The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A key City Markets pension fund asset has allegedly been “saddled” with an unpaid $305,000 tax liability, amid ongoing disputes over whether it was sold via two separate real estate transactions.

Whanslaw Turnquest, City Markets’ former chief inventory control officer, alleged in a May 12, 2016, affidavit that no real property tax has been paid on the defunct supermarket chain’s former East-West Highway headquarters building for eight years.

As a result, a $304,905 tax liability has built up on what could be one of the best recovery sources for hundreds of City Markets pensioners, who have been waiting for more than four years to recover their retirement monies.

A Department of Inland Revenue tax certificate, dated May 9, 2016, and attached to Mr Turnquest’s affidavit, shows that $259,342 worth of principal, and $45,604 in surcharge penalties, has accumulated since 2009.

Bahamas Supermarkets, City Markets’ operating parent, is listed as the East-West Highway property’s owner, rather than the pension fund, which is known as the Bahamas Supermarkets Ltd Profit Sharing Retirement Plan.

The dates on the tax certificate thus indicate that City Markets’ last two majority owners, the ill-fated BSL Holdings buy-out consortium, and Trans-Island Traders, the vehicle owned by Sir Garret ‘Tiger’ Finlayson and his family, are responsible for failing to make the necessary payments prior to the company’s 2012 demise.

And court documents obtained by Tribune Business suggest the former headquarters building is now embroiled in further controversy relating to two real estate transactions that were supposed to have sub-divided the property and sold it.

Mr Turnquest, in his affidavit, alleged that Trans-Island Traders and the Finlaysons, had failed “to advance settlement” of the City Markets pension fund saga, and the payment of what is due to all beneficiaries.

“For example, they claim that the East-West Highway property has been conveyed to two of their companies, and that they now want to convey it back to the [pension fund] trustees or to the plaintiffs [beneficiaries],” Mr Turnquest alleged.

“They have divided the property and effectively want to sell the parking lot portion, and would like to convey to the plaintiffs a non-parking property for trailers and other vehicles.”

Documents seen by Tribune Business suggest that the East-West Highway headquarters property was divided into two, with the buildings split off from the back parking lot and delivery area.

A January 16, 2015, conveyancing shows the latter area being sold by the pension fund’s then-trustees, Christine Turnquest-Knowles and Constance Rolle, to a company called Cellars Property Holdings.

Other documents identify the latter entity as a subsidiary of Associated Bahamian Distillers and Brewers (ABDAB), the company controlled by the Finlayson family.

In return, for selling the property to Cellars Property Holdings, which was subsequently to be renamed BSL Property Ltd, the conveyancing shows the City Markets pension fund was to gain shares worth $600,000 in a company called Trinity Ltd.

That, too, is another ABDAB subsidiary, which acted as a holding vehicle for its equity interest in the Trinity Plaza shopping centre on West Bay Street.

Mr Turnquest, who heads the Bahamas Supermarkets Former Employees’ committee, alleged in his affidavit that the Cellars Property Holdings deal - and sub-division of the headquarters property - was designed to leave the pension fund holding the real property tax liability.

“The vacant portion they have allegedly taken for themselves or their company was divided to ensure that no real property tax is attached to it,” he claimed.

“However, the portion with the warehouse, which they want to transfer back to the ownership of the plaintiffs [beneficiaries] is saddled with real property tax.”

Mr Turnquest alleged that Rouschard Martin, the pension beneficiaries’ attorney, had for months been requesting information on whether a real property tax liability was attached to the former City Markets headquarters building.

He added that it was only through their own research, and efforts with the Department of Inland Revenue, that the true picture emerged.

Tribune Business previously revealed that City Markets’ last principals, the Finlayson family, exchanged the pension plan’s interest in the former company head office - its main asset - for preference shares in their Associated Bahamian Distillers and Brewers (ABDAB).

The deal effectively switched the security for the former supermarket chain’s pension beneficiaries from illiquid real estate assets that have proven “impossible” to sell to a more liquid investment.

With no buyer found for the former City Markets head office on East-West Highway, the pension beneficiaries - via the trade union that represented the majority of the former workers - were in theory given the opportunity to receive dividend payments on those preference shares and, potentially, a cash payout of everything owed to them.

However, Tribune Business has seen e-mails from Mark Finlayson, ABDAB’s president, dated Friday, September 18, 2015, offering to rewind and reverse this deal.

This seems to have been in response to pressure from the City Markets pension fund’s current trustees, who were questioning the validity of the transactions involving the former headquarters building, and whether the conveyances had been recorded.

They were taking the position that the property is still owed by the pension fund, via the retirement plan’s trust.