The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

An outspoken QC has urged the Government to speedily “nationalise” the Grand Bahama Port Authority (GBPA), arguing: ‘We’re dealing with a $100 billion, not $3.5 billion, investment here.”

Fred Smith QC, the Callenders & Co attorney and partner, called for the Christie administration to purchase the GBPA at ‘fair market value’, then devolve its quasi-governmental and regulatory powers to a ‘local authority’ owned by its 3,500 licensees and other Freeport stakeholders.

He warned that it was essential that the Government move with haste, given that the latest bout of family in-fighting at the GBPA had the potential to “kill Freeport”.

Tribune Business exclusively revealed last week how the late Sir Jack Hayward’s children and grandchildren had succeeded in persuading the Supreme Court to appoint Judicial Trustees to take over their father’s trust.

Ex-financial services minister, Ryan Pinder, and his Deltec Bank & Trust colleague, Paul Winder, have thus take over both the ‘Sir Jack Hayward Discretionary Settlement’ and Seashells Investments, the entity that ultimately owned Sir Jack’s 50 per cent stake in the GBPA and its Port Group Ltd affiliate.

Their appointment has stemmed from a “battle for control” of the late Sir Jack’s trust and estate, which has pitted his children and grandchildren against his long-time companion, Patty Bloom, and her children.

The fight, which has eerie similarities to the four-year saga which divided the St George family, the Haywards’ fellow GBPA shareholder, thus threatens to paralyse both the latter’s 50 per cent stake and decision-making/investor confidence in Freeport.

“It’s time for the Government to nationalise the shares of the GBPA,” Mr Smith told Tribune Business in response.

“Freeport, and the 60,000 residents and businesses, cannot survive another five years of internecine warfare between aristocratic children who are not businessmen, and not equipped to run a quasi-governmental authority.”

Many observers, especially the 3,500 GBPA licensees and Freeport residents, are likely to be uneasy over Mr Smith’s call for Government intervention.

They will likely see any GBPA purchase by the Government as a prelude to Nassau taking back control over Freeport’s daily affairs - something many will want no part of.

However, Mr Smith explained that he saw the Government acting merely as a facilitator - purchasing the GBPA’s shares from the Hayward and St George families, and then devolving its quasi-governmental and regulatory powers to a ‘local authority’.

Such an entity, he added, is provided for in the 1968 amendment to the Hawksbill Creek Agreement, which also requires that any amendments to it be approved by 80 per cent of the licensees.

“We saw how five years of family warfare left Freeport after Edward St George died, and we now have a repeat performance in the Hayward family,” Mr Smith told Tribune Business.

“This is the perfect time for the Government to take the shares of the GBPA and, as required by the constitution, to pay a fair price for it.

“And, after it’s acquired, to do the right thing by the licensees and landowners of Freeport, and put the shares into a local authority as required by the 1968 Hawksbill Creek Agreement,” he added.

“We would then have a stake in our future, and be able to manage our future, by being responsible for it, and then we would see Freeport boom. There is a real opportunity for Bahamians and licensees to take back Freeport from these childish, feuding families.”

Mr Smith said Freeport’s scale and importance to the Bahamas required the Government to move with the same speed that it displayed in responding to Baha Mar’s Chapter 11 filing.

Asked what would happen if the Government did nothing, he replied: “It’s going to kill Freeport.

“We can’t survive another five years of feudal infighting. Just as we saw with the first five years, people [investors] won’t touch Freeport with a 10-foot pole. Legitimate investors will run from Freeport.

“For once, the Government need to take swift action, as they did with Baha Mar,” Mr Smith continued. “We’re not dealing with a $3.5 billion investment; here we’re dealing with a $100 billion one.

“The infrastructure and value of Freeport to the future of the Bahamas is incalculable. It couldn’t be replicated.”

Mr Smith criticised successive PLP and FNM administrations for their “ignorance and lack of vision” for allowing the late Sir Jack and his business partner, Edward St George, to turn the original concept of Freeport and the Hawksbill Creek Agreement on its head.

The GBPA, he explained, was conceived as a publicly-traded company listed on the New York Stock Exchange (NYSE). Yet the duo were allowed to privatise and de-list it, and turn the Port Group of Companies into a profit-driven machine.

This, Mr Smith said, was achieved by “asset-stripping” the GBPA and transferring its infrastructure assets into its Port Group Ltd affiliate. Sir Jack and Mr St George then entered into joint ventures with international investors over these assets, most notably with Hutchison Whampoa.

These assets include the likes of the Grand Bahama Development Company (DEVCO), Freeport Harbour Company, Grand Bahama International Airport Company and Sanitation Services.

Mr Smith, who as the GBPA’s former external counsel had a front row seat for this ‘asset stripping’, said: ‘The Hawksbill Creek Agreement never anticipated that the shares of the GBPA would be a private, for-profit ownership until 2054.

“The whole construct fell apart after Edward St George and Sir Jack Hayward purchased the shares from Wallace Groves, and with the connivance and approval of the PLP government, privatised the Port Authority. It has been downhill ever since.”

Mr Smith said even the Government’s 12.5 per cent equity stake in the GBPA was lost in the melee.

He added that the GBPA’s licensees and other Freeport stakeholders were “completely disenfranchised” and lost “the dream of the magic city”.

“The shares in the Port Authority are almost worthless at this stage because all the assets have been stripped from the GBPA,” Mr Smith told Tribune Business.