By NATARIO McKENZIE
Tribune Business Reporter
The Opposition's deputy leader yesterday estimated that the Government's Grand Lucayan purchase will ultimately cost Bahamian taxpayers "at least $100m", branding the deal "ill-advised".
Speaking in the House of Assembly yesterday, Chester Cooper, pictured, said the acquisition was effectively a done deal as $30m had already been paid to Hutchison Whampoa, the seller.
He argued that the purchase "seems rushed, ill-advised and a slap in the face, and said: "The Government appears to be most disingenuous in how it has framed this deal in trying to explain it to the Bahamian people. I believe this deal will ultimately cost taxpayers at least $100m.
"This resolution is also flawed in that it asks the Government to approve funding of $35m. Where is the resolution to approve the $30m already spent, and the more than $1m already given to Hutchison. Are we going to pretend that is not expenditure?
"Will the Government not come clean with the Bahamian people and seek approval for that spending now, or will it neglect its own commitments to transparency and try to bring a supplementary appropriation bill for that money at some future date, hoping the Bahamian people do not notice? Where is the resolution for the stamp tax on the mortgage the Government has agreed to pay in this lopsided deal? That's another $3.5m."
Breaking down his $100m estimate, Mr Cooper said: "The Government has already paid $10m, then $20m, now it will pay another $35m on mortgage, with interest, and that is $65m. Is there stamp tax on this sale? If so, we can assume from the negotiations so far that the Government has graciously relieved Hutchison from paying its fair share of that and so that's another $6.5m.
"Then there's the interest on the bond; that's another $2.8m, if we're being conservative. Then there's the stamp tax on the mortgage we know the Government has agreed to pay - that's another $3.5m. Employee obligations that the Government has magnanimously agreed to shoulder the responsibility of are at least another $8m for back pay and union obligations and severance. Again, I'm being conservative.
"The Government will pay another $2m, being extremely conservative, to subsidise Hutchison's losses until the sale closes. Let's not forget this resort is losing millions of dollars every month. I will tell you that I think the closing will take longer than anticipated and it'll end up being over $3m."
Mr Cooper continued: "Since we've established that the hotel loses $1.5m per month, let's multiply that by the six months the Government actually believes it will take to find a buyer for the property, plus another two months to close the deal. That's another $12m.
"That's assuming that the Government doesn't feel gracious with the new buyer and cover all the taxes and costs again. Then there's legal fees. I think we can safely say that Higgs and Johnson is not working on this pro bono. That's 2.5 percent of the transaction. That's another $1.6m. To exchange the money given to Hutchison to US. currency with the VAT and stamp tax for that - another half a million.
"Hutchison also told the Government they can't have the napkins, or the plates or the cleaning supplies or the toilet paper in the resort that they're purchasing for $65m. So they'll need to replenish that. Let's be conservative again and say that's another half a million dollars. We're well above $100m at this point."
The Exuma MP suggested there are "many more creative and less expensive ways for the Government to help the employees of Grand Lucayan, and the vendors around the resort and the people of Grand Bahama".
He added: "Perhaps the Government could have subsidised the losses of the hotel until a buyer could be found. It's paying nearly $2m to Hutchison to subsidise Lighthouse Pointe now anyway.
"Perhaps the Government could have instituted a social welfare programme tailored to the employees after it forced Hutchison to honour the union's agreement and pay out severance according to our laws. Perhaps the Government could have insisted that in order for Hutchison to continue to receive the level of concessions it does, then it would have to actively facilitate the sale of this property."
Mr Cooper further queried: "Why didn't the Government just agree to cover the losses on the property rather than spending $30m cash, without telling the public, and incurring an additional $35m debt that it could least afford?
"If this property is to quickly change owners, to do a flip, then why is the Government inserting itself in the middle of what should be a private sector transaction? If there is a buyer to flip the property to then why doesn't the Government just bring the parties together and facilitate that transaction?"