The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

An “extended or whole new Hawksbill Creek Agreement” and a change in the Grand Bahama Port Authority’s (GBPA) ownership are vital ingredients for attracting wealthy investors to Freeport, a prominent attorney said yesterday.

Carey Leonard, now with Callender’s & Co, told Tribune Business he felt the GBPA’s current shareholders - the Hayward and St George families - would have “to part” with at least majority control, but only if the right buyer was found.

Suggesting that this would require an investor willing to pump $500 million into Freeport, Mr Leonard said a revived GBPA under new ownership direction, combined with a secure Hawksbill Creek Agreement, were critical to Freeport’s revival.

But, while acknowledging that Freeport’s commercial legal services market was at “a low ebb”, Mr Leonard said blame for this did not lie solely with the GBPA or the Government. He called on the private sector, too, to be more proactive in attracting new business to Freeport.

Mr Leonard said Freeport’s, and the Bahamas, economic woes had their roots in the recent global recession and lingering uncertainty.

Apart from wealth and capital flows shifting from the US, Europe and traditional markets in favour of the BRIC (Brazil, Russia, India, China) countries, the upper middle class also had less wealth and disposable income to spend.

It was these persons who had been purchasing second homes and lots in the Bahamas, Mr Leonard said, while the world’s wealthy elite “need certainty and something to excite them” before they invest anywhere.

In Freeport’s context, Mr Leonard said “that needs either an extension or whole new Hawksbill Creek Agreement”.

As for the GBPA, he added: “If new shareholders are brought in, and I think the current shareholders are going to have to part with a controlling interest in the company - but only if they find a company prepared to put $500 million into the place - that will create some excitement for wealthy people to part with their money.”

As a former GBPA in-house counsel, Mr Leonard’s words are likely to carry some weight. He is expressing what, Freeport sources have told Tribune Business, are views gaining some traction among the private sector and others, namely that the St George and Hayward families need to sell their interests and make way for a buyer with the strategy and financing to take Freeport forward.

The Government is also understood to be going through the Hawksbill Creek Agreement with a ‘fine tooth comb’, in part to prepare for negotiations over the real property tax and Business Licence exemptions due to expire in 2015.

But also, sources have indicated, to assess whether the GBPA has complied with its developmental and governance responsibilities. The Government, via the Ministry of Grand Bahama, is liaising closely with GBPA management.

However, Ian Fair, the GBPA’s chairman, and its management team have just begun to embark on a proactive marketing and investment promotion strategy designed to attract new business and investment to Freeport.

Many observers would argue they, and the current owners, should be given more time for their plans to work.

In addition, the GBPA and its Port Group Ltd affiliates are unique assets, due to the quasi-governmental powers, licensing authority and developmental responsibilities bound up with the former entity.

That would require finding a similarly ‘unique’ buyer willing to take on those obligations. Otherwise, those responsibilities might be ceded to Nassau, with all that implies for Freeport and the Hawksbill Creek Agreement.

Elsewhere, Mr Leonard said Freeport - and the Bahamas in general - needed to reduce the cost of energy if they were to maintain economic competitiveness.

Again questioning whether the Bahamas should maintain exchange controls, Mr Leonard expressed hope that this nation’s signing on to the Economic Partnership Agreement (EPA) and full World Trade Organisation (WTO) membership would “help us with the total lack of transparency with respect to government legislation”.

He added: “We are way behind the 8-ball on this. There is so little transparency in everything we do. Businesses expect transparency. If they don’t get it, they will move to wherever you have it in the world. Businesses want certainty.”

Mr Leonard described all these factors as “causes” for Freeport, and the Bahamas’, problems, adding that the effect was “we don’t have any business”.

Yet he added: ‘To lay it all on the GBPA is not fair, to lay it all on the Government is not fair. We as people need to be a lot more proactive. In a nutshell, that’s the way I see it.”