borrowed cheap money from China for the airport highway and it received 200 Chinese workers. How many hundreds of Chinese will be forced on The Bahamas to build the Family Island ports and infrastructure upgrades announced last week?

What Bahamians must understand is that when China lends, and it contracts its workers to do the work, a significant amount of the money borrowed goes back to China with the workers who build the project. They pay their workers with money we borrow.

In addition, The Bahamas gets the bill for the loan. Over the years, the interest and principal payments also go to China.

The Chinese also keep their workers on self-contained on-site camps when they are sent abroad. We barely even get them to visit our stores to spend the money we borrowed when they are working in our countries.

The Bahamas should embrace Chinese investment. Without Baha Mar, our near future would look less bright. But The Bahamas must be careful regarding the relationship it develops with China regarding the labor issue.

We lose a significant chuck of the value of these investments when our uneducated laborers are denied work because Chinese get these jobs.

China brilliantly creates unequal trade relationships. China’s manipulated currency has helped it suck a significant portion of manufacturing from the West. It then loans the cash it has made back to countries such as the United States to buy more of its products.

China is now the second largest economy in the world and in the near future it will displace the United States as the world largest economy.

Much debate is needed among our policymakers about the Bahamian-Chinese embrace. We must find ways to continue to attract Chinese money that comes with fewer Chinese workers attached.

We think Chinese investment should be welcomed. We also think a reasonable number of Chinese workers should be accepted. However, China building most of our infrastructure projects and commercial projects almost solely with Chinese labor is not acceptable.

If China does not budge to the representations of a small place such as this, or a small region such as ours, we then have to do some analysis to determine if it is wise to borrow as much from China as opposed to other commercial lenders who do not set similar labor requirements. This issue is not simple.

Bahamians have thus far been okay with China’s involvement in The Bahamas. But as the numbers of Chinese coming to country get larger and larger with each announced project, the attitude towards China in The Bahamas will change. When a country has a double-digit unemployment level, its citizens get upset when foreigners get lots of jobs in their country.

Our political parties must be careful with this relationship. More concessions on the labor issue are needed from a China that does not like to compromise.

3/15/2011

thenassauguardian editorial

Bahamas Blog International

The Bluewater story will be told, and it’s a wonderful story for the people of The Bahamas to know and to have

PM responds to Bluewater threat
By CANDIA DAMES
Guardian News Editor
candia@nasguard.com



Prime Minister Hubert Ingraham last night responded to a threat recently issued by Bluewater Ventures Limited, saying he will not be intimidated by the “shell company” and promising to tell the whole story of the Christie administration's plan to sell 49 percent of the Bahamas Telecommunications Company (BTC).

Bluewater recently alleged that the Government of The Bahamas has been making defamatory comments against it and the company threatened to take legal action against the Ingraham administration.

Bluewater has asked the government’s attorney to advise no later than today whether the government intends to issue a public statement repudiating the alleged defamatory statements.

But the prime minister made it clear last night that no such step will be taken.

“They seek to intimidate,” said Ingraham, while wrapping up debate on the government’s mid-year budget statement. “Well, you know you can’t intimidate me in my private life. I wouldn’t talk about the Government of The Bahamas. And so, the Bluewater story will be told, notwithstanding any threats by them.

“The Bluewater story will be told and it’s a wonderful story for the people of The Bahamas to know and to have.”

Ingraham noted that the letter Bluewater’s attorney sent to the government’s lawyer last week never indicated what were the alleged defamatory statements.

Ingraham is expected to address the Bluewater issue during the upcoming debate in the House of Assembly on the BTC privatization.

The prime minister also touched on Baha Mar, a project introduced under the Christie administration that changed substantially under the Ingraham administration. Ground was broken last week on the Cable Beach development and Opposition Leader Perry Christie hit out at the government for not acknowledging at the event the PLP’s role in bringing the project about.

But Ingraham said last night, “Baha Mar is going ahead because the Chinese government is providing the money. They (the PLP) never wanted any business dealing with the Chinese government.

“They recognized Taiwan. In fact, that’s how the leader of the opposition got back in the PLP. The PLP made a deal with the Taiwanese government to recognize them and not the People’s Republic of China.

“Ervin Knowles, who was the minister, got fired, and Christie got hired. Ervin Knowles was appointed ambassador to Taiwan.

“The only reason why we have [ties] with the People’s Republic of China today is because the FNM did that and the Chinese regard us as an old friend and they are supporting us in the Baha Mar project.

“And there was no possibility of Baha Mar being able to get a loan with the Chinese unless The Bahamas government said ‘yes’, please do it.’”

Ingraham said the Free National Movement is delighted at the opportunity to be in government.

But he said, “We are concerned about the extent to which outright lies are told to the public, shamelessly so.”

Ingraham said what the FNM government has done is “unmatchable by them”.

“The reality is, Mr. Speaker, that we on this side of the House are pleased that the people of The Bahamas have reposed their trust in us and that we are spending their money wisely.

“We are preparing their economy for the future.”

3/4/2011

thenassauguardian

Bahamas Blog International

Sarkis Izmirlian, Man of the Year

Sarkis Izmirlian JCN Man of the Year
The Bahama Journal


As we here at JCN have done for the past ten years; so do we continue this year: we have decided to recognize certain deserving men and women for the contribution they have made [and continue to make] to the ongoing development of the Bahamas.

We do so not only because we can; but because we must –as a responsible media organization – continue to do all that we can to help build up our nation; and so by the same token, we must always give credit where and when credit is due others.

We note also that, right-thinking Bahamians throughout the length and breadth of the Bahamas are today excited at the vistas of opportunity they see as they contemplate the initiation of the Baha Mar project, slated for the Cable Beach strip.

As in the case of these highly expectant Bahamians, we too look forward to the start-up and completion of this mega-project.

In this regard, it should not take the genius that comes with rocket-science to understand and appreciate the import of a project that promises to employ thousands of Bahamians.

Such a venture would also bring with it a multiplier effect that promises to buoy other aspects of the Bahamian economy, its society and its competitiveness in that wider world where in the struggle for economic pre-eminence and consumer satisfaction, it is excellence that matters most of all.

Izmirlian is this Journal’s Man of the Year because he has been able to match word with deed in support of his stated conclusion to the effect that the Baha Mar project – in its guise as a world-class resort - will significantly benefit The Bahamas and all Bahamians.

We believe him when he says that, “… Baha Mar will make The Bahamas one of the premier tourist locations in the world…"

And so, distilled to its essence, the word we are getting is to the effect that, Baha Mar will draw millions of vacationers and business travelers every year to the resort's six hotels, with almost 3,500 rooms and condos, the largest casino in the Caribbean, the largest convention center in The Bahamas, a world-class golf course, retail village and much more.

In addition, it is to be noted that, Baha Mar –once fully operational- will boast having a staff that is fully operational, with some 98 per cent of the staff being Bahamian.

This is excellent-good news.

It is this new information that supports and under girds the decision we have made to name this entrepreneur par excellence – Sarkis Izmirlian- as our man of the year.

He is this year’s choice not only because of his tenacity and vision; but also for being that kind of investor who clearly has a phenomenal depth of confidence in the Bahamas and in its people.

In addition, he is clearly that kind of man who is driven to get things up and going; here we would also venture that this man has a depth of confidence in himself and in his capacity to get up from under any number of disappointments and challenges.

To put the matter concerning Izmirlian in its proper perspective; this investor makes things happen; in this, he is to be distinguished from all those others who wait patiently for things to line up this or that way.

This is not to say that, he does not recognize the need for perseverance; indeed, he surely had his share of this as he plotted his way through what might have – on first glance- seemed to be seemed so very many high hurdles.

As the record shows; this man persevered; stuck to his guns; sought out and found a worthy strategic partner in the guise of the Chinese Export-Import Bank and has thereafter gone on to victory.

As we now know, “The proposed Cable Beach development would be financed by the Export-Import Bank of China and constructed by the China State Construction Engineering Corporation…”

And clearly, while we reference victory on the part of this man –Sarkis Izmirlian – we are also minded to take note of the fact that, the Bahama Mar project signals good news not only for those who govern, but also for the nation’s Loyal Opposition.

As the record would show, the initial conversations and tentative agreements concerning Baha Mar and the revitalization of the Cable Beach Strip came up for consideration in that time when, the Free National Movement was then in opposition.

In toto, then, the vast majority of our people are also winners in that saga that now involves Sarkis Izmirlian, Baha Mar and the transformation of the tourism product in the Bahamas.

This believer in the Bahamas deserves not only our recognition; but also that of all right-thinking Bahamians.

And so, we salute Sarkis Izmirlian as JCN’s Man of the Year.

December 31, 2010

The Bahama Journal

Bahamas Blog International

The essential differences between Messrs Hubert Ingraham and Perry Christie revealed

We Have No Choice?
by Simon


The House of Assembly debated a resolution on the Baha Mar deal recently. Unfortunately for the Perry Christie-led PLP, it has already lost the broader national debate on the proposed mega project.

This includes a haemorrhaging of goodwill from the PLP by many professionals and even many within the party who are flabbergasted and frustrated by Mr. Christie’s dissembling and series of incoherent statements on Baha Mar since its inception. Curiously, part of the story concerns – the BlackBerry.

Some weeks ago, Mr. Christie attempted to mock the Prime Minister for regularly checking his BlackBerry at a dinner attended by both leaders. Mr. Ingraham was monitoring any news of a settlement between Baha Mar and Scotiabank on an outstanding loan between the two entities.

The story reveals the essential differences between Messrs. Ingraham and Christie. Hubert Ingraham is a part of the Smartphone generation while his former law partner is a throwback to a bygone era, wedded to a model of economic development that is being assigned to the proverbial ash heap of history.

Mr. Ingraham’s use of the BlackBerry represents a forward-looking, tech-savvy style of leadership marked by a hands-on approach, timeliness and engagement. This is in marked contrast to Mr. Christie’s cavalier, late-again and disengaged style. The device that perhaps best represents his decision-making style is the telegraph, which in today’s world would be slow-moving, clunky and out-of-date.

But, the more defining difference between the men was revealed in one of the more shocking statements ever made by a Bahamian leader on a project as large and as involved as Baha Mar.

WE HAVE NO CHOICE?

On the eve of Mr. Ingraham’s departure for China, the Leader of the Opposition counselled the Prime Minister to take the Baha Mar deal as it was. His reckless advice: We have no choice! We have no choice?

One would have expected this to be the view of officials at Baha Mar, not of a former Prime Minister. Life is filled with choices, even in the most difficult circumstances.

It is clear that Mr. Christie would have headed to China on bended knee, as an agent for Baha Mar, representing narrow special interests rather than the broader Bahamian national interest.

Mr. Christie’s view that the country had no choice but to accept the Baha Mar deal as is, is the clearest insight yet into why he essentially gave away Bahamian treasure and land at Cable Beach which no Bahamian leader from the UBP, PLP or FNM ever did.

It explains the Great Mayaguana Land Give-Away in which beachfront property equivalent of the distance from the eastern end of New Providence to Lyford Cay was alienated to foreign interests.

It reveals why his party’s land policy has been disastrous for The Bahamas and why his talk of Bahamianization is mostly talk. It further demonstrates why Mr. Christie and the PLP are content to sell cheaply our national ambitions and dreams to foreign interests, often to the cheapest bidder, rather than genuinely empower Bahamians.

Thankfully, Mr. Ingraham disregarded Mr. Christie’s monstrously bad advice in his negotiations with the Chinese. He did so because he knows that The Bahamas indeed has a choice, indeed a number of choices, as we slowly recover from a global economic crisis.

HEAD-TO-HEAD

Rather than bended-knee, Mr. Ingraham went head-to-head with Chinese officials. Whereas Mr. Christie felt there was no choice than to accept $200 million dollars worth of contracts for Bahamians, Mr. Ingraham got that number doubled to $400 million. Those contracts will now include work on the Core Project which was not in the original deal.

In his Sunday press conference Mr. Ingraham noted that contracts will be awarded to large, medium, small scale and individual contractors. This is broad economic empowerment in fact, rather than just in talk.

Mr. Ingraham insisted on and got a sizable expansion of training opportunities for Bahamian workers and professionals. This dovetails with his administration’s revamping of the Bahamas Technical and Vocational Institute under revised legislation passed this year. It may also build on the National Retraining initiative launched last year.

The Prime Minister also suggested that there may have been some movement on phasing in the number of rooms at Baha Mar over a designated period of time.

Whatever the final outcome on this matter, it is clear that Mr. Ingraham went to China to negotiate a better deal for the country, as opposed to Mr. Christie who it appears may have gone simply for a signing ceremony and pomp in circumstances that would not have been as advantageous to The Bahamas.

WATERSHED

As noted previously in this column, the Baha Mar deal has been a watershed in terms of the vision and quality of governance demonstrated by Mr. Ingraham and the FNM in stark contrast to that of Mr. Christie and the PLP.

It must be a source of considerable angst for the latter, that the project they initiated has been re-negotiated on better terms and will be launched by an Ingraham-led FNM Government. History eclipses those who are irresolute, procrastinating and dithering when decisiveness is required.

The Bahamas deserves better than political, business or civic leaders telling us that we have no choice in charting our national destiny, despite the rough seas we are facing. This is the talk of those who are dragged along hopelessly by the stream events, rather than tacking and turning to navigate those events to one’s better advantage.

On Baha Mar and other foreign investment projects, Mr. Christie has shown that he is mastered and sidelined by events. Through painstaking negotiations Mr. Ingraham has shown that he knows how to shape events, even when presented with as problematic a deal as the initial one placed on the table by Baha Mar.

Mr. Christie’s declaration that the country had no choice on Baha Mar proved stunningly incorrect. It will prove to be one of the more disastrous pronouncements he has made in his long political career. It is a mistake the Bahamian people will clearly take into account as they make their choice at the next general election.

bahamapundit

Bahamas Blog International

The history of the Baha Mar project

The history of the 1,000 acre Baha Mar project
BY LARRY SMITH



AFTER years of manoeuvering over the 1,000-acre Baha Mar project on Cable Beach, the Ingraham government (in its own words) has finally made sweet lemonade from the sour fruit left on the table by the Christie administration.

In April 2005 the newly formed Baha Mar Development Company (owned by a Lyford Cay-based property developer named Sarkis Izmirlian) bought three aging hotels on the Cable Beach strip with a $200 million loan from the Bank of Nova Scotia. The venerable Nassau Beach was subsequently closed, while the Crystal Palace and Cable Beach Hotels were renovated and re-branded.

That same year Baha Mar concluded an agreement with the Christie administration for a $1 billion-plus development, including several hotels, a casino, retail village, convention centre, expanded golf course, and beach and pool amenities. Ironically, had the project got underway when it was supposed to, it would have opened in the midst of the Great Recession - with potentially devastating consequences.

Side agreements to the 2005 agreement included deferred taxes that could later be paid in instalments, a $20 million marketing contribution from the Ministry of Tourism, and a commitment to upgrade the airport and other infrastructure.

There was also an agreement to transfer to the developer hundreds of acres of both Crown and government land on Cable Beach worth an estimated $150 million.

However, Baha Mar proved unable to raise $400 million in capital, show evidence of further financing, produce detailed plans, or attract world class partners by the agreement's stated deadline of October 2006.

With an election approaching, the Christie government scrambled to revive the project. And by early 2007 it had been reorganised as a joint venture with Harrah's Entertainment. The planned capital spent more than doubled to $2.6 billion (along with more than a quarter billion dollars in government concessions) and promoters were hailing the project as unprecedented in scope and character.

The revised project included a larger casino, double the meeting room space, and 1200 more hotel rooms.

But despite "vigorous negotiations" a deal could not be finalised before May 2007. And when the electoral dust had settled, Perry Christie was replaced as prime minister by Hubert Ingraham, who immediately launched a review of the project.

Although the new government eventually decided it would abide by the 2005 terms, Baha Mar insisted on further negotiations, according to the prime minister. And by February 2008 he unveiled a supplemental Heads of Agreement that trimmed some of the concessions given three years earlier.

"There is high expectation by the Bahamian public about the Baha Mar project," Ingraham acknowledged in March, 2008 during passage of a parliamentary resolution to authorise the transfer of public lands to the developer. "We will do all we can to facilitate it, but I do not want to oversell it."

March 2009 was the new deadline set for the government's conditions to be met so that the deal could be finalised. But long before that could happen, Harrah's got cold feet due to the economic downturn and pulled out of the partnership, putting the whole project in jeopardy. Unable to obtain regular financing in the capital markets, Baha Mar turned to the cash-rich Chinese government to save the development.

Earlier this year, China's Export-Import Bank agreed to arrange $2.5 billion in financing, and Beijing's state-owned construction corporation signed on to build the project, which will feature six hotels and add 3,500 hotel rooms and condos to the country's current inventory of 15,000 - more than half of which in Nassau.

Following the prime minister's recent trip to China to firm up the details of the construction arrangements, the House of Assembly unanimously passed a government-sponsored resolution to approve the project, including the unprecedented issuance of up to 8,150 work permits for non-Bahamian construction workers.

After talks with the Chinese, Ingraham was able to announce that he had doubled the share of business for Bahamian subcontractors, with more than construction 4,000 jobs now on offer, and that some $8 million would be spent on training programmes for Bahamian workers.

"We put down some benchmarks, like the $400 million in Bahamian contracts, and said if they accepted our terms we would approve the project by the end of November," the prime minister told me.

"We always disclose the terms of deals - not like the PLP when they signed the 2005 Baha Mar Heads of Agreement with a confidentiality clause, and contemporaneously issued side letters containing larger exemptions from taxes and committing even more public money in violation of the (phase three) deal they had agreed with Kerzner two years earlier."

In fact, this last point has proven to be the only remaining fly in the Cable Beach lemonade.

The prime minister does not accept that the current Baha Mar deal violates the guarantees to Atlantis developer Sol Kerzner that no subsequent investor would get more favourable terms. Kerzner's complaint focused on the ratio of Bahamian to non-Bahamian construction workers, presumably because Baha Mar will benefit from a cheaper, more skilled, and more productive labour force.

"Among the many requirements that the government imposed (on us) was a strict rule that at least 70 per cent of the total construction labour force would be Bahamian. However, this new (Baha Mar) deal will constitute a complete reversal of (that) standard," Kerzner said angrily.

The prime minister's response is that "the government will review Kerzner's claim and seek to resolve all issues."

The question of whether the Bahamas can accommodate thousands of new hotel rooms opening at the same time is another issue for Atlantis.

"The reason is that the tourism infrastructure needs to catch up to additional demand.

"Airlift is not going to grow and develop in one day just because another 3,000 luxury rooms are opened. And I think that is very critical...and not easily done," Managing Director George Markantonis told The Tribune recently.

The Baha Mar project will get underway before the end of this year, with contracts awarded to Bahamian firms. The China State Construction & Engineering Company should begin work by the spring, and the project could be substantially completed by 2014.

In response to market concerns, Baha Mar has agreed to stagger the opening of the new hotels over a five-month period stretching into 2015, and close the Crystal Palace Hotel during renovations.

According to the Chinese, the project relies on being developed, marketed and operated as a single phase "to induce demand that would not otherwise exist for a series of standalone hotels."

They point out that the Hyatt, Morgan's and Rosewood hotel companies are investing $62 million of their own money into the project, and note that the airport will be redeveloped by the time Baha Mar opens. Expectations are that the tourism market will have rebounded by then.

Another issue that has received somewhat less attention in the media is the provision of water and power for such a massive project being built and brought on stream at one time. As we all know, these commodities are relatively scarce on New Providence these days, and there are fears that our infrastructure will be further strained in the short-term.

In fact, BEC will need to generate an additional 25 megawatts of electricity to accommodate the projected power demand for Baha Mar.

And the developer is supposed to cover the cost of a new BEC substation, as well as build a central sewerage system, and a reverse osmosis plant for potable water.

Although there was understandable shock and dismay when Baha Mar's requirement for such a large foreign labour component first became known, public opinion seems to have quickly moved to accept the inevitable - no doubt fully motivated by the recession.

For example, in June of this year the PLP said it would not involve itself in the decision to allow thousands of Chinese workers into the country and seemed determined to let the government twist in the wind. But only two months later they were singing a different tune, based on the state of the economy.

And from the sense of jubilation conveyed by the government since the Baha Mar deal was approved, it seems that the studied scepticism of the past few years was aimed not only at getting the best deal possible in a difficult environment, but also at drawing the opposition into a full embrace of the project's current framework in order to minimize the obvious political risks.

As one well-connected insider told me: "I'm sure there was some political thinking involved, but for the most part it was to get a doable deal."

What do you think?


Send comments to

larry@tribunemedia.net


Or visit www.bahamapundit.com

November 24, 2010

tribune242

Bahamas Blog International

The Parliament’s decision to unanimously approve Baha Mar’s request for 8,100 work permits is troubling...

Decision to approve Chinese work permits troubling
BY LYNDEN NAIRN



At the risk of prejudicing my views on this matter, let me remind your readers that “a bird in the hand is better than two in the bush”.

The Parliament’s decision to unanimously approve Baha Mar’s request for 8,100 work permits is troubling because it appears that all of the relevant factors were not considered or even known.

At the outset, I want to make it clear that Baha Mar has the right to invest whatever amount it wishes, wherever it wishes and whenever it wishes within the confines of our laws.

I also believe that consistent with the tenets of our capitalistic economy, Baha Mar has the right to make good and bad business decisions. It is not right, for instance, to deny approval of a Bahamian project on the basis that it would create a glut of room inventories in the marketplace, even though one would expect investors and their financiers to have regard for that possibility.

The labor issue is a significant problem not only because it robs Bahamians of maximizing their benefits from the project, and not only because on its face it puts Atlantis at a disadvantage, but because it represents a business deal that apparently could not be financed if the financier were not afforded certain privileges.

During Atlantis’ multiple phases, the government thought that it was in the best interest of the Bahamian people to require Atlantis’ labor component to be at a certain level. Undoubtedly, that imposition caused Atlantis to engage labor at a higher cost than it would if that condition did not exist.

A few years later, in order to ensure that financing is secured for a project, the government has decided to allow Baha Mar to engage almost three times the number of foreign workers as Atlantis. That circumstance means that Baha Mar is able to construct its facility at a lower cost than Atlantis.

That places Atlantis at a significant competitive disadvantage since the cost of construction drives capital requirements, financing costs, room rates and ultimately profitability. Whatever one’s opinion with respect to Atlantis and Baha Mar, one has to at the very least appreciate that this is a legitimate concern for Atlantis.

Indeed, it really ought to concern all of us since this state of affairs creates uncertainty in the minds of current local and international investors as to whether the government might change the playing field and render their business models not feasible.

This is a very dangerous matter and should not be brushed over in our effort to cause Baha Mar to happen. Atlantis’ investment is already in the ground — it is what it is. A decision by the government should not be the event that renders it less competitive — not in a capitalistic environment.

Some persons have criticized the agreement between Atlantis and the government. However, it needs to be remembered that businesspersons must seek to guard against the kind of risk that Atlantis faces today. Perhaps one is saying that such a deal is not in the country’s interest. The fact is though that no reasonable government should be afraid to execute such a deal since no reasonable government would wish to jeopardize a major investment project.

That said, I believe that the government has a moral responsibility to not grant a better deal to Baha Mar. Foreign and local investors must be able to trust that the government will ensure that the playing field is level at the time of their investment and after as well.

No investor, local or foreign, would wish to invest in an environment of uncertainty. This situation could jeopardize future investments in The Bahamas.

Indeed, Sir Sol Kerzner has already said that Atlantis phase four is unlikely. Already, therefore, the cost of granting Baha Mar 8,100 permits to construct a $2.6 billion hotel is $1 billion in future investments. The question is how many other projects will be deterred?

Moreover, if Atlantis’ phase four project were to reflect the Bahamian labor component that was imposed on it several years ago, they are likely to have engaged 3,500 Bahamians, the same number that Baha Mar will hire.

I also found it rather revealing that the labor cost allocated to the 3,500 Bahamians that Baha Mar intends to engage is $200 million over four years. That equates to $275 per week inclusive of national insurance and other benefits.

What is equally striking is that having increased the Bahamian component by $200 million, the Chinese labor component remains unchanged. Assuming that information is complete, and frankly there is no reason to believe that the Prime Minister was complete, then it simply means that Bahamians will be given contracts to procure materials. Assuming such materials are required to be sourced in China, then this amendment constitutes nothing.

What is more, if it is true that as the Prime Minister suggests, the additional $200 million is intended to move Baha Mar’s cost closer to Atlantis’, then what is the incremental cost of the Baha Mar development?

Now let’s say that Baha Mar makes the argument that its total development cost was not lowered as a result of the favorable labor allocation. That is quite possibly true, but does that make the government’s situation any better? Perhaps not.

Here is why: It is indisputable that the Chinese government’s decision to provide the financing is based on the excessive work permits and the sale of materials for that project. Therefore, the inducement takes place broadly at the level of financing, not at the level of project development cost.

That makes Atlantis’ argument even more compelling since in that instance the issue is not merely the competitive disadvantage that is driven by development cost, but the entire project. In other words, if in the absence the incremental incentives the Chinese would refuse to finance the project, the government has unwittingly given Baha Mar a financing advantage. Atlantis can therefore argue that the entire project represents an abandonment of the agreement, not just the additional labor and land cost that they incurred. Even commercial banks can argue that this deal places a competitive bar on them that they cannot reach.

I do not seek to carry water for Atlantis, much less commercial banks. I simply believe that it is essential for us to consider the consequences of the decisions we make.

The fact is that this arrangement has far reaching consequences. I only wish that the Christie administration and the Ingraham administration had not messed up Baha Mar’s original plans so badly. They owe Izmirlian, Atlantis and the Bahamian people an apology and even their resignations.

I now wish to consider a related but slightly different matter. Bahamians will recall that during the various construction phases of Atlantis, many persons argued that it was inappropriate to grant Atlantis all the incentives that were given. Undoubtedly, there were smaller investors, Bahamians and others, who felt that their business models were being threatened by the Atlantis subsidies or perhaps they felt that they should have received similar incentives, for whatever reason.

I believe a strong argument can be made by those who were aggrieved. That points to the fact that we need to have clearly defined concessions/incentives in order to create a level playing field and remove uncertainty and arbitrariness from the process. The latter leaves too much room for abuse and under the table dealings. Furthermore, deals should not be made in secret and persons who benefit in any way as lawyers, developers, etc., should not vote in our Parliament on these specific matters.

• Lynden Nairn is a Chartered Accountant, and president of Colina General Insurance.

11/24/2010

thenassauguardian

Bahamas Blog International

Sir Sol Kerzner and the Baha Mar deal

Kerzner's concerns on Baha Mar project
By PAUL G TURNQUEST
Tribune Staff Reporter
pturnquest@tribunemedia.net


A NEW day is dawning in the Bahamas. An entity that was once only talked about will soon become a reality on Cable Beach - Baha Mar.

At an estimated value of over $2.6 billion, it is considered by all estimates to be a monolithic project. To some it is considered a monstrosity that will consume all that was here before it. To others it is a golden egg.

To the chairman and CEO of Kerzner International, Sir Sol Kerzner, it is something else altogether.

Last week, Sir Sol made a rare appearance in the local press by issuing a statement to the media on the impending approval of Bah Mar.

In his statement, Sir Sol said that while they welcomed any project that would enhance and improve the tourism sector in The Bahamas, "the proposed terms of the Baha Mar project violates the Kerzner Heads of Agreement with The Bahamas." He promised that Kerzner International would discuss with the Government how to address this "breach" in their "most favoured nation" clause.

Principle

Since this statement there has been much talk in the press about what exactly a most favoured nation clause is. According to the Minister of State for Finance, Zhivargo Laing, a MFN classification is an internationally established economic principle, centrally recognized by the World Trade Organization (WTO), which seeks to establish a level playing field between mutual parties.

"The term is counter intuitive," Minister Laing explained.

"The name suggests that you treat the entity with MFN status more favourably than others, but what it really means is that you treat everyone alike; you don't treat anyone more favourably," he said.

Based on the MFN principle, if one MFN entity is granted special Customs rates, for example, then all MFN entities should be granted special Customs rates. The specific rates would be established by government policy or law.

In the case of the Bahamas, the Hotels Encouragement Act addresses the issue of concessions, while allowances for labour are specified in government policy, he said.

In order to establish whether a breach of MFN privilege exists, Mr Laing suggested one would have to assess a competing agreement "in its totality" and not compare a single line item. He said the question of a breach is "not so simple from the government's point of view."

In fact during the Prime Minister's wrap up on the Baha Mar debate he said, "I do not concede that we would be in breach of the deal with Kerzner. The relationship between the Bahamas and Kerzner has been mutually beneficial," Prime Minister Ingraham said.

Sir Sol, however, has taken the conversation to another level when he revealed during a teleconference with the press last week that if Baha Mar were to be approved in its current state the jobs of over 8,000 employees at Atlantis could be put at risk.

"It seems to me pretty ridiculous in this current environment, even if the economic environment were a lot better to look to come in and double the current number of rooms overnight. It seems to me pretty irresponsible. I also believe that one should take into account that we have 8,000 people working with us, and if this were to move forward the likelihood is that people's jobs would have to be threatened. It is just impossible, practically impossible to double the size of the market.

Pressure

"As we said in our statement, last year was a tough year and occupancy was under pressure. Well guess what, this year is even tougher. So it seems pretty ridiculous to me that these folks are wanting to move forward," he said.

And move forward they have. The Baha Mar labour resolution was passed unanimously before the House of Assembly (36 voting for, with four absent), which allows for 8,150 foreign workers, but no more than 5,000 at one time to be employed on the Baha Mar Cable Beach project.

Following this unanimous vote in the House of Assembly last week, Baha Mar's senior vice-president of external affairs, Robert "Sandy" Sands said that construction for the single-phase $2.6 billion Baha Mar development project could break ground as early as January, pending the close of the Export Import (EXIM) Bank of China loan.

Contractors have already been chosen for the first six construction packages, totaling $60 million, which will include the new Commercial Village contracts and the new West Bay Street.

According to Mr Sands, the initial payout will cover construction contracts and also includes numerous Bahamian architects, engineers, quantity surveyors, suppliers and many other related parties who will participate in these first six contract packages.

Prior to the approval of this massive project, Sir Sol said that he did not want to speculate on what he would do if Baha Mar was approved without at least the development being "phased" in as his Atlantis properties were. Now that the project has been pushed through the proverbial pipeline, the question remains: What will Atlantis do in response?

Addressing these concerns, Prime Minister Hubert Ingraham informed the nation that he was confident that Sir Sol's concerns about Baha Mar could be resolved satisfactorily.

He also publicly proclaimed his respect and gratitude for Sir Sol's contributions to the country, adding that he will do anything in his power to ensure the Atlantis product remains successful on Paradise Island. However this commitment, he said, does not mean he will not be fair to other developers.

"We were always concerned, when we came to office that there was nothing in the Baha Mar deal that would have given them a better deal than Kerzner. I think I can say that the thing that ticked Kerzner (off) more than anything else is a statement by Perry Christie to the effect that Baha Mar only wants to get what Kerzner got," said Mr Ingraham on the radio show Issues of the Day.

"There is no question in my mind of my high regard for Sol Kerzner and what he has done for the Bahamas. I was berated by many when he came in 1994 and what he has done for the Bahamas has transformed our tourism industry.

"He has provided us with 2,000 more jobs than he committed to, he has a very successful project on Paradise Island and I will do all I can, for as long as I can, to ensure that his project is successful."

"That has nothing to do with whether I will be fair to anybody else. (But) I will not knowingly give anybody else a better deal than Kerzner got," stated the nation's chief.

During his live radio interview, Mr Ingraham also accused the former Christie administration of engaging in secret deals with Baha Mar by promising them concessions not included in their contract.

He said these secret concessions are part of what government is trying to renegotiate.

"The PLP government gave Baha Mar a deal over and above what they signed in the contract. So on the same day that they signed the contract they issued what was called side letters offering Baha Mar more.

"We tried to pull those things back. We are now doing an analysis to see the extent to which we have been successful, we think we have been somewhat successful in ensuring that there is equity and balance between the two."

Hopefully this "equity" and "balance" between the two resorts will eventually allow the two properties to complement each other, without there being any cannibalism in the marketplace, he said.

However, this appears highly unlikely if both hotels will be aiming for the same dwindling number of "high-end" visitors.

At this stage it is not easy to dismiss Atlantis' concerns as a mere fear of competition when one considers that our air arrivals have not actually been booming over the past few years. With a global recession still wreaking havoc on our tourism industry, no "expert" is willing to guess on when things are expected to turn around in that sector.

Maybe, like the haunting voice in the Hollywood film "A Field of Dreams," if Baha Mar builds it, the tourists will come.

November 22, 2010

Tribune242 Insight

Bahamas Blog Inernational

Prime Minister Hubert Ingraham insists that the Government of The Bahamas will not concede a breach of contract that Kerzner International is alleging will be made - if the Baha Mar project is approved

PM: Govt will not concede breach of Kerzner contract
By CHESTER ROBARDS
Guardian Staff Reporter
chester@nasguard.com


The Government of The Bahamas will not concede a breach of contract that Kerzner International is alleging will be made if the Baha Mar project is approved, Prime Minister Hubert Ingraham insisted last night during his contribution to debate in the House of Assembly. The House unanimously passed the resolution to move forward with the Baha Mar project late last night.

Ingraham urged that Kerzner International, owners of the Atlantis Resort on Paradise Island, should outline why it thinks The Bahamas has breached the ‘Most Favored Nation’ (MFN) clause in its agreement with Kerzner, and put it to his government.

“On behalf of the government, I do not concede that we have breached our agreements with Kerzner,” said Ingraham.

“I await receipt of the particulars of Kerzner’s claim which we will review and determine.

“We always honor our deals. And the arrangement with Kerzner is no exception.”

Kerzner charged in a press release issued Wednesday that the government of The Bahamas has given the Baha Mar developers more favorable labor terms than they received during the development of Atlantis, which violates the MFN clause.

However, Ingraham insisted last night that Baha Mar has not been offered certain concession given Kerzner during their development phases.

He argued that The Bahamas over the years has been just as good to Kerzner as Kerzner has been to the Bahamian people and economy.

“The entry of Kerzner in The Bahamas has been good, indeed very good for The Bahamas,” said Ingraham.

“Kerzner has created as many as 2,000 more new and additional jobs to that required under the terms of the various agreements concluded with the government.

“Kerzner’s impact on training – whether of workers involved in the construction of its various resort properties, or for workers engaged in the operation and maintenance of Kerzner’s properties is clearly evident. The impact of Kerzner International – of Atlantis, the Ocean Club and the Cove, with their themed park, marina, etc, is also evident.

“Yes, Kerzner is good for The Bahamas. It is also true that The Bahamas has been good to Mr. Kerzner.

“It has not been a one way street. The relationship has been mutually beneficial.”

The prime minister also lamented the fact that it took more than six years for Kerzner to bring its concerns to the table, which he insisted cannot stop Baha Mar’s development now.

“I note that Kerzner International is late in expressing its concern with the Baha Mar project; having not voiced those concerns in 2005 when the dimensions of this project would have been very widely covered in the Bahamian press, nor in 2007 when my government made the details of the various agreements concluded with Baha Mar public in this place,” he said.

“I believe, Mr. Speaker, that the horse has left the barn. I am fully confident that this honorable House will signal its approval for this project to proceed.”

Ingraham also took his alloted time in Parliament to reaffirm Baha Mar and China State Construction’s (CSC) commitment to increasing the amount of subcontracted work for Bahamians from $200 to $400 million, and creating an $8 million training program for construction workers, $1 million of which is to be a cash injection at the approval of the project.

Baha Mar and its Chinese partners have also agreed to develop a permanent training and service academy that will prepare Bahamians for the resort properties’ opening and beyond, Ingraham said.

He tabled e-mails and a letter from CSC and Baha Mar bolstering their support for these services.

According to him, the net benefit of this deal for Bahamians and the Bahamian economy far outweigh the counter-arguments to such a large development.

Baha Mar released a statement last night, following the government’s passage of the resolution, thanking it for its support and ensuring that, following their receipt of the final government approvals, they will commence the project by awarding contracts immediately to Bahamian contractors.

The development’s Chairman and CEO Sarkis Izmirlian said his company is dedicated to the project and the economic benefits it promises to The Bahamas.

“The Baha Mar team is delighted with today’s unanimous vote by Parliament,” he said.

“We are dedicated to delivering to The Bahamas this world class destination resort and the immediate and long term economic benefits, both from its construction and operation.

“The government and the Bahamian people are placing their trust in us, not just to have Baha Mar succeed as a business enterprise, but as importantly for Baha Mar to be a productive and exemplary member of the Bahamian community.

“Succeeding for The Bahamas is the key to Baha Mar’s success. This is what Baha Mar is about, and this is the guiding principle with respect to how we will run our business.

“We look forward to the tremendous positive benefits that Baha Mar will bring to The Bahamas.”

11/19/2010

thenassauguardian

Bahamas Blog International

Perry Christie - Opposition Leader says: ... if the government considers itself a partner in the deal with Baha Mar, it should have dealt with the alleged breach with Kerzner outside of the House of Assembly

Christie: Issues with Kerzner should have been resolved first
By CHESTER ROBARDS
Guardian Staff Reporter
chester@nasguard.com


Leader of the Opposition Perry Christie admonished the government during his contribution to debate in the House of Assembly yesterday, for not moving to resolve their apparent breach of a ‘Most Favored Nation’ (MFN) clause with Kerzner International, before bringing the Baha Mar resolution to Parliament for a vote.

Christie said if the government considers itself a partner in the deal with Baha Mar, it should have dealt with the alleged breach with Kerzner outside of the House of Assembly.

According to him, when the government was made aware that Kerzner considered the allowance of 8,000 Chinese workers for the Baha Mar project a violation of MFN, the prime minister should have met with them to resolve the issue before yesterday.

“It looks like there is antagonism in the product, serious difficulties in the product, where the government is making a decision to breach an agreement,” said Christie.

“Because, if we are saying that we are going to approve it (Baha Mar) and he (Sol Kerzner) is saying we are in breach of it (MFN), Parliament should suspend itself, since we have been asked to come to this point to have a determination made as to whether or not we are in breach.”

According to him, the matter of a breach of contract is “a matter to do with partners” and “not to do with public relations of a government”.

He said he was taken aback when Member of Parliament for Marco City, Zhivargo Laing read the press statement in the House of Assembly that was issued by Kerzner International outlining what it considered to be a breach of MFN.

“I was shocked yesterday,” he said. “This (MFN breach) is essentially a major legal matter that has exercised the minds of lawyers here in the attorney general’s office and the Queens Counsel of England.”

Christie also used much of the beginning of his alloted time in the House to respond to the government’s accusations that his party was not an effective government when they were in power and with regard to the Baha Mar agreement.

He got extremely testy with his colleagues across the floor yesterday, reminding them to act like parliamentarians while addressing the House and each other, as Bahamians look to them as a good example.

“We are coming to a time in the country where we have to be careful that we do not begin applying in our country retribution and reaction,” he said.

“That is not good for this country and our leadership in this country must exercise the greatest care as we move forward, dealing with people's reputations.

“Recognize that as best we can, we will try to avoid the snaring remarks and try to focus on the issues at hand.”

11/19/2010

thenassauguardian

Bahamas Blog International

Baha Mar; No Need for Acrimony

The Bahama Journal Editorial


That we live in a time and in a place where some who lead can be petty; can be vindictive and where there is more bile spewing than even the law should allow is today self-evident.

And for sure, that we also live in a time when Bahamians should come together in order to pull themselves up from under is also as clear as day. But as clear happens to be the fact that, there are still so very many Bahamians who – for whatever reason – relish in the politics of personal destruction.

As a direct result of this penchant to see politics as some kind of infernal blood-sport, there are those in parliament who routinely hurl invective and slander-tainted innuendoes at others; all in aid of supposedly winning in a debate.

Much of this is rooted in the fact that some of these people are simply ignorant of the fact that this is just not the way it should be in Parliament.

Here we take some little comfort in the fact that, where ignorance is bliss; ‘tis folly to be wise.

Notwithstanding our current chagrin, there is –yet- some comfort to be found in some of what is about to happen in the House of Assembly.

Here, the good news we have today concerns what seems a dawning consensus to the effect that, the Baha Mar Project should proceed.

We suspect that it will proceed precisely because it seemingly has the potential to help the Bahamas in this dread hour; when things are clearly set to pose any number of other challenges.

Evidently, the principals behind this Baha Mar project are to be given their kudos for having the fortitude to persist in a time and in a place where the going –as they say- was rough.

But yet again, in a world where all’s well that ends well, we are happy to report that, the Rt. Hon. Hubert A. Ingraham seems agreed that the Baha Mar project should and indeed, will proceed.

As this nation’s Chief notes: “...As a result of candid discussions with the Chinese Export Import Bank, the China State Construction Company, and following upon discussions between those companies and their partner, Baha Mar, I can advise that consensus has been reached on a number of significant issues related to the proposed Baha Mar Cable Beach Development...”

And as Mr. Ingraham went on to explain, “First, the construction value of works to be subcontracted to Bahamian contractors and subcontractors has been doubled from $200 million to $400 million. Bahamians will also work on elements of the Core Project... Second, China State Construction and Baha Mar have agreed to an extensive and comprehensive training and retraining programme...”

We also note that, “ Baha Mar has also agreed to establish a Training and Service Academy which will provide extensive training prior to the opening of the various hotels and other amenities. The Academy will be permanent, offering ongoing training opportunities for employees and prospective employees...”

This is surely some very good news for the Bahamian people, writ large. But even while all of this is well and good, we wonder why this eminently worthy project attracted so much venom and so much bile from so very many quarters.

Indeed, even as we send out praise-thanks for what has transpired concerning Baha Mar in the aftermath of the prime minister’s Asian foray and in particular, his visit to Beijing, we remain discomfited by some of what now emanates from Parliament as this matter is debated and digested by the nation’s law-makers.

Indeed, like lots of other Bahamians who routinely tune into some of what passes for debate in parliament; we are not impressed. Like others who believe that the people’s business should be handled with the highest degree of decorum and civility; we are just not impressed with speakers who believe that the essence of debate is to be found in making personal attacks.

And for sure, like lots of other Bahamians who seriously believe that there are times in life when the governing party and its parliamentary opposite should work together – united in service and love – for the achievement of the common good.

We make these few comments as prologue and preface to a more nuanced comment on the current debate concerning the Baha Mar project; with such a commentary coming in when the dust has settled, so to speak.

At that juncture, Baha Mar would be consigned to the category: Done Deal. And yet again, we insist that this project is a good one for the Bahamas, for Baha Mar’s investors and for the governing Free National Movement and Her Majesty’s Loyal Opposition, the Progressive Liberal Party.

November 19th, 2010

The Bahama Journal Editorial

Bahamas Blog International

Sir Sol Kerzner says: The proposed deal between the Government of The Bahamas and Baha Mar violates previous agreements between the government and Kerzner International

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

thenassauguardian

Bahamas Blog International

Baha Mar project is good for The Bahamas

Forward with Baha Mar
The Bahama Journal Editorial



By way of this commentary, we reiterate a point previously made to the effect that this Baha Mar project is good for the Bahamas and that as such, its approval should be put on the fast track.

We base our conclusion in our conviction that –as designed- this project promises to double the marketing this country now enjoys.

This in turn, promises any number of ancillary benefits.

As Stephen Wrinkle, Bahamas Contractors Association underscores: "Remember what an impact we had when they built phase three of Atlantis. What they’re doing with Baha Mar is equal to all of the phases they did at Atlantis and they’re doing it one phase. This is a big deal…"

As regards the question concerning labor and its role in the realization of the Baha Mar project, Mr. Wrinkle said they were sorely needed.

Here Wrinkle notes that, “…They are calling for 8,000 workers out there; 4,000 workers have got to be found; we can’t provide 4,000 workers. We’d be hard pressed to provide half of that. On these big international projects it’s just a fact of life. We’ve sat at the table; the BCA has tried to represent the interests of Bahamian contractors and workers and we’ve had some success with Baha Mar; they’ve been receptive."

For our part, then, we are very optimistic concerning the goods that come packaged in with this initiative. And so today, we can go no further except to note that, Baha Mar is apparently well on its way to becoming a done deal; this because the current administration has apparently been satisfied with the outcome of prime minister Ingraham’s talks in Beijing on the matter in hand.

This is eminently good news for the Bahamian people.

We wish all well who worked so long and so hard to bring this matter to this state of high resolution. Parenthetically so to speak, this venture yet owes a debt of gratitude not only to the current administration; but also to its predecessor.

And so today we note that, time, reason and commonsense having been congealed into something akin to real understanding are apparently working their magic in a Bahamas where petulance, spite and nit-picking sometimes wreak havoc.

And for sure, as we have consistently lamented, these are surely some of the hardest days experienced by most Bahamians alive in what some of them might deem a ‘modern’ Bahamas.

It is just as true that, some of these Bahamians –having grown accustomed to relatively prosperous times – are beside themselves in distress.

While these hard times might well persist for an indefinite length of time, there is reason for some optimism as certain storm clouds recede; with some of these once shadowing the Baha Mar project with a veil of uncertainty.

Mercifully, things seem to be going in the right direction as the government now signals its intention to move forward with this singularly important venture.

Yet again, we reiterate that, we would very much like both the governing party and its Opposition to know that each has done itself a world of good by working together so as to bring about an optimal resolution as regards this Chinese funded initiative.

Incidentally, all of these groups and interests support the Baha Mar project and recognize the immediate and real benefits they will gain from its going forward.

Here we are also quite certain that, in the fullness of time, both parties would come to the conclusion that, each was guilty of making a mountain of a mole-hill as regards the Chinese request for thousands of expatriate workers who would assist in constructing the resort complex.

In this regard, we advise all and sundry that, this matter is not the biggest in the world and that, we all stand to gain tremendously once the Baha Mar project is off and running.

As we have previously suggested and explained, “…Let there be no mistake about the matter at hand – the Baha Mar project is a very big deal; it is not only a big deal to the investors who are putting their money on the line; but for sure, it is a huge deal for both the government and the people of The Bahamas.”

And we also went on to explain, “…“And here, let there be no mistake about another aspect of the matter involving this project – this project brings with it a large chance that – once completed – tens of thousands of Bahamians will benefit, either directly or indirectly…”

This remains our view.

November 17, 2010

The Bahama Journal Editorial

Bahamas Blog International

Sir Sol Kerzner - Kerzner International Chairman and CEO - has concerns about the terms of the Baha Mar deal

Kerzner concerned about terms of Baha Mar deal
By CANDIA DAMES
Guardian News Editor
candia@nasguard.com


Kerzner International Chairman and CEO Sir Sol Kerzner has concerns about some of the terms of the $2.6 billion Baha Mar deal, Prime Minister Hubert Ingraham said yesterday.

Ingraham told reporters at a meet the press event that he met with Kerzner yesterday morning to discuss those concerns.

“There are some concerns on the part of Kerzner as to the extent to which Baha Mar is getting a deal from The Bahamas that is more favorable to them than Kerzner got,” Ingraham said.

“In 2003 when the government of the day signed an agreement for Kerzner to do its phase three, it agreed that nobody would get a better deal in The Bahamas for any development than Kerzner got.”

He added, “They are concerned about the extent to which they themselves had to pay huge sums of money for property to do their development and Baha Mar was given property at [concessionary] prices. Secondly, they were required to hire 70 percent (Bahamian) workers on their job, and only 30 percent foreigners and we are considering giving Baha Mar these 5,000 to 8,000 Chinese workers.”

Ingraham said Kerzner International officials will get back to the government on the extent to which they have justifiable reasons for their concerns.

“And we will review their concerns and make determinations, but in the meantime it will not interfere with our intention to approve the Baha Mar project by the end of this month,” he said.

Asked whether Kerzner International plans to pursue a phase four of its development, Ingraham said, “The reality is even if they had the money and even if they had the will, the desire, nobody would do a phase four at Atlantis if you’re going to put down on Cable Beach another 2,600 hotel rooms and all the facilities.

“The reality is that there is only one market. Nassau is only just one place and airlift and business and profitability and room rates and the whole host of things (come into play). So it isn’t likely that they are going to do another phase at the moment. That’s not likely.”

Ingraham said Kerzner told him yesterday that there is no truth to rumors that he is considering selling the Atlantis Resort on Paradise Island.

“He said absolutely not,” Ingraham said. “I believe him.”

11/15/2010

thenassauguardian

Bahamas Blog International

Prime Minister Hubert Ingraham confirmed that the Baha Mar project would likely be approved by the government ...

Govt to approve Baha Mar
By BRENT DEAN
Deputy News Editor - The Nassau Guardian
brentldean@nasguard.com


As a result of negotiations between Prime Minister Hubert Ingraham and the Chinese, and subsequent negotiations between the Chinese and Baha Mar, subcontracts to Bahamians in connection with the Baha Mar project will increase from $200 million to $400 million.

“This will be the largest award of contracts to Bahamian contractors on a single project. Contracts will be awarded to large, medium, small-scale and individual contractors. This is in keeping with my government’s commitment to deepening and broadening economic opportunities for all Bahamians,” said Ingraham yesterday at a news conference at the British Colonial Hilton.

Ingraham used the news conference to update the country on his recent visit to China. During the trip, he met with Baha Mar’s partners – China Export-Import Bank (China Eximbank) and China State Construction Engineering Corporation (CSCEC) – about potential changes to the $2.6 billion Cable Beach development.

Before those meetings, Ingraham had expressed concern about several components of the project. These concerns included the resort being built in one phase; Baha Mar needing equity partners; and that under the plan, Bahamians would not work on the hotel core.

Ingraham was not able to win concessions based on all of his concerns. He said there has been no final agreement on the phased entry of rooms at the resort into the marketplace.

However, along with the increase in subcontracted work to local firms, Bahamians will now work on the hotel core, according to Ingraham.

The prime minister also confirmed that he has been advised by Baha Mar and the China Eximbank that Hyatt will invest $40 million into the development. Rosewood Hotels and Resorts and Morgans Hotel Group will invest $10 million each, he added.

CSCEC will invest $150 million into Baha Mar.

One of the early hurdles to approval of the project by the government was the resolution of Baha Mar’s loan payment to Scotiabank. The bank and developer recently settled.

Yesterday Ingraham revealed Scotiabank’s equity stake in the project.

“The Bank of Nova Scotia is leaving in its unpaid balance of its loan to the extent of 12 percent of the project,” he said.

China Eximbank is extending a $2.45 billion loan to the developers.

Baha Mar and its Chinese partners have also agreed to significant training opportunities for Bahamians, Ingraham said.

This will include the establishment of a training and service academy.

“The academy will be permanent, offering ongoing training opportunities for employees and prospective employees,” Ingraham explained.

According to the prime minister, Baha Mar has confirmed that in the 12 to 24 months before the resort’s opening, which is projected for early 2014, high performance individuals would be selected by the hotel operators and placed within their hotel systems throughout the world.

“These individuals will be placed in job shadowing programs, on the job training programs, and hotel specific systems training programs. Baha Mar will also be hiring executive staff and training individuals who will staff the anticipated job fairs and will be conducting employment interviews,” Ingraham said.

During the 12 months before the resort opens, it is projected that the hiring and job fairs would begin at Baha Mar.

“Baha Mar anticipates hiring and training approximately 7,000 employees during this period,” Ingraham said. “It is also expected that a number of the Bahamian construction workers in a variety of trades will be interested in filling ongoing maintenance positions since they will be very familiar with the project’s mechanical, electrical and plumbing infrastructure.”

The training initiative is expected to continue after the resort opens.

The Baha Mar resolution is scheduled to be debated in the House of Assembly on Wednesday and Thursday of this week.

The prime minister confirmed that the project would likely be approved by the government by the end of November. Contracts for Bahamian firms could be issued as early as December, with work beginning in January 2011, Ingraham confirmed.

He added that it is likely to take CSCEC three months to mobilize. Construction on the hotel core could start by the second quarter of 2011, according to the prime minister.

Ingraham did not specify a number, but he said that as a result of the changes to the development, the number of Bahamians employed would increase by thousands.

The Progressive Liberal Party (PLP) issued a response last night to Ingraham’s statements on Baha Mar.

“If the PM's apparent big accomplishment from his trip to China was increasing Bahamian participation in the Baha Mar project from $200 million to $400 million, then he in essence admitted that his recent trip to China was futile, a failure and a waste of public funds,” said the PLP.

Though the $400 million allocation of work to subcontractors is a new component of the deal, the PLP said Bahamian participation “was always substantially greater than $200 million, so the PM broke no new ground on this.”

The opposition party also criticized Ingraham for not having reached agreement to reduce the number of foreign workers helping to build the resort.

“Notwithstanding the PM’s public pronouncement that he did not agree with the large number of work permits required for this project, the numbers he affirmed today remain at a maximum of 8,150 permits over the scope of the project,” said the PLP.

11/15/2010

thenassauguardian

Bahamas Blog International

Bahamas Contractors' Association 'eagerly' awaiting word from the prime minister on his high-level meetings with the Chinese financiers of the $2.6 billion Baha Mar project

Contractors 'eagerly' awaiting word from PM on Baha Mar
By TANEKA THOMPSON
Tribune Staff Reporter
tthompson@tribunemedia.net


THE Bahamas Contractors' Association is "eagerly" awaiting word from the prime minister on his high-level meetings with the Chinese financiers of the $2.6 billion Baha Mar project.

Head of the association Stephen Wrinkle was hopeful that the matter would be discussed at length in the House of Assembly today. However a clerk in Parliament told The Tribune that the House of Assembly will not meet again until November 17.

"I guess everyone is eagerly awaiting his report. Once Cabinet is advised I would assume they would make their findings known in House of Assembly (today)," said BCA president Wrinkle yesterday.

The prime minister met with members of the BCA a day before he left for his official visit to China and took stock of their group's concerns, especially their push for increased Bahamian labour incorporated into Baha Mar, transfer of knowledge from skilled Chinese workers to Bahamian labourers and greater funding allocated to train locals working on the project.

"He took those along with him and hopefully he brings back good news," said Mr Wrinkle.

Mr Ingraham returned from his trip to China - after stopping in Barbados to attend the funeral of Prime Minister David Thompson - last Friday.

He has been quiet on what transpired during that trip.

However, Mr Wrinkle expects to hear positive news.

"We always expect to hear good news, we're hopeful, I know the prime minister and his delegation did his best to (negotiate) the best deal possible and whatever he's done, we'll take it and run with it," he said.

The Tribune understands that compromises "may have been reached" between Mr Ingraham and the Chinese over the concerns he has voiced about the level of Chinese labour participation in the Baha Mar project and the single phase of construction involved.

According to information reaching The Tribune last week, there were three "points of compromise" arrived at between Mr Ingraham during meetings with the China State Construction Company - the general contractor for the $2.6 billion Baha Mar resort development - and officials from the China Import Export Bank in Beijing.

One of these compromises is said to be that a larger quantity of construction work and related dollars will go to Bahamian contractors.

Two other negotiated points were that more funding - in the hundreds of millions of dollars - would be allocated towards the training of Bahamian workers and the transferring of skills/knowledge during the project and the proposal that while it would be built in one phase, the resort's six hotels would "open in phases."

November 10, 2010

tribune242

Bahamas Blog International

The Baha Mar project hangs in the balance

Chinese consider Baha Mar changes
By CANDIA DAMES Guardian News Editor
candia@nasguard.com

Gov’t presses for $500 million in work for subcontractors


The much-touted $2.6 billion Baha Mar project planned for Cable Beach is hanging in the balance as the government awaits word from the company’s Chinese partners on whether they will make fundamental changes to the deal.

The Nassau Guardian can confirm that the government is waiting on the Chinese to say whether they would agree to Bahamian subcontractors getting up to $500 million of the work, as opposed to the $200 million in work currently envisioned in the deal.

It would mean a stronger involvement of Bahamians on the project, something Prime Minister Hubert Ingraham has been insisting on.

It is understood that Ingraham has also asked the Chinese to agree to a phased development as opposed to a one phase project.

The Guardian has learnt that the government expects an answer from the Chinese on these issues by the end of November. Baha Mar officials had hoped to break ground on their development by then, but that appears unlikely.

Until such time, the Baha Mar resolution — which the government had intended to debate many weeks back — will remain on the shelf in Parliament.

Ingraham told The Nassau Guardian in Beijing late last month that the government expects to have an answer for Baha Mar by the end of 2010.

The prime minister, who returned to Nassau late last week from his travels, has been quiet on his discussions with officials of the China State Construction Engineering Corporation and the China Export-Import Bank.

It remains unclear whether Baha Mar’s request for more than 8,000 work permits will be adjusted.

Not long before he travelled to China, Ingraham stressed that there were certain points the government was not prepared to budge on as it related to the project.

“There are two things that stick in our craw and we want to be able to digest the project and it is difficult to digest it with these things sticking across here,” he said, pointing to his throat.

Apart from the labor issue, Ingraham referred to Baha Mar’s plan to build the massive project at Cable Beach in one phase with a planned 2014 completion.

He said those are “major issues, like a big bone”. The prime minister added, “It has to be fixed.”

“To do the project in a one, single-phased development is not in our interest, and it’s in our interest to have the development but not as a single-phased development. Regrettably, that is the position,” he said.

But Baha Mar CEO Sarkis Izmirlian told The Nassau Gaurdian recently that the one-phased approach was a condition of the financing.

Ingraham said prior to the China trip, “There is more than enough land between the Nassau Beach (Hotel) and the land owned by Baha Mar east of the Nassau Beach for them to construct their 1,000 room hotel, their casino and whatever else they want to construct and open it.

“And nothing prevents them from building the others at the same time. There’s no need whatsoever for all to be built and opened at the same time. That is not in our interest. That may well be in the interest of the financiers, the construction company and the owners of the project, but what about our interest? It is not in our interest.”

Ingraham said while in Beijing, just prior to his meetings, that he expected the Chinese would be receptive to the government’s position.

The prime minister is expected to announce adjustments to Baha Mar’s plans in Parliament after the government hears from the Chinese partners.

11/10/2010

thenassauguardian

Bahamas Blog International

PLP leader Perry Christie is at odds with Prime Minister Hubert Ingraham over Baha Mar Resort construction phases

Christie at odds with PM over six planned Baha Mar hotels
tribune242



PLP leader Perry Christie is at odds with Prime Minister Hubert Ingraham over his belief that the six hotels which are to be built as part of the Baha Mar Resort should be built or opened in phases.

Mr Christie said it would only increase the cost of the project to break down the construction into phases, and would make little sense for the resort developers not to open all of the hotels at the same time if they were all constructed simultaneously.

Information reaching The Tribune is that Prime Minister Hubert Ingraham may have asked the Chinese if the hotels could be built in phases rather than all at once or that if this could not be accommodated, that they would open in a phased manner.

But Mr Christie said that considering the fact that so much money was being borrowed to fund the hotels' construction it would "not make sense to have hotels sitting there that they couldn't sell", referring to the ability to sell rooms within the hotels once they are completed.

And he added that the size of the Baha Mar development was one of the reasons for the re-development of the Lynden Pindling International Airport.

Studies

"Don't forget, Baha Mar engaged a company to do studies which concluded that both the Baha Mar development and Atlantis can co-exist/be developed at the same time," said Mr Christie.

Meanwhile, Mr Christie also told The Tribune that he understands that coming out of the Prime Minister's meetings with Baha Mar financiers, China Export Import Bank and the China State Construction Company, its general contractor, an arrangement may have been reached whereby the Bahamian labour component on the construction project would be increased by ten per cent, with 40 per cent Bahamian and 60 per cent Chinese labour.

Some sources had suggested Mr Ingraham had sought to negotiate a $200million increase in the amount of funding that will go to Bahamian contractors in connection with the project.

"The Prime Minister, I presume upon his return, will advise the country as to whether or not he was able to succeed in these discussions," said Mr Christie last week.

Stephen Wrinkle, President of the Bahamas Contractors Association, said yesterday that prior to Mr Ingraham leaving for China he told the BCA in a meeting that he would seek to increase the Bahamian content of the labour force and get more work for Bahamian contractors as part of the Baha Mar project.

"We have to ensure we've got the quantity of the workers and the dollar value comes to the contractors and not just payrolls," said Mr Wrinkle yesterday.

The contractor added that as the industry awaits an announcement on what was the outcome of any efforts on behalf of Mr Ingraham to achieve this end, the BCA continues to dialogue with Baha Mar and BTVI on training workers so they are prepared "at such time as when the facts and figures emerge".

"We know there will be a Bahamian content in the labour force and the project and we are continuing to focus our efforts on preparing our workers and contractors so if the work the Prime Minister is doing comes to fruition we will be able to presentable work force for project," said Mr Wrinkle.

November 08, 2010

tribune242

Bahamas Blog International