The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Philip Ruffin yesterday slammed the Minister of Tourism for publicly suggesting he and his companies still owe casino taxes to the Bahamas Government, urging him to “desist” from this position.

The hotelier, who previously owned the Wyndham and Nassau Beach Resorts, plus the Crystal Palace Casino, reiterated his position that $12.1 million in outstanding gaming taxes were paid when the properties were sold to Baha Mar in 2005.

A release issued by Davis & Co, Mr Ruffin’s Bahamian attorneys, said the Government should have records showing that his companies “fully discharged” their obligations via the purchase price received from the Izmirlian family.

Documents attached to the release reveal that Mr Ruffin’s Bahamian interests owed the Government and its agencies, plus the hotel pension funds, nearly $17 million when the Bah Mar deal was struck in early 2005.

The release, signed by Philip McKenzie, Davis & Co’s managing partner, argued that the issue had become “political fodder” with numerous “unfounded statements” being made about his client.

The statement on Mr Ruffin’s behalf was issued after Obie Wilchcombe, minister of tourism, said earlier this week that a review of the Gaming Board’s records showed his companies still owed a multi-million dollar sum in unpaid casino taxes.

Mr Wilchcombe said the Government now intended to request payment from Mr Ruffin in writing, and provide him with records to support its case. He added that the billionaire investor had never failed to live up to his responsibilities.

Mr Ruffin, though, struck first yesterday, the Davis & Co statement saying: “Mr Ruffin encourages the Minister to desist from statements that suggest that he owes casino taxes.”

K P Turnquest, the FNM’s deputy leader, who planned to raise the issue of Mr Ruffin’s taxes, and whether he still owes the Government, in the House of Assembly yesterday afternoon, said of the release: “That’s interesting because the Auditor General’s report still shows there’s a sum outstanding.”

However, Mr Wilchcombe stuck to his guns yesterday, telling the House of Assembly under questioning from FNM MP, Loretta Butler-Turner, that Mr Ruffin’s interests still owe outstanding casino taxes.

Mr Wilchcombe’s comments, and Mr Ruffin’s rebuttal, came after Tribune Business exclusively revealed earlier this month how the Auditor-General’s report for the 2013-2014 fiscal year showed the Government had revised upwards its estimates of the hotelier’s outstanding casino taxes.

The Auditor General’s report disclosed that the true sum owed by Mr Ruffin had increased by $2.147 million, from $5.13 million to $7.277 million, as a result of a “review” by the Government’s own Revenue and Tax Departments.

The increased sum came after Prime Minister Perry Christie’s assertion in the House of Assembly on October 8, 2014, that the Auditor General’s 2011-2012 fiscal year report was incorrect on the billionaire’s outstanding tax balance.

The Prime Minister suggested then that Mr Ruffin’s outstanding casino tax balance had been settled when he sold the Wyndham and Crystal Palace casino to Sarkis Izmirlian and Baha Mar.

Mr Christie said at the time: “Just let me put on the record that at the time of the purchase of those facilities, all taxes would have been paid. All taxes that were legally due to the Government would have been paid.

“That is the assertion I make. I am going to be able to put it on the record. I am going to speak to Ministry of Finance officials just to be able to confirm and verify that point.

Mr Wilchcombe’s comments indicate that the ‘verification’ exercise resulted in a Ruffin casino tax bill that was higher than previously thought - something that the hotelier vehemently denied.

The near-$5 million discrepancy between the $12.1 million cited by Davis & Co and the Auditor General’s $7.277 million will also interest observers.

All this suggests that that someone, somewhere, has their calculations wrong. And the different positions effectively pit Mr Ruffin, the Prime Minister and the Deputy Prime Minister’s law firm against their Cabinet colleague, Mr Wilchcombe, the Auditor General, and Gaming Board/Ministry of Finance officials.

Adding further fuel to the situation is that Mr Ruffin is a former client of both Mr Christie and Deputy Prime Minister Philip Davis when they were in private practice. The latter lead the legal team handling the Cable Beach resort sale.

He has maintained close ties to both men and the Bahamas, frequently visiting this nation even though he no longer has any investments here.

Davis & Co, which acted for Mr Ruffin in the Baha Mar deal, said that “a condition of the closing” mandated by the Government was that all outstanding taxes and fees had to be paid prior to their client collecting the purchase price.

Both Mr Ruffin and Baha Mar were said to have selected “a reputable American title firm” to act as escrow agent. It was made responsible for receiving the purchase price from the Izmirlians, then paying off any outstanding liabilities such as outstanding taxes, prior to Mr Ruffin receiving the remaining balance.

The Davis & Co statement admitted that casino taxes were “one point of contention” between Mr Ruffin and the Government, as all sides sought to determine the taxes and fees owed to the latter.

It attached a May 5, 2005, letter sent to Baha Mar’s John Forelle by Deepak Bhatnagar, the financial advisor to the Hotel Corporation of the Bahamas, which then acted as casino licensor.

The letter, sent on behalf of the Corporation’s managing director, Dr Baltron Bethel, asked Baha Mar to reduce the sum being held in escrow to cover Mr Ruffin’s outstanding liabilities to the Government to $16.815 million.

This reduction, Mr Bhatnagar said, resulted from “further revisions” to the figures by the Gaming Board and the Bahamas Electricity Corporation (BEC). They dropped Mr Ruffin’s debts to $12.1 million and $150,000, respectively.

Davis & Co also issued a breakdown of the agreed $16.815 million bill owed by Mr Ruffin’s companies when the Baha Mar purchase was consummated.

While casino taxes accounted for almost 75 per cent, Mr Ruffin’s Cable Beach interests also owed $1.677 million in outstanding National Insurance Board (NIB) contributions; $625,204 in real property taxes; $379,722 in hotel licensing fees; and $392,331 and $51,000 owed to the Bahamas Telecommunications Company (BTC) and Water and Sewerage Corporation.

Another $1.44 million was outstanding in hotel industry pension fund contributions.

This debt listing is instructive, because it gives the Bahamian people insight into how some investors - foreign and Bahamian - are allowed to run up massive debts to the taxpayer and Public Treasury, effectively becoming a burden on the rest of society.

Davis & Co, on Mr Ruffin’s behalf, yesterday said the full $16.815 million sum was paid to the Government, with their client then receiving the balance of the purchase price.

“The Government, having agreed the taxes and fees owing by the sellers [Mr Ruffin’s companies] to government, and having instructed the buyers to withhold such amount, now says it will pursue further collection of monies from the sellers,” the statement said.

“For the record, Mr Ruffin categorically denies that he or the sellers [his companies] owe the Government of the Bahamas any money.....

“It is unfortunate that this very simple commercial transaction, which is well documented, has become a matter of political fodder,” Davis & Co added.

“It should be clear based on documents that should be in the Government files that the sellers fully discharged their duties at closing, and owe no taxes and fees to the Government of the Bahamas or any government entity.

“For whatever curious reasons, politicians continue to make unfounded statements about Mr Ruffin and other private citizens and bona fide investors, without regard to the facts or the negative impact of such statements.”