The Tribune

The negotiations over Freeport’s expiring tax breaks are “very much a matter of survival” for the Grand Bahama Port Authority’s (GBPA) 3,500 licensees, an outspoken QC arguing that these incentives are among the few “not completely breached” yet.

Fred Smith QC, in a May 20, 2015, affidavit to support his application for permission to bring Judicial Review proceedings against the Government over its Freeport ‘consultation process’, said the city’s economic decline had reduced staffing levels at his own law firm by almost 75 per cent from their late 1990s high-point.

And, in a further warning to the Government, the Callenders & Co attorney partner said he had also received instructions to initiate legal action over Value-Added Tax (VAT) and Customs actions that were perceived as breaches of the Hawksbill Creek Agreement.

Mr Smith alleged that apart from the five-seven year period immediately following passage of the 1993 Grand Bahama Act, successive administrations “have been at odds” with the GBPA and rights of its licensees.

“They [governments] have done their best to limit, restrict and control Freeport and the Hawksbill Creek Agreement, and to extract taxes, often illegally,” Mr Smith alleged.

“They have respected the Hawksbill Creek Agreement more in the breach than in the observance. This has resulted in a chronically limping and depressed economy (other than between 1993 and 1999), and a regrettable state of affairs where, for the most part, the GBPA, the licensees and the Government are usually at odds rather than working harmoniously together as a public-private partnership (PPP).”

Mr Smith said this had caused “repeated litigation counter-offensives”, usually mounted by himself, “to try to hold the line for the licensees and GBPA”.

He alleged: “The perennial assault to extract illegal taxes, coupled with the vice-like grip on Immigration, exchange control, the Investment Board, and the Office of The Prime Minister oversight and control of GBPA licensing, have made it almost impossible to conduct a profitable businesses in Freeport.

“This situation has been made even worse now by the intrusions of certain discriminatory and illegal practices under the recent VAT regime. As a licensee, I say that it is an anxious and very counterproductive business environment for me to exist in, and one which greatly contributes to a sense of uncertainty, which militates against business potential, and investment, both domestic and from abroad.”

Confirming that he had received instructions to “sue on the VAT and further Customs breaches of the Hawksbill Creek Agreement”, Mr Smith argued that his words were “not hyperbole”.

“In my view, the economy of Freeport has always had enormous potential,” he argued. Yet, when asked by persons in Nassau how the economy in Freeport has been doing, for many years my regrettable answer used to be that it is ‘dying’.

“I have now changed that to ‘decaying’. The economic carcass of Freeport’s once Golden Goose is rotting. Even Callenders in Freeport, which once employed over 57 people during Freeport’s brief resurgence in the late 1990’s, has reduced its staff to a paltry 15.”

Mr Smith said this had been recognised by Prime Minister Perry Christie, leading the Government to commission the report by the international consulting firm, McKinsey & Co, on policy options and recommendations for Freeport’s short and long-term future.

The August 2015 expiration of Freeport’s Business Licence and real property tax exemptions also prompted the Government to appoint the six-person committee, chaired by Dr Marcus Bethel, to lead consultation’s with stakeholders on the city’s future.

Mr Smith said he and others had viewed the consultation process as “a good faith opportunity” to influence Government policies and thinking with respect to Freeport.

Yet he implied that this notion had been soured by the Government, and committee’s, refusal to release the McKinsey report. Given that this was “pivotal” to the consultation and government thinking, Mr Smith and his fellow attorney, Carey Leonard, launched the Judicial Review action on the grounds that its non-disclosure meant the process was not ‘proper and meaningful’.

“This opportunity to protect and preserve our rights under the Hawksbill Creek Agreement is very much a matter of survival for me and other licensees, given that tax exemptions remain some of the only provisions of the Hawksbill Creek Agreement that have not been completely breached, as were the licensing and the Immigration provisions, with devastating consequences,” Mr Smith alleged.

“Having been given this opportunity to be consulted, I consider that I, along with other licensees, have a right to be properly informed as sought by this application, so that we may have some inkling into the Government’s and the committee’s thinking. We also wish to be sure that there has not already been predetermination, and that this is not simply a rubber-stamping of a decision to extract more taxes..... I do not wish to be shooting in the dark.”