The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

An outspoken QC yesterday said it was “high time” the Grand Bahama Port Authority (GBPA) was returned to public ownership via a listing on the Bahamas International Securities Exchange (BISX), as concerns rise over Freeport’s “discombobulated” economy.

Fred Smith, the Callenders & Co attorney and partner, told Tribune Business that the GBPA should be returned to public ownership in the Bahamas, rather than via the New York Stock Exchange (NYSE), where it was listed for many years.

He suggested that this could happen by activating the ‘devolution transfer’ mechanism contained in the 1968 amendments to the Hawksbill Creek Agreement (HCA), which provide for the GBPA’s quasi-governmental and regulatory powers to be vested in a local government-type authority.

Many observers believe such a devolution, which would require the support of 80 per cent of GBPA licensees, is becoming increasingly urgent given the latest rift among the Port Authority’s shareholder families.

The battle for control over the late Sir Jack Hayward’s family trust, which has seen all its assets - including the 50 per cent equity stake in the GBPA and its Port Group Ltd affiliate - placed under Supreme Court supervision, has temporarily stymied efforts to sell both entities to major international investors.

And Mr Smith warned that it also threatens to undermine business confidence and investor interest in Freeport, which is what happened between 2006-2010 due to the dispute between the Hayward and St George families.

“Having been at the epicentre of the Hayward and St George litigation, I can attest first hand to the invisible destructive consequences of the owners of the Port Authority being at war,” Mr Smith told Tribune Business.

“Although this is a war within the Hayward camp, the ripple effects become a tsunami to the economic interests of all 3,500 licensees.”

Given that Freeport is an “artificially created” economy via the Hawksbill Creek Agreement, the QC said it was vital for both the Government and Port Authority to create an investment climate “of calm, consistency and relative calm”.

But, while the Hawksbill Creek Agreement required “soft, subtle and sophisticated touches” whenever issues arose, Mr Smith said it had been repeatedly undermined.

Not only by the “drastic, draconian measures” used by successive governments, but the “internecine warfare among the shareholders, which only inures to the discombobulation of the local economy”.

Of the results, Mr Smith said: “No one is quite sure what is going on. Investors locally and internationally need certainty to plan their affairs, and to provide confidence in the local economy.”

Squabbling “over the spoils of war”, as the Hayward family is now doing, he added, would only deter Bahamian and foreign investment in Freeport.

Mr Smith said Callender’s & Co could attest to the impact of the GBPA in-fighting and heavy government interference in Freeport, as its staff there had shrunk from 57 persons in the early 2000s to 13 currently.

With the interests of Freeport’s licensees, landowners and 60,000 residents constantly excluded and ignored, Mr Smith urged the Christie administration to intervene and force the Haywards and St Georges to sell their interests.

He warned, though, that this had to involve the devolution of the GBPA’s powers back to public hands via the 1968 Hawksbill Creek Agreement amendment, pledging to “fight tooth and nail” any bid to return Freeport’s governance to Nassau.

“As licensee, I would resist to the bitter end any involvement by Central Government in Freeport’s regulatory conduct,” Mr Smith told Tribune Business. “Nassau has no business in Freeport; it should stay away.

“As a licensee I would fight tooth and nail to keep Central Government out of being the regulatory authority under the Hawksbill Creek Agreement.”

He added: “It’s high time devolution occurs in Freeport - from private hands to public hands. The GBPA would become a publicly traded company on the Bahamas International Securities Exchange, just as it used to be on the New York Stock Exchange..

“Why are Bahamians any less entitled to hold a piece of their country?”

The GBPA was initially listed on the NYSE, prior to being taken private by the late Sir Jack Hayward and Edward St George.

Tribune Business previously revealed that BlackRock, the world’s largest asset manager with $4.5 trillion under management, had been in negotiations to acquire 100 per cent of the GBPA and Port Group Ltd from the Haywards and St Georges.

While the deal appeared to have been stymied when two of the three Hayward trustees in favour of it were removed, Tribune Business understands that BlackRock has not been completely deterred, and that it remains in contact with the GBPA’s owners.

Mr Smith said Freeport did not know the ‘opportunity cost’ of the previous failure to advance and consummate the BlackRock deal.

“This is the problem. Freeport has been pregnant with opportunity for decades,” he told Tribune Business.

“Had it not been for Government interference, and selfish promotion of their self-interests by the Hayward and St George families, we would have been light years ahead in growing Freeport’s economy.”