The Tribune

The Government was last night bracing for an outspoken QC’s latest Judicial Review salvo, after it missed his deadline to provide “an undertaking” that no decisions will be taken on Freeport’s tax and economic regime.

Fred Smith, the Callenders & Co attorney and partner, is now set to apply to the Supreme Court for permission to launch a Judicial Review action over the Government’s alleged failure to hold “meaningful consultation” with Freeport stakeholders over the city’s future.

His argument is grounded in the failure to make public the Government-commissioned report by the international consulting firm, McKinsey & Co, which made recommendations on Freeport’s short and long-term future.

Mr Smith, in a May 8, 2015, letter to the Prime Minister and members of the Government-appointed committee that led consultations on Freeport’s future, warned that the process had been left “fundamentally flawed” by the failure to make the McKinsey report public.

And he has refused to grant the Attorney General’s Office an extension to his self-imposed deadline, which expired yesterday afternoon, for it to give an undertaking that the consultation process - and recommendations arising from it - be stayed until the McKinsey report was published.

This produced a cool response from the Attorney General’s Office. Danya Wallace, the assistant director of legal affairs, in a letter sent to Mr Smith yesterday, said: “We are quite frankly surprised at the outright refusal to the extension, which was reasonable in all the circumstances.....

“Again, we state that the committee and the Government are actively considering the matters raised in your letters and we will revert as soon as able.”

This, and other communications, produced an irreverent response from Mr Smith, who replied: “Dear Attorney General, if you would kindly give me the McKinsey report I will kindly give you an extension.

“Otherwise I intend to issue proceedings because you cannot continue to govern in secret, especially when it affects my 40-year professional economic, social and other existence in Freeport as a [Grand Bahama Port Authority] licensee.”

What all this might mean for Freeport’s expiring Business Licence, real property tax and other tax breaks is unclear.

But any Judicial Review challenge will likely foreshadow delay to any decision being taken over these investment incentives and the Hawksbill Creek Agreement’s long-term future.

This threatens to further exacerbate the uncertainty surrounding Freeport’s investment climate, and deter capital projects by both existing and new investors.

Explaining his rationale for drawing up Judicial Review proceedings, Mr Smith wrote in his May 8 letter that the Prime Minister announced that the consultation committee’s appointment effectively stemmed from the McKinsey report’s contents.

“Unfortunately, the process set in motion on March 5 is fundamentally flawed and does not amount to an adequate or meaningful consultation,” Mr Smith wrote, in a letter that was also copied to the committee members and Dr Michael Darville, minister for Grand Bahama.

“This is because the Government has refused to allow the interested parties to see the contents of the McKinsey report, which is plainly pivotal to the whole process.

“As a result, the interested parties do not know what policy proposals the Government is considering and are unable to make informed and substantial contributions to the committee.”

Mr Smith said he declined to attend the committee’s Town Meetings until provided with the McKinsey report, and then renewed his threat to launch the Judicial Review challenge.

He also asked the Government to provide an undertaking “not to make any decision” over both the investment incentives that expire on August 4 this year, and “proposed wider policy interventions in the economic and fiscal regime” of Freeport, until any Judicial Review action is completed. Otherwise he will seek a Supreme Court injunction to compel this.

Mr Smith was joined by fellow Callender’s & co attorney, Carey Leonard, in setting out his broader concerns in a May 7, 2015, letter to the committee’s chairman, Dr Marcus Bethel.

The duo questioned why the McKinsey report was being kept secret, given that it was financed by the Bahamian taxpayers and intended to “enable better decisions to be made on the way forward for Grand Bahama”.

They added that it was “impossible’ to provide meaningful feedback to the committee in the absence of the report, given that it was playing a key role in guiding the Government’s policy response.

Messrs Smith and Leonard wrote of the situation: “It does highlight one of the reasons why Grand Bahama, and indeed the country, does not have more foreign direct investment, for it showcases another example of how far behind the rest of the world, how backward, this country has become.

“Transparency, and the right to transparency, is a way of life in most modern democracies. Business is about a full knowledge of their surroundings, and access to it is something that they are automatically entitled to in most modern countries.

“This country’s lack of transparency does not go unnoticed on the international stage.”

The Government-appointed committee is headed by Dr Bethel, and also includes the Prime Minister’s senior policy adviser, Sir Baltron Bethel; ex-Central Bank governor, James Smith; Grand Bahama Chamber of Commerce president, Kevin Seymour, and one of his predecessors, Dr Doswell Coakley.

Sources close to the committee, speaking on condition of anonymity, previously told Tribune Business that the McKinsey report had not been published because it was just a first draft.

They also suggested that its publication would influence the feedback obtained from Freeport stakeholders, and added that the Government did not want to “tip its hand” to the Grand Bahama Port Authority (GBPA) before negotiations began.