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Heads Of Agreement Deals 'Against Good Governance'

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Heads of Agreement deals struck between the Government and major foreign developers are “contrary to good governance”, a well-known QC said yesterday, because they enable statutory permitting processes to be bypassed.

Fred Smith QC, the Callenders & Co attorney and partner, told Tribune Business that Friday’s Privy Council injunction, which halted Resorts World Bimini’s dredging project, was vital in signalling that the Bahamas’ was “not a business banana republic”.

“From a business perspective, as a businessman in the Bahamas, it is so important that foreign investors understand the Bahamas is governed by laws just like in London, Florida and Malaysia or any other civilised country in the world,” Mr Smith said, in a not-so-subtle reference to Resorts World’s parent, Genting.

“The Bahamas is not a business banana republic. Laws need to be followed in the Bahamas, even if the Government tries to lead developers astray through fast-tracking via Heads of Agreement.

“The Government attempts to fast-track foreign developers without obtaining the necessary permits. Heads of Agreement are contrary to good governance in the Bahamas.”

The first Ingraham administration introduced so-called Heads of Agreement between the Government and foreign developers/investors after it took office in 1992.

These ‘master documents’ set out the headline, or major, terms agreed between the two parties to facilitate a major investment project, which is usually a hotel or tourism-related development.

However, several observers have, over the years, echoed Mr Smith by pointing out to Tribune Business that ‘Heads of Agreement’ are devices that can be used to evade Parliamentary and public scrutiny, and potentially enable the Government to cut ‘secret deals’ with developers.

And Heads of Agreement do not automatically signal the immediate start of major investment projects, as there are a whole array of underlying permits and approvals developers must first obtain, such as a Hotels Encouragement Act approvals and a variety of planning/construction-related permits.

“This is why we need a Freedom of Information Act, because litigating Judicial Review cases is like trying to shoot at a moving target,” Mr Smith told Tribune Business.

“You never know how the landscape is going to change from moment to moment because everything is so secretive.”

The Judicial Review action that Mr Smith is heading for the Bimini Blue Coalition against the Resorts World cruise ship terminal/jetty and dredging project is seemingly an example of the complaint the well-known QC is making.

For he and the Coalition are alleging that the developers bypassed the statutory approvals process in failing to obtain a dredging/excavation permit from the Department of Physical Planning, the correct agency, until May 22 - eight days after the dredging started.

Resorts World had instead relied on approval letters from the Department of Lands and Surveys to begin work, an agency that Mr Smith is alleging has no authority to issue dredging permits under the Conservation and Protection of the Physical Landscape of the Bahamas Act 1997.

The Bimini Blue Coalition’s May 16, 2014, submissions to the Court of Appeal in its challenge to the Supreme Court ruling that it must pay $650,000 as ‘security’ for Resorts World and the Government’s costs also takes up the ‘Heads of Agreement’ theme.

The Coalition’s submissions focus in on Resorts World’s own Supreme Court filings, which argued that the Bahamian judicial system had the opportunity “to set a precedent in the public interest of the Bahamas”.

This precedent, it argued, would be to show Judicial Review actions would “rarely if ever be granted” in cases where investors had invested heavily based on the approvals/permits the Government has the authority to grant.

“The developers are effectively saying that government ‘approvals in principle’ or Heads of Agreement should amount to a guarantee that the requisite permits and approvals will be forthcoming, thereby circumventing all statutory processes relating to regulation of development and environmental protection in the Bahamas,” the Coalition alleged.

“The point made is illuminating and noteworthy, as it demonstrates the mentality of the developers (and perhaps the mentality of many developers in the Bahamas): They are investing large sums and have central government Cabinet political approval.

“As such, they expect to be above the law and do not need to go through the planning channels that apply to all other development work in the Bahamas, and otherwise apply to Bahamians.”

The Coalition questioned whether the Government was treating foreign developers in “a favourably discriminatory manner” compared to Bahamians, thereby breaching the latter’s constitutional rights.

The Coalition alleged that its Judicial Review was necessary “to send a clear message that the rule of law must be respected by all and sundry in the Bahamas, and that the Government authorities must ensure that large investors are bound by the same rules as everyone else, and will need to abide by the planning and environmental protection legislation and practices in place in the Bahamas”.

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