By NEIL HARTNELL
Tribune Business Editor
The Prime Minister "aggressively" intervened to prevent Hutchison Whampoa "looting" the Grand Lucayan on the eve of the Government's takeover, Tribune Business was told yesterday.
Michael Scott, chairman of Lucayan Renewal Holdings, the Government-owned special purpose vehicle (SPV) that now controls the resort, confirmed to this newspaper that the Grand Lucayan could have been rendered inoperable by the former owner stripping it of key assets.
Arguing that Hutchison Whampoa's actions represented "a fundamental breach of contract", and could have resulted in a legal battle, Mr Scott said the Government's prompt action - led by Dr Minnis - had "avoided that happening".
He added that himself and other Lucayan Renewal Holdings directors had been "horrified" when tipped-off to what was occurring on the night of September 10th, just hours before the Government - through the SPV - was to assume operational and management control at Freeport's anchor property.
Among the assets involved were golf carts and service vehicles, plus a host of IT-related devices such as laptops, ipads and computer monitors, which Hutchison Whampoa intended to redeploy at its other corporate offices in Freeport.
Mr Scott, responding after Chester Cooper alluded to the dispute during his House of Assembly, confirmed the Opposition's deputy leader was "correct" in what he had said about Hutchison Whampoa's actions.
"What they did was they took the view, some lawyer, that the handover was going to occur at midnight on September 10/morning of September 11," the veteran attorney told Tribune Business. "They were in a hurry to get out on September 11, so we moved to take over management and control.
"The way in which they interpreted the [sales] agreement was they could take out whatever they wanted. In the evening they proceeded to de-camp with the golf carts, the service vehicles that you run linen, towels and dry cleaning around in, certain other service vehicles, ipads, laptops, cell phones and monitors for desktop computers, and relocate them for use in other businesses and offices established in Freeport."
Asked whether Hutchison Whampoa's actions could have potentially crippled the Grand Lucayan's operations on the first day of government control, Mr Scott replied: "How does a golf course function without golf carts? Let's start with that."
The Lucayan Renewal Holdings chairman said himself and another director, Willie Moss, analysed the sales agreement "very carefully" once alerted to what was happening to determine whether it permitted Hutchison Whampoa to remove these assets.
"We were horrified when tipped off about it," he told Tribune Business. "We looked at the agreement, identified the paragraphs which said where they couldn't do that. It was a breach of contract.
"We notified the Attorney General and the Attorney General's Office, they met with the Prime Minister, and he had a conference call with Hong Kong on the morning of September 11. The Prime Minister spoke to Raymond Chow [a senior Hutchison Whampoa executive], said they were dealing with a sovereign state and that their behaviour was unbecoming of negotiations between Hutchison and a sovereign state. He undertook to put the property back, which they did."
Mr Scott continued: "When I got up there on the 12th, I called in and spoke to Graham Torode, who is Hutchison's local representative in Freeport, and formally complained on behalf of the Board and Government of the Bahamas. I got his undertaking that everything taken had been replaced."
The Lucayan Renewal Holdings chairman said the Prime Minister's involvement, and decisive action, had resolved the matter and prevented an already-strained relationship with Hutchison Whampoa from deteriorating further.
"To be very clear about this so there is no question, no ambiguity and no doubt, the Prime Minister was advised by the Board that they were about to loot the property, and he acted immediately and aggressively to avoid that happening and head it off," Mr Scott told Tribune Business.
"It was addressed and resolved very quickly. Had they done it, we would have had to commence legal proceedings for a fundamental breach of contract. It was my responsibility, and I was not going to permit that to happen."
The episode, though, is unlikely to endear Hutchison Whampoa to many Bahamians, especially those on Grand Bahama, given the favourable sales terms it appears to have obtained from the Government.
Besides not sharing the burden, and being relieved of having to pay $3.25m in Stamp Duty on the real estate sale, the Hong Kong-headquartered conglomerate has been allowed to keep the $80-$85m in insurance proceeds received on its Hurricane Matthew claim. This is despite its decision not to invest a cent in repairs estimated at $35m.
Hutchison Whampoa is also receiving $2m from the Government in return for not shutting the 196-room Lighthouse Pointe property down from August 1, in addition to interest at 4 percent on the seven $5m bond tranches that will repay the $35m it is providing in vendor funding to finance the purchase.
Mr Scott, meanwhile, said the formal sales prospectus that will be issued to potential Grand Lucayan buyers remains "in train". He added: "We have to agree on who's going to do the appraisal, who's going to do the marketing. I'm not at liberty to name names."
The attorney also described voluntary separation packages for Grand Lucayan staff as "a work in progress", with all workers receiving their due salary payments in full today.
"We've just had our first payroll since takeover," Mr Scott said. "The best news I can give you is it passed uneventfully, which means everybody got paid. I gave my personal undertaking it would happen, and it's happened."