Govt Knew Of Wells Loi Before Signing


Tribune Business Editor


Key members of the Christie Cabinet knew in advance that the Government was set to “issue” the controversial ‘Letter of Intent’ (LOI) that led to the downfall of former parliamentary secretary, Renward Wells.

Michael Halkitis, minister of state for finance, informed the Inter-American Development Bank’s (IDB) Bahamas country representative on May 26, 2014, that “the Government has issued an initial LOI” to Stellar Energy.

Mr Halkitis’s letter is dated some five to six weeks BEFORE Mr Wells signed the LOI with the group proposing a $600-$650 million waste-to-energy plant at the New Providence landfill, an action that ultimately resulted in his removal as parliamentary secretary in the Ministry of Works.

The document, and others obtained by Tribune Business, raise serious questions as to ‘who knew what’ within the Christie administration regarding the LOI’s drafting and signing.

Several Cabinet ministers, namely Philip Davis, Mr Wells’ immediate ‘boss’ at the Ministry of Works, and Kenred Dorsett, minister of the environment, both denied any knowledge of the Stellar Energy LOI, which was dated July 4, 2014, when questioned about it a week later.

Mr Halkitis has never commented on the matter, and was not among those asked about the LOI when the controversy first surfaced in mid-July 2014.

However, Tribune Business is in possession of two letters, bearing his signature, which show at least one Cabinet Minister was aware of both the LOI’s existence pre-signing, and Stellar Energy’s meetings and negotiations with the Government.

Mr Halkitis’s May 26, 2014, letter to Astrid Wynter, the IDB’s then-Bahamas country representative, deals exclusively with Stellar Energy’s proposal for a 70-80 Megawatt (MW) waste-to-energy plant to be located at the New Providence landfill on Tonique Williams Highway.

“The Bahamian government is considering the inclusion of waste-to-energy as a supplementary platform in the overall reform of the energy sector of the Commonwealth of the Bahamas,” Mr Halkitis wrote to Ms Wynter.

“Waste-to-energy has been recognised by the Bahamas government as a fundamental part to achieve the overall goal of the energy reform. To this effect, the Bahamas government has issued to SE [Stellar Energy] Group an initial LOI.”

The LOI was even attached to the letter, for Mr Halkitis tells Ms Wynter to “see attachment A” in reference to the document.

The ‘attachment’ and last sentence, coupled with the date of Mr Halkitis’s letter, are highly significant and raise numerous issues that the Bahamian people have yet to receive answers to.

Given that a Cabinet-level minister was seemingly aware of the LOI, it raises immediate questions as to whether Mr Wells was ‘hung out to dry’ and made a ‘scapegoat’ or ‘fall guy’ when the controversy broke. And why no one in government came to his defence.

The former parliamentary secretary, who subsequently ‘crossed the floor’ to join the Opposition, was ultimately removed from his post for exceeding his authority, because he did not have the power to bind the Government and its Cabinet.

However, as an experienced engineer and Ministry of Works employee before entering politics, many observers queried why Mr Wells would have acted as he did, given that he would have been fully aware of government protocol.

Mr Wells told the House of Assembly that he stepped aside because he had received no “written authorisation” to sign the LOI - implying that he was told verbally, or thought he had been told verbally, to do so.

Highly-placed government sources told Tribune Business at the time that the LOI emerged that there was “more to the situation than meets the eye”, and that “more will come out”.

They suggested that Mr Wells had been caught in the middle of, and fallen victim to, a ‘power struggle’ within the Government between two factions backing different ‘solutions’ for the New Providence landfill - one supporting the Stellar proposal, and the other the offer by current operator, Renew Bahamas.

Some sources have suggested that the LOI was deliberately leaked by the faction backing Renew Bahamas, with Mr Wells’ role used to manufacture a controversy that was intended to ‘sink’ the Stellar bid, and ‘play’ the media and Bahamian public.

Mr Halkitis’s letter to Ms Wynter, which purports to inform the IDB on the Government’s alternative energy policy, indicates the Christie administration was in early to mid-2014 amenable to the Stellar Energy proposal.

“The proposal by Stellar Energy is intended to meet all the requirements of the Bahamas Government,” the minister of state for finance wrote.

He listed these as “the quickest way to produce additional electricity”, and the upgrading of energy infrastructure and lowering of prices to consumers within 18 months.

Further goals, Mr Halkitis said, were the

“immediate start” of waste management and landfill remediation/mining, leading to the city dump’s “total elimination”.

The Minister also told Ms Wynter that Stellar required $40 million in financing to complete its engineering studies on the plant’s feasibility, and develop the project, adding that he had been informed the company “has secured an initial 12-months loan offer in the same amount”.

Stellar, Mr Halkitis added, was seeking an IDB funding guarantee in the same amount, with a suggested formula attached to his letter. The document also reveals that Stellar submitted its proposal to the IDB on December 20, 2013, and gave a presentation on the project in Nassau to the bank’s officials on March 13, 2014.

Another letter from Mr Halkitis, this time dated February 10, 2014, makes clear he is aware of Stellar’s talks with the Ministry of Works, as it references a December 12, 2013, letter to the company from Mr Wells.

“We wish you success in your efforts to fund this ambitious and necessary waste-to-energy undertaking for the benefit of our beloved Bahamas,” Mr Halkitis added.

That December 12, 2013, letter, which has also been seen by Tribune Business, is addressed to Allen, Allen & Company and the law firm’s principal, former FNM Cabinet minister, Algernon Allen.

Describing waste-to-energy as a “viable means” of lowering electricity costs, Mr Wells told Mr Allen: “From the various constructive meetings which the Government of the Bahamas has had with the principles of Stellar Energy, and their partners and advisers, Stellar Energy has been accepted as a bona fide and globally respected waste-to-energy provider, and is of significant interest to the Government in that regard.

“Further, Stellar Energy’s proposal is under serious consideration by the Government of the Bahamas, and we look forward to the results of the [engineering] studies.”

That letter, and the recent legal action filed by Stellar over its inability to proceed with its project, directly challenge Mr Allen’s assertion to Tribune Business on July 22, 2014, that he was

“not the attorney[s] for Stellar Energy”.

This newspaper was subsequently told that Mr Allen fulfilled the roles of attorney and adviser to the company, although he may have left the former role by that stage.

However, Mr Allen’s law firm, and Frank Forbes of Sigma Holdings, who is referred to as Stellar’s “chairman” in several documents seen by Tribune Business, are both named as defendants in the company’s recently filed legal action.

They appear to be the “private individuals, who claimed to represent the Bahamas Government and who have been facilitators in connection with the project” referred to in the action.

It alleges that Stellar was promised a June 30, 2014, Memorandum of Understanding (MoU) would be executed by Deputy Prime Minister Philip Davis and issued to the company, allowing it to proceed. This has not happened.

The LOI saga also raises issues as to whether the ‘left arm knows what the right arm is doing’ in government, given that Stellar appears to have been negotiating with elements of the Christie administration outside the then-BEC reform process - which was supposed to have been the sole, exclusive path for overhauling the energy sector.

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