Lessons for BTC from Bahamas Airways
by Simon
A recent editorial cartoon of MPs bearing a coffin labelled Bahamianization was cute as a caricature but unconvincing as commentary. The cartoon represents a polar extreme from the left. From the right is another polar extreme claiming that Bahamianization has been tried and has failed.
As usual, the truer picture is somewhere in the middle beyond the hyperbole and casual analysis. Certainly, we are not where we want to be, but to deny various advances since independence, of which both extremes are prone, betrays many examples of progress despite the distance we have to travel.
All of which begs the question: What constitutes Bahamianization? Like all strands of nationalism, notions of Bahamianization are often driven by romanticism, ideological purity tests, prejudice and fear. At its most extreme, nationalism can explode into jingoism, xenophobia and racism.
At the heart of nationalism is a sense of identity and belonging to a place and may include political, social and economic nationalism. The highly emotive debate about the future of BTC has triggered various waves of economic nationalism which concern issues of opportunity, ownership and empowerment.
INSTRUCTIVE
But if the issues are about the greater empowerment of and opportunities for Bahamians, the BTC question is not as simplistic as the ardent nationalists suggest. The aviation industry offers an instructive case study in economic nationalism.
In 1968 Cathay Pacific Airways agreed to a partnership with the Bahamas Government in the development of Bahamas Airways as our national airline. The Hong Kong-based carrier was given exclusive rights to a number of important routes while providing the country with deep pockets and expertise in the airline industry, as well as an extensive international travel network.
Cathay Pacific (CP) invested heavily in the aircraft, marketing and training needed to develop routes between The Bahamas and tourist markets like New York and other cities. Once profitable, CP agreed to sell a 25 percent stake to the Bahamas Government at the initial share price of Bahamas Airways, which would have resulted in a windfall profit for the country.
The Bahamas would have had a national flag carrier able to compete with the big American carriers. Today we own 100 percent of a carrier that cannot compete. Is this Bahamian pride and nationalism? With crocodile tears about nationalism, Sir Lynden unilaterally and underhandedly broke the agreement with Cathay Pacific whom he himself courted and brought to The Bahamas.
Our national airline would have been integrated into the global aviation network decades before the more recent wave of globalization, providing guaranteed airlift for our tourist market, business passengers and cargo.
Imagine the possibilities of The Bahamas as a regional hub for Bahamas Airways/Cathay Pacific with direct flights to Latin America years ago, flying directly to many cities in the U.S., expanding our access to European capitals and better linking the country to the Pacific and China.
Sir Lynden and others defended his about-face by saying that Bahamians should fully own the routes Bahamas Airways had been granted. In the event, his waving the nationalist’s banner was a cover for crony capitalism as he awarded the routes to a crony who failed to get his airline off the ground.
SCANDAL
The result was the collapse of the arrangement with Cathay Pacific, a blow to the credibility of the government with investors and a big scandal for the country. The crony airline became known as “the paper airline” and became a laughing-stock.
Sir Lynden’s decision on Bahamas Airways was one of the pivotal issues which provoked increasing dissatisfaction with his leadership, eventually resulting in the break from the PLP of the Dissident Eight and others.
The founders of the FNM and other nationalists who remained in the Pindling government had to take tough and pragmatic decisions early on in the greater national interest of making the Bahamian dream more accessible and advancing the promises of majority rule.
They overwhelmingly and correctly concluded that to expand tourism and economic access and opportunities for Bahamians, and in order to grow the Bahamian economy to fund priorities such as education, that the Cathay Pacific partnership was an exceptional deal for The Bahamas.
Sir Lynden’s decision was tragic. In significant ways it set the country back decades. While it may be difficult to calculate the lost opportunities and economic benefits to the country and the Public Treasury, we know what Bahamasair has cost taxpayers -- now approaching half a billion dollars.
For point of reference, our total national debt today is approximately $4.2 billion dollars. Over the years Bahamasair constantly flew off course with poor service and incompetent management, various scandals and rip-offs, political interference and featherbedding of supporters, as well as wasteful spending.
Four decades after the Bahamas Airways debacle, the country owns 100 percent of a national airline that has been a significant failure in many respects. Is this more preferable than a 25 per cent stake in an airline that would have been more profitable, that would not have cost the Public Treasury the mind-boggling sums expended on Bahamasair, and would have guaranteed airlift into our prime tourism markets?
Then there are the opportunity costs of millions which could have been invested in education, health care, the arts, infrastructure and other areas. In all probability our national debt would also have been lower and our public finances healthier.
RATIONAL
Such rational cost-benefits analysis does not hold the emotional appeal of thumping our chests, waving the national colours and proclaiming that we are the majority owners of our national airline. Still, Bahamian pride must be more than nostalgia, unthinking nationalism and outdated economic thinking.
Surely we cannot fully know what the future of Bahamas Airways would have been amidst the turmoil that has roiled the airline industry over the decades from oil shocks to mergers to intense competition.
What we do know is that Cathay Pacific is still a healthy and competitive airline and that many of Bahamasair’s domestic routes are now in the hands of private fully Bahamian-owned companies that are profitable. The model Bahamas Airways could have followed is a concentration on international routes leaving domestic routes to local carriers with, in some instances, government subsidies to less profitable inter-island routes.
Suppose that in the 1980s The Bahamas was again offered a partnership with an international carrier to buy a majority stake in Bahamasair, with an agreement similar to the proposed BTC and Cable & Wireless partnership?
The agreement would have entailed the Government maintaining a significant though not majority stake, veto power over key decisions and significant board seats. The new partnership would leverage the resources of the well-established airline including extensive capital investments and other resources made available to Bahamasair that it could not access on its own.
The new partnership would also help to integrate the new Bahamasair into a global travel network of expanded routes with significantly better economies of scale in a more competitive global airline industry. Eventually, shares would be also sold to the Bahamian public
If this was the deal on the table, what would those who oppose the new partnership between BTC and Cable & Wireless, have thought and argued? Clearly, one could not plausibly argue that the national interest would have been better served by insisting on a 51 percent stake.
Undoubtedly the airline and telecommunications industries are different. Yet, there are parallels between the Bahamas Airways story and the proposed new partnership for BTC.
March 18, 2011
bahamapundit
A political blog about Bahamian politics in The Bahamas, Bahamian Politicans - and the entire Bahamas political lot. Bahamian Blogger Dennis Dames keeps you updated on the political news and views throughout the islands of The Bahamas without fear or favor. Bahamian Politicians and the Bahamian Political Arena: Updates one Post at a time on Bahamas Politics and Bahamas Politicans; and their local, regional and international policies and perspectives.
Showing posts with label Bahamianization. Show all posts
Showing posts with label Bahamianization. Show all posts
Tuesday, March 22, 2011
Monday, December 6, 2010
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
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
Friday, October 15, 2010
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
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
Thursday, October 14, 2010
Baha Mar Drama - (Part 1)
The Drama at Baha Mar – Part 1
by Simon
Lights, camera, action! At least, that was the theory. With giddy fanfare the Christie administration broke into the ZNS evening news to broadcast live from Cable Beach a deal hyping an agreement with Baha Mar. The made-for-television reality show was obviously and deliberately timed to coincide with the beginning of the evening news, commandeering most of that night’s broadcast.
But after the lights and cameras trekked back to Third Terrace Centreville, nothing happened. Well, quite a bit happened. Except, of course, the construction of the promised mega complex. The original deal, the world economy and the Christie administration all collapsed, though not necessarily in that order.
The impressive architectural models and glittering high-tech videos of the touted development glossed over the realities on the ground. The public relations bonanza also obscured the nature and details surrounding the proposed plans to re-develop the historic Cable Beach.
We have seen this reality show before. It involves the same mindset, plot and cast of PLP cabinet ministers and their associated dealmakers that brought us the Great Mayaguana Land Give-away. The initial arrangements for the Baha Mar deal and the I-Group deal in Mayaguana involved more than rank hypocrisy by the party whose progressive and liberal brand name are whispery echoes of a by-gone era.
More fundamentally, the deals betrayed the PLP’s own nationalist rhetoric and chest-thumping patriotism. At the core of the Cable Beach and Mayaguana deals were stunning betrayals of the very idea of Bahamianization. This included making Bahamians subordinate in the deals, while alienating prime Crown Land and Government real estate to foreigners in perpetuity.
GALLING
Equally galling, was the PLP’s attempt to market these schemes to Bahamians as if we were idiots who could not see the big picture or read the fine print. There was also the smugness and arrogance by PLP hucksters. They pretended that these deals were more for the benefit of ordinary Bahamians than for the self-satisfied oligarchs who brokered them with gleeful abandon.
As recently as the 2010/11 budget debate, the Opposition’s Leader in the Senate, Senator Allyson Maynard Gibson, boasted that the Mayaguana Development Company, the group responsible for a proposed development at our most easterly island, was owned 50/50 by the I-Group and the Bahamas Government.
As noted in Front Porch in July: “This 50/50 arrangement would have eventually sold off nearly 100 per cent of Mayaguana’s coastal area and nearly 10,000 acres to non-Bahamians.
“As Mayaguana, by comparison, is somewhat larger than New Providence, the deal the PLP continues to brag about was the equivalent of turning over to a single developer a stretch of coastal land from the eastern end of New Providence to Lyford Cay. Again, the vast majority of this land would have ended up in foreign hands.”
Back to the drama at Baha Mar. Perry Gladstone Christie and his new PLP sold off at bargain basement prices prime beachfront and other public land at Cable Beach that Sir Stafford Sands and the UBP, Sir Lynden Pindling and an earlier version of the PLP, and Hubert Ingraham and the FNM never did over the course of more than half a century. Mr. Christie now has his place in the history books!
The original Baha Mar deal was a disaster on so many levels. Despite the rhetoric, the supposedly new PLP under Mr. Christie never updated their philosophy and policy ideas. The party simply wanted to be back in power. Upon returning to office they scrambled, cobbling together various slogans, clichés and talking points to justify their old habits of wheeling and dealing.
Perhaps realizing the controversial nature of significant elements of the original Baha Mar deal, Mr. Christie -- who purports to be the man of great consultation -- kept details of the deal secret. It was left to the Ingraham administration to table the Heads of Agreements on the initial deal.
INSULT
This was an insult added to the many injuries inflicted on our national interest in the initial deal, including public land sold at discounted prices and the proposed grant of extraordinarily generous concessions and cash payments. There were initial hints that Goodman’s Bay may have been alienated from the Bahamian people, though somebody appeared to backtrack quickly on this affront.
With Baha Mar and various anchor projects, the PLP failed to embrace newer ideas in terms of our tourism product and economic development. The idea of Baha Mar as essentially another Atlantis may have been a critical mistake. Such a vision stoked the egos of the proponents of the deal and Mr. Christie.
Still, a different type of project or variety of projects at Cable Beach, aimed at a different tourism demographic, would have been the wiser course of action. Moreover, rather than alienating invaluable public land, other arrangements could have been made to secure most of this land for generations of Bahamians.
In the Mayaguana deal the PLP at least pretended to be concerned about the national interest. The deal with Baha Mar was a give-away of monumental proportions.
There could have also been arrangements to enable Bahamians to have various levels of ownership and equity in a development which was to be built on mostly public land. Instead, the Christie administration turned its back on the core ideal of Bahamianization which was at the heart of the movement for Majority Rule.
Sadly, with the conclusion of the original deal with Baha Mar, there was no turning back, one of the slogans beloved by the PLP’s marketers. That other favourite PLP slogan, “Forward Ever, Backward Never”, also crashed and burned in light of the initial deal negotiated by Mr. Christie.
Having set in motion and made unavoidable many of the features of the current deal with Baha Mar, Mr. Christie in his typical political style, has left it up to Prime Minister Ingraham to do the heavy lifting on a final deal which he himself failed to conclude.
TONE!
Now Mr. Christie is commenting on the Prime Minister’s tone – tone! -- on a final deal. This is in keeping with his usual course of inaction in which style and tone are more important than substance. After all, who can forget his gushing and ingratiating tone when the Baha Mar deal was announced live on television? For all of Mr. Christie’s sweet melodies and tone, nothing happened.
Moreover, despite his lovely tone about the initial deal, he brokered an agreement which was wrong for The Bahamas on many levels. Mr. Ingraham has replaced Mr. Christie’s amateur tone with that of a seasoned leader. Whereas Mr. Christie was impetuous and cavalier, Mr. Ingraham has been measured and has driven a harder bargain.
Unlike Sir Lynden and the PLP’s unilateral abrogation of elements of the Hawksbill Creek Agreement, Mr. Ingraham negotiated the best deal he could for the Bahamas with Baha Mar. He has struck the right tone in negotiating with others who simply rolled over the hapless Mr. Christie, who was panicked about getting a deal at just about any cost to secure his re-election and legacy.
Short-term, the Prime Minister has sometimes been criticized about his manner and timing in negotiating elements of a final deal. In the longer term the wisdom of his negotiating strategy may prove more beneficial for the country.
In addition to tabling all heads of agreements related to Baha Mar, the Prime Minister is correct in bringing a resolution to the House of Assembly so that the Bahamian people’s elected representatives can express their will.
This will be time for Mr. Christie to do something which he has been reluctant to do from the inception of Baha Mar: To go on record clearly and unambiguously about his party’s stance on many of the controversial issues involved in an agreement whose initial seeds he helped to plant and water.
Baha Mar Drama - (Part 2)
bahamapundit
by Simon
Lights, camera, action! At least, that was the theory. With giddy fanfare the Christie administration broke into the ZNS evening news to broadcast live from Cable Beach a deal hyping an agreement with Baha Mar. The made-for-television reality show was obviously and deliberately timed to coincide with the beginning of the evening news, commandeering most of that night’s broadcast.
But after the lights and cameras trekked back to Third Terrace Centreville, nothing happened. Well, quite a bit happened. Except, of course, the construction of the promised mega complex. The original deal, the world economy and the Christie administration all collapsed, though not necessarily in that order.
The impressive architectural models and glittering high-tech videos of the touted development glossed over the realities on the ground. The public relations bonanza also obscured the nature and details surrounding the proposed plans to re-develop the historic Cable Beach.
We have seen this reality show before. It involves the same mindset, plot and cast of PLP cabinet ministers and their associated dealmakers that brought us the Great Mayaguana Land Give-away. The initial arrangements for the Baha Mar deal and the I-Group deal in Mayaguana involved more than rank hypocrisy by the party whose progressive and liberal brand name are whispery echoes of a by-gone era.
More fundamentally, the deals betrayed the PLP’s own nationalist rhetoric and chest-thumping patriotism. At the core of the Cable Beach and Mayaguana deals were stunning betrayals of the very idea of Bahamianization. This included making Bahamians subordinate in the deals, while alienating prime Crown Land and Government real estate to foreigners in perpetuity.
GALLING
Equally galling, was the PLP’s attempt to market these schemes to Bahamians as if we were idiots who could not see the big picture or read the fine print. There was also the smugness and arrogance by PLP hucksters. They pretended that these deals were more for the benefit of ordinary Bahamians than for the self-satisfied oligarchs who brokered them with gleeful abandon.
As recently as the 2010/11 budget debate, the Opposition’s Leader in the Senate, Senator Allyson Maynard Gibson, boasted that the Mayaguana Development Company, the group responsible for a proposed development at our most easterly island, was owned 50/50 by the I-Group and the Bahamas Government.
As noted in Front Porch in July: “This 50/50 arrangement would have eventually sold off nearly 100 per cent of Mayaguana’s coastal area and nearly 10,000 acres to non-Bahamians.
“As Mayaguana, by comparison, is somewhat larger than New Providence, the deal the PLP continues to brag about was the equivalent of turning over to a single developer a stretch of coastal land from the eastern end of New Providence to Lyford Cay. Again, the vast majority of this land would have ended up in foreign hands.”
Back to the drama at Baha Mar. Perry Gladstone Christie and his new PLP sold off at bargain basement prices prime beachfront and other public land at Cable Beach that Sir Stafford Sands and the UBP, Sir Lynden Pindling and an earlier version of the PLP, and Hubert Ingraham and the FNM never did over the course of more than half a century. Mr. Christie now has his place in the history books!
The original Baha Mar deal was a disaster on so many levels. Despite the rhetoric, the supposedly new PLP under Mr. Christie never updated their philosophy and policy ideas. The party simply wanted to be back in power. Upon returning to office they scrambled, cobbling together various slogans, clichés and talking points to justify their old habits of wheeling and dealing.
Perhaps realizing the controversial nature of significant elements of the original Baha Mar deal, Mr. Christie -- who purports to be the man of great consultation -- kept details of the deal secret. It was left to the Ingraham administration to table the Heads of Agreements on the initial deal.
INSULT
This was an insult added to the many injuries inflicted on our national interest in the initial deal, including public land sold at discounted prices and the proposed grant of extraordinarily generous concessions and cash payments. There were initial hints that Goodman’s Bay may have been alienated from the Bahamian people, though somebody appeared to backtrack quickly on this affront.
With Baha Mar and various anchor projects, the PLP failed to embrace newer ideas in terms of our tourism product and economic development. The idea of Baha Mar as essentially another Atlantis may have been a critical mistake. Such a vision stoked the egos of the proponents of the deal and Mr. Christie.
Still, a different type of project or variety of projects at Cable Beach, aimed at a different tourism demographic, would have been the wiser course of action. Moreover, rather than alienating invaluable public land, other arrangements could have been made to secure most of this land for generations of Bahamians.
In the Mayaguana deal the PLP at least pretended to be concerned about the national interest. The deal with Baha Mar was a give-away of monumental proportions.
There could have also been arrangements to enable Bahamians to have various levels of ownership and equity in a development which was to be built on mostly public land. Instead, the Christie administration turned its back on the core ideal of Bahamianization which was at the heart of the movement for Majority Rule.
Sadly, with the conclusion of the original deal with Baha Mar, there was no turning back, one of the slogans beloved by the PLP’s marketers. That other favourite PLP slogan, “Forward Ever, Backward Never”, also crashed and burned in light of the initial deal negotiated by Mr. Christie.
Having set in motion and made unavoidable many of the features of the current deal with Baha Mar, Mr. Christie in his typical political style, has left it up to Prime Minister Ingraham to do the heavy lifting on a final deal which he himself failed to conclude.
TONE!
Now Mr. Christie is commenting on the Prime Minister’s tone – tone! -- on a final deal. This is in keeping with his usual course of inaction in which style and tone are more important than substance. After all, who can forget his gushing and ingratiating tone when the Baha Mar deal was announced live on television? For all of Mr. Christie’s sweet melodies and tone, nothing happened.
Moreover, despite his lovely tone about the initial deal, he brokered an agreement which was wrong for The Bahamas on many levels. Mr. Ingraham has replaced Mr. Christie’s amateur tone with that of a seasoned leader. Whereas Mr. Christie was impetuous and cavalier, Mr. Ingraham has been measured and has driven a harder bargain.
Unlike Sir Lynden and the PLP’s unilateral abrogation of elements of the Hawksbill Creek Agreement, Mr. Ingraham negotiated the best deal he could for the Bahamas with Baha Mar. He has struck the right tone in negotiating with others who simply rolled over the hapless Mr. Christie, who was panicked about getting a deal at just about any cost to secure his re-election and legacy.
Short-term, the Prime Minister has sometimes been criticized about his manner and timing in negotiating elements of a final deal. In the longer term the wisdom of his negotiating strategy may prove more beneficial for the country.
In addition to tabling all heads of agreements related to Baha Mar, the Prime Minister is correct in bringing a resolution to the House of Assembly so that the Bahamian people’s elected representatives can express their will.
This will be time for Mr. Christie to do something which he has been reluctant to do from the inception of Baha Mar: To go on record clearly and unambiguously about his party’s stance on many of the controversial issues involved in an agreement whose initial seeds he helped to plant and water.
Baha Mar Drama - (Part 2)
bahamapundit
Thursday, March 11, 2004
Buyers Are Interested In Earlin Williams Korean Boats
The Customs Management Act gives Customs officials the authority to put up for sale any item for which duties have not been paid after a given period of time. Months after waiting for payment, Customs authorities appear poised to auction the vessels.
Buyers Want Korean Boats
11/03/2004
Government officials intend to seek a court order to have the 16 Korean fishing boats "condemned", which would give them the freedom to dispose of the vessels as they see fit, the Journal has learnt.
The 16 boats at the heart of the controversy that involved Korean investors were due to be auctioned before the end of the month, with unnamed buyers already expressing an interest in purchasing the vessels.
But those buyers will have to wait a little while longer for the opportunity to purchase the boats.
Fifteen of the boats remain impounded at Morgan's Bluff, Andros, and another one - that would have served as a processing ship - is in Grand Bahama, nearly four months after Fisheries Minister V. Alfred Gray told parliamentarians that the boats will be removed from The Bahamas "forthwith".
A government source conceded this week that Minister Gray was speaking without full knowledge of the law when he said the boats will be removed forthwith.
The Department of Fisheries revoked the registration certificates that were held by Netsiwill Holdings Limited after determining that the boats were not 100 percent Bahamian owned. Netsiwill principal, Earlin Williams, has since said that the Korean investors turned ownership of the boats over to him for $1.
He maintains that the revocation action should be reversed now that he has solved the issue of the "Bahamianization" requirement.
The boats remain in the possession of The Bahamas Customs Department, which said in a release last December that, "The vessels may not be moved or interfered with in any way without the express permission of the Department. All 16 vessels are expected to leave Bahamian waters in due course of law after the completion of logistical arrangements for their removal from the jurisdiction of The Bahamas."
But after determining that Mr. Williams and his company had broken no law as it relates to Customs requirements, the department advised them to pay the $650,000 owed in duties. The company paid $25,000 in stamp tax when the boats came in in October.
They were advised to pay duties after the revocation of the registration certificates, which meant that the items were no longer classified as duty-free.
Mr. Williams said on a Radio Love 97 programme in January that in the worst-case scenario, he would find the more than $600,000 to pay the customs duties for the boats. But he did not return calls to the Journal on Tuesday and Wednesday to answer whether he had come up with the money.
The Journal has now learnt that government authorities do not want Customs to accept the payment if it is offered by Mr. Williams.
The Customs Management Act gives Customs officials the authority to put up for sale any item for which duties have not been paid after a given period of time.
Months after waiting for payment, Customs authorities appear poised to auction the vessels.
Minister Gray has explained that the registration certificates were revoked because the specifics regarding the Korean ownership of the boats were unknown to the government at the time the applications were submitted.
But Mr. Williams has said, "The Government of The Bahamas acted prematurely and acted without all the facts."
A $2.5 million mortgage had been attached to the vessels.
State Minister for Finance James Smith said Tuesday that the matter was now before the Office of the Attorney General and directed the Journal to Director of Legal Affairs Rhonda Bain.
But she was unavailable for comment on Wednesday.
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