...unless and until we fix whatever is wrong with our tourism industry (and fix it urgently) ...the economic and social dislocations currently being experienced in The Bahamas will continue unabated

What needs to happen in tourism

CFAL Economic View

The Ministry of Tourism’s ‘Islands of The Bahamas Arrivals Report’ released earlier this year contains some very useful and informative data on the tourism industry in The Bahamas, and a lot more information on the economic performances of those countries from which our visitors originate.

The report, compiled by the ministry’s research department, provides a summary of total visitor arrivals to The Bahamas for the year 2011, in what appears to be a record-breaking total of 5.234 million.  That figure is broken down further to show that only 1.29 million of those visitors (or about 25 percent) arrived by air.

There is something troubling about that figure when it is taken into account that about 25 years ago The Bahamas was boasting total air arrivals in the region of 1.5 million.  What is more troubling is the fact that we are in the midst of the worst recession ever experienced in a modern Bahamas and the agency which oversees our most important industry appears to be offering no concrete solutions.

Almost 75 percent of the report outlines the economic challenges facing the United States as a result of the crash of the housing market there, and the subsequent financial meltdown.  The rise in unemployment, particularly in the northeastern states, is highlighted perhaps to remind us that the reason for the poor performance of our local economy is tied to employment levels in the U.S.  It is also noted that Texas, contrary to popular belief, generates more tourists for The Bahamas than many of the northeastern states.

Similar information is provided on Canada and the western European nations whose citizens also visit The Bahamas, although not in such great numbers as the Americans.  Again, the intent is presumably to inform us that it is the global slowdown in economic activity that is adversely affecting our visitor arrivals (by air) and consequently contributing to the slow economic growth figures.

Those examples, or more appropriately arguments, would have been more persuasive had we not been made aware from other sources that air arrival tourists were up and growing impressively in our competitor destinations, such as Jamaica, the Dominican Republic, Cuba and Cancun, Mexico.  Some mention of the costly and perhaps unsustainable subsidies to the industry in the form of ‘companion airfare’ is given as a successful policy response to the crisis.

For more than half a century tourism has played a pivotal role in the economic development process of this country.  It has accounted for most of the foreign direct investment, more than 50 percent of direct and indirect employment, and has provided the necessary level of foreign exchange inflows to not only fund our insatiable import appetite but also to support the important one-to-one peg between the U.S. dollar and the Bahamian dollar.

Changes needed

In other words, unless and until we fix whatever is wrong with our tourism industry (and fix it urgently), the economic and social dislocations currently being experienced in the country will continue unabated.  Large numbers of skilled and semi-skilled Bahamians will join the unemployed labor force. Unable to meet their debt commitments, they run the risk of losing their homes and other assets acquired during better times.  Unable to provide the needed level of support for their immediate families, the inevitable household tension could rip families apart.

What is needed is a recognition of the importance of the tourist industry to The Bahamas in general and to the partial solution to the current economic crisis in particular.  In the short-term, attempts to stimulate other less important parts of the economy or programs to diversify production from our main service provider simply will not create the number or types of jobs sufficient to absorb the unemployed.

The tourism plant, in terms of existing and planned hotel rooms, needs some form of re-tooling to ensure it is functioning at its optimal potential.  We know for instance that the costs of labor and utilities are out of line with our competitors, placing the country at a pricing disadvantage.  Those areas need to be addressed, perhaps by permitting the hotel operators to produce (hopefully more efficiently) their utility needs rather than relying on the inefficient state-owned corporations.

Above all, we need more air-arrivals since that category of visitor spends more than 10 times what is spent by their cruise counterparts, making a larger contribution to employment and output in the country.  The Bahamas at this time in our history needs a fresh, focused and comprehensive plan to increase the number of air arrivals in order to produce the required number of jobs and to begin the process to effectively reverse the unemployment trend.

 

• CFAL is a sister company of The Nassau Guardian under the AF Holdings Ltd. umbrella.  CFAL provides investment management, research, brokerage and pension services.  For comments, please contact CFAL at: column@cfal.com

Aug 15, 2012

thenassauguardian

Caribbean Blog International

In all honesty, the idea of urban renewal cannot be claimed as being the brainchild of either the Christie or Ingraham administrations... It preceded both by many years... In fact, Urban Renewal in the broadest sense of the word was the brainchild of Sir Stafford Sands, the creator of this country's tourism and financial industries

A people betrayed, says Ed Moxey, of the Pindling years

tribune242 editorial




THE PANACEA to all this country's social problems is Urban Renewal, PLP-style. The constant cry of the PLP is that the FNM came along, stole the PLP's idea, destroyed it and, in so doing, opened a Pandora's box of destruction for these islands. Everything, including escalating crime, both in the streets and in the schools, can be blamed on the elimination of the PLP's novel idea -- Urban Renewal.

For their part, the FNM maintains that although police patrols were removed from the school campus, the structure of urban renewal was not destroyed, but rather improved upon and broadened.

In all honesty, the idea of urban renewal cannot be claimed as being the brainchild of either the Christie or Ingraham administrations. It preceded both by many years.

In fact, Urban Renewal in the broadest sense of the word was the brainchild of Sir Stafford Sands, the creator of this country's tourism and financial industries.

In a conversation with Sir Stafford shortly after the UBP lost the government to the PLP in 1967, he assured us that he was leaving a financially healthy government. All the PLP had to do, he said, was to sit on their hands and let all his party's plans go through and the country would be in good shape. However, if they got itchy fingers and started tinkering, everything could collapse.

Sir Stafford Sands was a five-year planner. A brilliant, and well organised man, he always worked on a five-year plan. So when the PLP came in, they would have found that tourism conventions, and functions had been booked for five years into the future and the Public Treasury was financially sound. Sir Foley Newns, the able colonial British administrator, who had worked with Sir Stafford as Cabinet Secretary from 1963, was kept on by the PLP until 1971, just one year short of Sir Stafford's five-year programme. Slippage started after he left.

Sir Stafford, the Minister of Finance in Sir Roland Symonette's government, with the approval of his colleagues, commissioned a Development Plan of New Providence Island and the City of Nassau in the summer of 1966. Working through the United Nations, Columbia University's division of Urban Planning in its School of Architecture was engaged to do the work.

What resulted was a magnificent, detailed, beautifully presented transformation of this island -- down to where every underground pipe was to be laid. It also provided for population growth. It was unfortunate that it was completed and returned to the Bahamas in the spring of 1967 after the UBP had been voted out of office. However, every member of the House of Assembly received a copy. And there it died.

"If it had been implemented," said Mr Moxey in his documentary, "the plan would transform over the hill, in particular the Grants Town community, installing a sewer system, and laying out the city centre, in a way seen only in Grand Bahama and Mathew Town, Inagua. There would be green spaces and bike paths, and streets dedicated to the children of New Providence."

About 13 years later, Arthur Hanna, then deputy prime minister, explained the reasons for the plans not being considered. He said it was because "there was no cost assessed for the implementation of the plan; no one was identified to pay the cost, and there was no suitable organisational administrative mechanism for translating the plans into reality".

On that statement alone -- exposing both incompetence and lack of imagination -- the PLP government should have been fired. A master plan had been put in the their laps, and they were waiting for a fairy godmother to show them how to use it.

The UBP government's urban renewal plan was introduced by Ed Moxey, a former member of the PLP Cabinet at that time, in his documentary, which had its premier showing on Sunday night in which he recorded his personal sacrifices to try to save Jumbey Village for the upliftment of his people. In the end, he lost the battle, but not his integrity -- although Sir Lynden also tried to take that from him. In his documentary Mr Moxey told how Sir Lynden had betrayed a trusting people, and the price that he personally had to pay for having an idea that dwarfed his party leader's myopic thinking.

Last night, Mr Moxey in speaking of Sir Stafford's plans, which preceded his own vision for Jumbey Village, had this to say:

"It is unfortunate that the Urban Renewal Study and programme initiated by Sir Stafford Sands for the black masses of Bahamians was trampled under the feet of our leaders and advocates of the Quiet Revolution in 1967.

"It is like I said 25 years ago, the revolution was betrayed and after 45 years of majority rule our people over the hill still live in substandard conditions using outside toilets and water pumps. Oh, my Lord, what a shame!"

Is this the unsound bridge that Opposition Leader Perry Christie has invited Bahamians to cross with him into the future? We hope not.

March 22, 2012

BACKBENCHERS DISILLUSIONED BY GOVT - MOXEY

tribune242 editorial

Caribbean Blog International

Kerzner International's Bahamas Managing Director George Markantonis warned The Bahamas to expect a big hit on its tourism product if the three massive casinos proposed for Miami-Dade and Broward counties are built next year

A threat to the Bahamas' tourism industry

tribune242 editorial


IN A recent article in The Tribune John Issa of Breezes warned that "the Bahamas, and more particularly Nassau and Freeport, will have to put more effort into developing and promoting our other resort attractions because gambling will be less of a draw than it was in years past". Also, he said, the cost of doing business in the Bahamas would have to come down, if this country hoped to compete internationally.

On Friday, Kerzner International's Bahamas Managing Director George Markantonis also warned the Bahamas to expect a big hit on its tourism product if the three massive casinos proposed for Miami-Dade and Broward counties are built next year.

As Mr Issa wrote: "Since the birth of Las Vegas over 60 years ago, casinos were considered, during the earlier decades, a sufficient attraction to be the main draw for a resort or destination."

When gambling was legalised in the Bahamas - over the loud objection of the Baptists - the fact that these islands were only a 30-minute flight from Miami set the gambling addict's heart aflutter. Regular charter flights from the US were provided weekly by the Lucayan casino to fill its gambling tables. It proved a good business and was certainly a revenue spinner for the Public Treasury.

It eventually spread to Nassau and fairly recent legislation provided that any hotel with a certain number of rooms constructed on any of the Family Islands could include a gaming room as a part of its attractions.

While it lasted, it brought in good business. In those days, committed gamblers - and there were many -- had to travel many thousands of miles to find a casino. There were the casinos of Las Vegas, Monte Carlo, Maçau, Baden Baden, Havana and Nassau. These were the areas that rolled the dice.

Today, there is such a proliferation of casinos that one no longer has to travel any distance. A player can even stay at home and indulge in online betting. That indeed is the rub for the Bahamas. No one has to book a charter any more to get to the gaming tables.

Baha Mar's 1,000-acre, $3.5 billion Cable Beach resort, which aims for a 2014 opening, boasts that with a 100,000sq ft space it will have the largest casino in the Caribbean. It says that it will be twice the size of Atlantis, which when it was opened on Paradise Island by Resorts International boasted that it was the largest casino complex in the Bahamas. In those days, that was indeed a proud boast -- it had put Freeport in the shadows.

And now comes Florida -- just a half hour away -- threatening all of them with the world's largest casinos.

The obvious difference between Atlantis and Baha Mar is that the Cable Beach venture - misreading the market trend -- is banking on attracting the convention and gambling crowd. Atlantis - although it too went for conventions in a big way just before conventions were being curtailed in the US, and nurtured its casino business - decided to create a family-oriented resort. In the end, it might find itself -- with its magnificent display of marine life and water attractions -- in the best position to weather the resort storm when the need for offshore gambling starts to fade.

Tempting Florida, which was hard hit by the collapse of the housing market, and high employment, is an offer by Genting Corporation, a Malaysian company, to build three lavish $2 billion casinos in South Florida.

"And with the promise of tens of thousands of sorely needed jobs and many millions of dollars in tax revenue, Florida politicians are recalibrating their positions," reported Lizette Alvarez of the New York Times on Friday. The artist's drawings of the three casinos are indeed surreal as they point skyward on what appears to be layer upon layer of large saucers. Obviously, they have not been designed with hurricanes in mind.

Already Genting, according to The New York Times, has paid $236 million cash for The Miami Herald's headquarters on Biscayne Bay. It has also bought neighbouring properties to make up 30 acres for one of the casinos.

In addition, Genting has promised Florida the world and more besides to get its commercial heart beating again. It is an offer -- considering the economic times - that will be hard to refuse.

In January, a casino bill will be debated in the Tallahassee legislature. It will have to change Florida's position on gambling if the Genting project is to get off the ground. And this is where the future of the Bahamas' tourism hangs in the balance.

Although there is a strong lobby supporting the Genting proposal, Disney, Florida's most powerful corporation, is totally against. Disney claims that casinos - certainly casinos on such a large scale - will destroy Florida's theme park image. Disney is backed by the Chamber of Commerce.

"Expanding casino gambling in Florida would never make sense in a good economy," said Mark A Wilson, the president and chief executive of the Florida Chamber of Commerce. "And the only reason they are even targeting Florida is that they are hoping that desperate people will reach for desperate measures. There is never a good time to push a bad idea."

Not only does Florida's future hang in the balance, but come January so does the Bahamas'. As Mr Issa and Mr Markantonis have said, it is now up to the Bahamas to improve its product. Mr Markantonis pointed out that the advantage that Florida has over the Bahamas is that it has "drive traffic and we have airlift".

Airlift is another sad story for another day.

October 31, 2011

tribune242 editorial

Caribbean Blog International

This Nation’s Bevy of Challenges

The Bahama Journal Editorial



With this nostrum as opening gambit, we take note of the fact that, for what now seems a fairly long season, the Bahamas seemed to conclusively demonstrate that development in a small island developing country could be successfully driven by foreign direct investment.

And for sure, Bahamians could and did exult in their good fortune by assuring themselves that, these salutary changes had come about due to their own initiatives.

Indeed, there was every indication that, the Bahamas had somehow or the other managed to escape its long history of boom and bust at the economic level.

And so it arose that, they decided to praise the late Sir Stafford L. Sands for being the financial genius behind the so-called miracle of year-round tourism to the Bahamas.

We now know that this was an illusion.

As the same record would attest and confirm: while Sir Stafford was –in truth and in fact – a major player in the development of the tourism industry, other forces – most of them external to the Bahamas- played crucially important roles in this transformative process.

Highest on the list of external forces would be the on-set of the Cuban Revolution and Cuba’s isolation from trade with the United States of America.

It was this external factor that has driven the Bahamian economy over the course of the past fifty years or so.

With this development came that transformation of the Bahamas which allowed the bulk of its people a first opportunity to turn its collective back on a development model predicated on seasonal tourism, niche banking, fishing, farming and other allied occupations.

This development brought with it ancillary political changes – some of which promised Majority Rule and some economic empowerment for those who were heretofore socially excluded and economically marginalized.

While some successes have been scored; there is every indication that some of these now run the real risk of being lost as a consequence of the hard times that now prevail.

In addition, there is every indication that things are set to be difficult for at least the next decade or so.

This situation stands in direct contrast to those days when money was in abundance and when practically everybody who was anybody could make a fairly decent living.

Things are now trending downwards; and so, as things go and grow from bad to worse – Bahamians on either side of the political divide have taken to blaming each other for this nation’s bevy of distresses.

While this ‘game’ might provide entertainment galore for those who are tuned in; we daresay that, this does the nation itself no real good.

For our part, then, we would sincerely suggest that, having grown accustomed to one version of the so-called good life [that is to say, a life driven by easy money] very many Bahamians are today panicking; this coming packaged in with the prospect that hard times might be here to stay.

While we are optimistic as regards our prospects for the long-term; we are today pessimistic for the short-term; this due to the fact that, the Bahamian people are yet to determine what they want and would have as regards real leadership.

In the interim, things threaten to disintegrate into a state akin to chaos.

And of course, this can lead to its own sad denouement in even more social distress.

Here take note that on occasion, we have bemoaned the fact that, the Bahamian people are being routinely failed by their leaders.

Evidence for this failure can be seen in practically every major institution; whether reference is to those who would lead in the field of faith and belief; education; government; the home or at the work place.

In addition, there is no gainsaying the fact that, there are very many Bahamians who are today mired in distress; with some of them teetering on the edge of despair.

And yet there is more bad news; this time around the reference we make has to do with what seems a Bahamian penchant towards dependency and lack of confidence in their own innate ability.

This neatly explains how it arises in case after case that Bahamians are loath to respect their own when they are put in positions of authority and power – thus the pre-eminence they give to foreigners and to most things foreign.

For a season, this way of things surely worked its magic.

But since nothing lasts forever, these balmy days are now receding. As they become history, a new order beckons; this being one where Bahamians will be obliged to work harder, produce more so as to become more self-reliant.

In this regard, we envisage the coming of that day when, the Bahamian people will have a national economy that walks – so to speak- on two legs; with one being foreign and the other Bahamian.

December 29, 2010

The Bahama Journal Editorial

Bahamas Blog International

Baha Mar Drama – (Part 2)

by Simon


To understand the potentially colossal mistake the PLP made in handing over the redevelopment of Cable Beach to Baha Mar, some historical background is necessary.

Before Baha Mar there was Cable Beach. The area derived its name after a telegraph cable line connecting The Bahamas with the rest of the world came ashore at Goodman’s Bay in 1892. One of the first people to receive a cable was the proprietor of the Royal Victoria Hotel.

Fast-forward some half a century and the area with its miles of pristine beach would surpass downtown Nassau as a major site for the expansion of the hotel sector. There was the Balmoral and the Bahamas Country Club.

In 1954, the Emerald Beach became the first fully air-conditioned hotel. Boasting 300 rooms and New Providence’s first convention centre, the ultramodern hotel came in at a price tag of $3.5 million. With the opening of the Nassau Beach Hotel on the strip in 1959 -- along with a Howard Johnson restaurant -- Cable Beach was helping to set the pace for the tourism industry and hotel sector.

In many ways, Cable Beach became the gold standard, even receiving the moniker, “the Bahamian Riviera”. Then, through the 1970s to the 1990s, the PLP made a series of fateful decisions that would prove disastrous for Cable Beach and end up costing the Pubic Treasury hundreds of millions if not more.

UNAPPEALING
This included construction of the monstrously unappealing, aesthetic nightmare that became the Crystal Palace Hotel, as well as the environmental damage that may have been caused through the erection of one of the hotel’s towers.

Re-elected in 2002, a new PLP Government would make another fateful and potentially disastrous decision about Cable Beach, reinforcing its record of economic incompetence and mismanagement. Much of the same PLP culture which proved disastrous for Cable Beach under Sir Lynden has resurfaced under Perry Christie.

But back to the 1970s. The then PLP Government purchased three major hotels on Cable Beach: the Sonesta Beach Hotel, the Balmoral and the Hyatt Emerald Beach. The Pindling administration also set up the Hotel Corporation, with Sir Lynden predicting that once the Corporation was doing well financially, shares would be offered to Bahamians.

His prediction was way off the mark. Indeed, the Hotel Corporation would come to have a checkered history, with Sir Lynden serving as Chairman at various junctures. In 1991, Carnival Cruise Lines, the owner-operator of the Crystal Palace Resort experienced considerable losses and threatened to either pull out of the development or declare bankruptcy.

In volume two of her major history of The Bahamas, Dr. Gail Saunders details how the Hotel Corporation responded to this threat:

“The Hotel Corporation, already accused of making an initial ‘sweetheart deal’ with Carnival and using the Crystal Palace to ‘featherbed’ PLP supporters, agreed to yet another bailout. Adding to massive debts, incurred through an unbusinesslike combination of takeovers and extravagant new building, the Hotel Corporation took a 40 percent stake in the Crystal Palace for $70 million.

“Though the government cited the drastic decline in tourist stopovers resulting from the worldwide recession as the cause of the Hotel Corporation’s woes, the opposition charged the corporation with gross irresponsibility as well as corruption and accused the government of virtually printing money to disguise its failures.”

UNTENABLE
State ownership of a large chunk of the hotel sector was rife with internal contradictions, with the Government being in the untenable position of having to act as the regulator and the regulated. In “Pindling: The Life and Times of the First Prime Minister of The Bahamas”, Michael Craton captures how irreconcilable were the contradictions:

“The Hotel Corporation had to weigh and juggle the cost to the Treasury against the benefits of import duty concessions, the advantages against the disadvantages of levying a government tax on rooms, the problem of keeping the owners and managers happy with the level of the wages bill while keeping the workers contented with pay and working conditions, the acceptable balance between Bahamian expatriate employment.”

This defied even the political skills and charm of Sir Lynden. It was akin to asking Moses to keep both the Egyptians and the Israelites happy at the same time. Shockingly, despite this failed history, one of their own making, the PLP condemned the Bahamas to repeating some of this history in the deal with the I-Group in Mayaguana.

By taking a 50 per cent stake in the Mayaguana Development Company, the Government once again placed itself in the role of the regulator and the regulated, an inherent conflict of interest.

But this is indicative of a PLP that refuses to learn the lessons of history, including its own massive failures and endless conflicts of interest. The “All for me baby” mentality in the PLP is alive and well, waiting for the next opportunity for nepotism and deal-making in a hidebound culture of self-entitlement.

After coming to office in 1992, the FNM privatized a number of hotels owned by the Hotel Corporation, including Cable Beach properties now owned by the successful Sandals and Breezes chains. This helped to revive an ailing and ageing Cable Beach.

With its return to office, the Christie administration had an opportunity to demonstrate that it was a new PLP with new ideas for tourism in general and for Cable Beach in particular. Sadly, the re-elected PLP was as clueless about market economics as when it was turned out of office a decade earlier.

This included Mr. Christie, a former Minister of Tourism whose understanding of tourism seems not to have evolved since he held that office. It also includes the former Minister of Financial Services and Investments, who was also involved in the Baha Mar deal.

Senator Allyson Gibson Maynard’s breathless defence of the ill-conceived Mayaguana Project -- with its near give-away of many miles of pristine coastal property to a single foreign developer -- is suggestive of a disturbing mindset in the PLP in terms of national development. It is an essentially neo-colonial mindset for a party still pretending to be progressive and liberal.

RHETORIC
Absent any real ideas to realize its rhetoric of empowerment and Bahamianization, the PLP seized upon all manner of schemes proposed by all manner of developers. Many of those developers had more ideas -- not necessarily good ones -- than they had dollars or good sense.

But no matter, a desperate PLP was prepared to essentially give away Bahamian treasure in the form of land, excessive concessions and cash to lure many of these developers. This was a part of an unreconstructed mindset in the PLP which talks Bahamianization while trashing the best interests of Bahamians in the service of narrower interests.

Cable Beach was in need of redevelopment, but not just by any developer at just about any cost. One of the PLP Government’s lead negotiators on this project, a consummate uber-consultant, continues to defend the original Baha Mar deal in both the print and broadcast media.

The uber-consultant is defending The Bahamas alienating some of our more valuable Crown and government land so that the developer could secure a loan. If this level of extraordinary state beneficence was necessary in order for the developer to receive the loan, we chose the wrong developer, especially for one of our premier touristic sites.

That the developer has laboured to pay back and renegotiate the terms of its major loan is suggestive of many things. All of which should have been taken into consideration before the Christie administration handed over the vision and patrimony of Cable Beach to selective interests.

As egregious, the developer was a middleman with no real track record in such a megaproject. And, the original deal that is being defended was rife with concessions the country never should have granted, a number of which have been clawed back by the Ingraham administration.

To see some of the blunders made at Baha Mar - readers may wish to read Baha Mar: Anatomy of a Big Blunder.

While Baha Mar may bring some short- and medium-term gains, its longer term prospects may be problematic on numerous fronts. The country continues to pay for the mistakes an earlier PLP made at Cable Beach. It may now have to endure the problems of a potentially colossal error that the Christie administration made with Baha Mar.

Baha Mar Drama – (Part 1)

bahamapundit

Bahamas Blog International

Baha Mar Development... Debate

Debate on the Baha Mar development
By LARRY SMITH


DEBATE on the government's resolution to approve the Baha Mar development was scheduled to begin today in Parliament - five years after the initial deal was concluded in 2005. But the debate was postponed until the project's principals can come to terms with the Bank of Nova Scotia on outstanding debt.

It's been a long road - although not quite as long as the 13-year BTC sell-off - and conditions in 2005 were vastly different from what they are today. Back then, the credit boom underway in the US had a marked spillover effect on the Bahamas, with major developments planned around the country.

But most of these projects collapsed in the wake of the Great Recession that swept the world in 2008. The Baha Mar project was kept ticking over, even when the original joint venture partners withdrew. It was the brainchild of a Lyford Cay resident named Sarkis Izmirlian, whose grandfather left Armenia in the final years of the Ottoman Empire.

Sarkis' father, Dikran, made his fortune by cornering the world peanut trade. And the family became property developers in Britain, where one of their companies owns the 13-acre site on which London's City Hall is located. While Dikran lives in Switzerland, Sarkis manages the family's assets from the Bahamas.

He is said to be an astute developer who conceived the grandiose Baha Mar project partly to make a name for himself. But the project has been able to survive only because the Chinese are investing their huge currency reserves in support of their strategic interests. According to China's Commerce Ministry, some 800,000 Chinese are now working on energy, infrastructure and housing projects around the world.

Without clear evidence, we should discount the allegations that have been made about the use of Chinese convicts as workers on these projects. But we do think it makes sense for our government to seek a broad political consensus for the project in view of the large foreign labour component.

The 1,000-acre Baha Mar project is owned by the Izmirlian family, with the Chinese Export-Import Bank providing $2.5 billion in financing over 20 years and the China State Construction & Engineering Co as principal contractor.

Challenges

It was unclear at this writing whether the Bank of Nova Scotia, which financed the Izmirlian's earlier acquisition of Cable Beach hotels, would become an equity investor. But it is fair to ask how Baha Mar expects to repay a $2.5 billion loan from China when it has already encountered challenges servicing the current $200 million loan to Scotiabank.

Still, it is the view of most observers that Cable Beach needs to be redeveloped for the country's tourism industry to remain competitive, and whether the land used for collateral is conveyed on a long-term lease or as freehold is beside the point.

The optimum use for that land is resort development and nobody else in the current environment can finance such a project.

And even though a large portion of the $2.5 billion will return to China in the form of interest, wages and materials purchases, this is still a major foreign investment for the Bahamas that will help to stimulate the economy in the short term and drive tourism growth in the longer term.

Conflict of Interest

According to the Institute of Auditors, conflict of interest is when someone in a position of trust has a competing professional or personal interest that makes it difficult to fulfil his or her duties impartially, or that creates an appearance of impropriety.

But exactly what does that mean in the Bahamas? Well, the short answer is...very little.

The Bahamas is a small place, which makes it difficult for any of us to avoid apparent conflicts. And they happen all the time, at every level, in both the public and private sectors. There are very few explicit rules, and even where rules exist, there are no real sanctions.

In the political realm, the old United Bahamian Party oligarchs have been described as "the poster boys for conflict of interest and corruption." Back before the days when cabinet ministers earned official salaries, UBP politicos routinely represented companies doing business with the government and awarded themselves contracts as a matter of right.

Things were so bad that prior to the 1967 general election the UBP itself had issued a code of ethics requiring ministers to withdraw from any case in which they had a private interest.

But that didn't stop politicians like Sir Stafford Sands from acting as paid agents for Freeport gambling interests, as documented by the 1967 Commission of Inquiry.

Sands (who was finance and tourism minister at the time) received over $1.8 million in consultancy fees from the Grand Bahama Port Authority between 1962 and 1966. The Port also gave hundreds of thousands of dollars in political contributions to the UBP.

When the Progressive Liberal Party came to power in 1967 it promised to change all that.

The Pindling administration issued a new code of ethics that prohibited ministers from accepting substantial gifts from persons doing business with the government.

Fast forward 15 years and the Bahamas was in the throes of a criminal takeover by South American drug cartels.

The Colombian flag was raised over Norman's Cay in George Smith's Exuma constituency by the notorious gangster Carlos Lehder, who drove ordinary visitors away at gunpoint and orchestrated hourly cocaine flights to the US.

The 1984 Commission of Inquiry found that Smith had accepted gifts and hospitality from Lehder, who is now serving a long sentence in an American jail. In fact, one parliamentarian said at the time that "Pindling and his crew make the Bay Street Boys look like schoolchildren."

The 1993 inquiries into Bahamasair and the Hotel Corporation were initiated by the first Free National Movement government. They documented decades of gross mismanagement, conflict of interest, and official corruption under the PLP. In response, the FNM promised a government in the sunshine that would be fully accountable to the people.

In the years since there have been many accusations of conflict of interest featuring politicians of both major parties, but none of them have matched the scale and sheer brazenness of those earlier controversies.

For example, during the second FNM administration Brent Symonette resigned as chairman of the Airport Authority after it became known that a company in which he had a minor interest had been contracted to do paving work at the airport. Charges were made against Tommy Turnquest for allowing an air conditioning contractor to pay for his leader-elect victory party. And Dion Foulkes was accused of awarding contracts for school repairs without a public tender.

When the PLP was re-elected in 2002, Perry Christie made a lot of noise about integrity in public life, and issued another code of ethics for ministers that basically re-stated existing guidelines. But his promised law codifying rules on conflict of interest never came before parliament.


Controversies

And so the controversies continued. Leslie Miller and other PLP officials were accused of renting buildings to the government they served, a common practice.

Minister of Local Government V. Alfred Gray was accused of remaining active in his law firm, which was representing one party in a local government dispute. Neville Wisdom faced charges of impropriety in awarding contracts for Junkanoo bleachers.

PLP Minister Bradley Roberts and then chairman of the Water & Sewerage Corporation Don Demeritte were accused of leading a conspiracy that would have bilked Bahamians of millions of dollars. According to testimony in an industrial tribunal, the chairman instructed the corporation's general manager to call off the bidding process for a reverse osmosis plant at Arawak Cay, and start negotiations with a firm whose principal was Jerome Fitzgerald, a PLP senator. This matter is still before the court.

The most sensational case of conflict of interest during the PLP's last term involved Shane Gibson's relationship with expired American sex symbol Anna Nicole Smith.

Gibson resigned from the cabinet in February 2007 after The Tribune published embarrassing photos of him on a bed with Smith at her Eastern Road home, although both were fully clothed.

Gibson insisted he did not have a sexual relationship with Smith and denied doing her any favours.

At the time, the "attack" on Shane was characterised by a fellow PLP minister as "the successful manipulation of misinformation by people whose stock in trade is nastiness and sleaze."

Well, now we have something that trumps all of that potted history.

A minister who takes advantage of a private helicopter flight in order to attend two official meetings on two different islands over two consecutive days - the evening premiere of a conservation film on Abaco, and a meeting with visiting American experts in the Exuma Cays the next morning.

"I would not have been able to do either with regular flights, or even make the previously agreed times by boat," Environment Minister Earl Deveaux told me. "It is difficult, if not impossible, to discharge this job, with the required oversight, if we are not able to use the facilities of the principals."

For George Smith's information, the Aga Khan is not a criminal - unlike Carlos Lehder. He is as desirable an investor as Sarkis Izmirlian. His Swiss-registered Development Network runs a variety of multi-billion-dollar humanitarian programmes in 25 countries around the world. And the Aga Khan Health Services is one of the most comprehensive, private, not-for-profit healthcare systems in the developing world.

Before we jump to conclusions, perhaps we should ask what are the actual regulations that apply to official conflict of interest in the Bahamas these days.

The answer to that question is contained in the manual of cabinet procedure, which states that a minister "must not, except as may be permitted under the rules applicable to his office, accept any gift, hospitality or concessional travel offered in connection with the discharge of his duties."

On my reading, accepting a trip for a personal benefit rather than for a public duty would likely be considered a breach of this rule.

Yet incumbents of both major parties have accepted personal hospitality from big investors or foreign governments fairly routinely over the years, and usually without any controversy.

The real elephant in the room in this context is the financing of political parties by big investors and corporate interests.

There are no rules at all in this regard, and everything is done behind closed doors.

I have it on good authority that each of the 82 main party candidates in the 2007 general election received an average of $30,000 in campaign funds. Added to that are general party expenses for advertising, printing, logistics, travel, and give-aways.

Clearly, Bahamian elections cost millions of dollars. Where do you think that money comes from?

So should we be concerned about a free helicopter ride to a business meeting? You be the judge.

What do you think?

Send comments to

larry@tribunemedia.net

Or visit www.bahamapundit.com

September 22, 2010

tribune242

Bahamas Blog International

The Clifton Property Bill to Establish the Clifton Heritage Authority Is Scheduled For Parliamentary Debate

The Official Opposition, Free National Movement (FNM) Party Parliamentarians Will Not Dispute The Core Issue of Turning The Clifton Property into a National Park 

Bahamas Government To Move On Clifton

By Candia Dames

candiadames@hotmail.com

15/01/2004

The large parcel of land on the western tip of New Providence known as the Clifton property has long been in limbo.

But that could soon come to an end.

As Members of Parliament prepare to begin debate on a bill to establish the Clifton Heritage Authority, the spotlight could again be placed on the controversy over the property that once ignited passionate debate that reached a fever pitch several years back.

Opposition Whip in the House Brent Symonette told the Bahama Journal Wednesday that there are questions that will no doubt arise regarding whether the Authority will be truly independent.

He said he expects "an interesting and heated debate."  But he noted that the opposition should not dispute the core issue - that is turning the land into a national park.

Five years ago, some members of the Free National Movement Government supported turning the area into a multimillion-dollar gated community with then Deputy Prime Minister Frank Watson insisting that, "the development will bring a stream of returning tourists year after year...it will provide any number of other jobs in the tourism industry."

Since that debate died down, the property, which was the site of significant archaeological finds, has remained untouched.

Among other things, the Authority would lead the way in raising money for the government to pay for the land, which is estimated by some to be worth about $20 million.  The government intends to issue bonds in this respect.

In 1989, the then government acquired the property from Nancy Oakes, who now resides in London.

The matter has stretched three administrations, but Ms. Oakes, now ailing, never received payment for the land.

Her attorney, Paul Adderley, told the Bahama Journal Wednesday that before the present government came up with this new option to pay for the property, she had been interested in getting the property back.

"The Constitution provides for prompt payment," he noted.

Mr. Adderley also pointed out that Ms. Oakes "is not as rich as people think she is" and he intimated that the payment would be long overdue.

Establishing a national park at the Clifton property would be a fulfillment of a Progressive Liberal Party campaign promise.  In fact, Mr. Symonette believes the debate in parliament will turn into a "political football."

In early 1999, the PLP, while in opposition, joined the tide of strong resistance to the Clifton Cay development proposed at the time.  Prime Minister Perry Christie, while in opposition, said he believed that the development would have placed in foreign hands far too much of the extremely scares natural resources that exist in New Providence.

Mr. Christie said he believed that the government should have retained the full 600 acres of land in trust for the Bahamian people.  The portion of land that would be under the Authority's control would be 208 acres.

"If the government can raise $20 million to fund the cost of a new bridge to the Sun International Resort (now Kerzner International) it can surely apply the same ingenuity to raise a lesser amount of capital to hold the Clifton Cay property in trust for present and future generations of Bahamians,"  Mr. Christie told the Bahama Journal in February, 1999.

American investors, James Anthony and James Chaffin, were in 1999 pushing a plan to turn Clifton into a $400 million gated community, a proposal that was so strongly opposed by some Bahamians, the investors soon packed up and left town.

Now, Clifton appears to face future persons who had opposed the development had been pushing for.

The bill before parliament would give the Authority to be established the power to "hold, manage, maintain, preserve, promote and develop [the property] as a national park and historic cultural heritage site."

The Authority would also enter into archaeological and other joint ventures with persons and entities of international and unimpeachable repute.

It would no doubt be a bit of a victory for the Coalition to Save Clifton Cay, which has quieted since debate on the property fizzled, but, according to its leader, has continued to review developments regarding the property.

Vice President of the Senate Dr. C. B. Moss, who helped form the Coalition several years ago, said the group supports the bill, but has some "minor" concerns.

But Rev. Moss added, "We think that the spirit of the proposed legislation would provide adequate protection for what we want to see there."