By Malcolm Strachan
THERE are bad deals and then there are ones that are historically egregious – those that leave us perplexed how one could possibly agree the terms involved. The raw deal made for the Grand Lucayan definitely fits the bill as one of the worst set of negotiations ever performed by a Bahamian government.
The Bahamian people, even more confounded after listening to the prime minister’s address on Thursday, are no doubt fearful of what may come. These fears are justified, as the prime minister and company are proving to be serially poor negotiators.
The controversial Oban deal, which the prime minister was nearly run out of town for, raised many red flags. Yet that in some ways was not even as alarming as the government’s decision to purchase the Grand Lucayan under the shocking terms it has agreed to.
While the prime minister continues to tout the $65m purchase price as some major victory, he could not be more disingenuous. During his address, the prime minister outlined the costs the government would have had to bear if Paul Wynn purchased the resort – over $159m in subsidies and concessions.
His attempt to portray Paul Wynn as the “antagonist businessman trying to swindle the Bahamian people” and the government as the “protagonists purposed to save the country” fell flat.
What Prime Minister Minnis - no doubt with complete intention - omitted is that the $65m price tag to purchase the resort is just the tip of the iceberg.
Digging into the specifics, we must be mindful that the initial $30m is being taken from the contingency fund. The government, in a bewildering move, is borrowing $35m from Hutchison Whampoa at a 4 percent interest rate to buy the resort.
If we can pause for a second to let that sink in – what government buys a resort located in its jurisdiction, but borrows more than half of the cost from the seller? Reprehensibly, the prime minister pontificated about how this was in the best interest for all Bahamians. No vision of how jobs are going to be created. Really, no vision of anything, as the government’s plan to protect the jobs of the employees do not go beyond keeping the hotel’s doors open until a more appropriate owner comes along – whenever that will be. Seriously, of all the supposedly smart people in the room, was this really the best that they can come up with?
The prime minister’s attempt to liken the Grand Lucayan purchase to former US President Barack Obama’s auto industry bailout nearly a decade ago is also a mischaracterisation. The former president did not assume ownership of the industry. He merely provided an injection of money. Minnis’ apples-to-onions comparison could have only made sense had the government been using its resources to fund marketing and airlift initiatives to increase heads in beds – all of which the Ministry of Tourism already does.
Seemingly, the government’s sole goal here is to pat itself on the back for delivering on something it promised on the campaign trail.
It is embarrassing, to say the least.
Mounting costs inclusive of stamp tax, interest on the loan, employee backpay, union obligations and severance packages, costs for operational losses, legal fees and inventory costs undoubtedly have Hutchison laughing all the way to the bank.
We would not be surprised if the government ends up purchasing the inventory that Hutchison Whampoa has so boldly demanded to keep.
Conservatively, we ought not be surprised if these ballooning costs end up doubling what the government has so disingenuously indicated on the face of the sale.
Particularly, once renovations begin, it may not be long before there are new revelations surrounding this gigantic sinkhole of an expense.
Surely, the government has done a number on the Bahamian people with this latest gaffe.
While Deputy Prime Minister Peter Turnquest, during his contribution to Parliament, indicated the costs to renovate the resort would total nearly $39m, we must ask why such a huge disparity between the government’s and the Wynn Group’s assessments?
Paul Wynn said in August the resort would cost in the neighbourhood of $110-120m to open the properties. That is around a 65 percent increase from what the government has forecasted.
Unfortunately, based on the government’s amateurish handling of this sale and lack of transparency, chances are the Wynn Group’s cost analysis is probably the most accurate. After all, as a business with expertise in the real estate arena, whereas the government does not, the likelihood is much higher they know what they are talking about.
While the government is obviously willing to give away the farm to inject Grand Bahama with a stimulus, the track record it is creating will not bode well for future negotiations with other foreign investors. The stench of desperation permeates off this government and it seems it was obvious to the previous owners.
Although the prime minister has said no investor will “put a gun to his head” on the resale of the resort, he certainly has done a poor job of explaining how he allowed the government to be strong-armed into the purchase of the Grand Lucayan.
Too often, the prime minister speaks to the electorate as if we are of low intelligence. Equating lack of support for this appalling deal to lack of support for Grand Bahama has to be one of the most moronic statements ever uttered by a prime minister. Surely, he has to know that.
That is why it is so unfortunate to see the prime minister continuously reach into his playbook to either preach “gloom and doom” in hopes to scare us into rallying behind him or bemoan what the previous administration did as a precursor to his actions.
Let’s face it. This government obviously lacks vision, creativity and is out of its wits. In trying to understand the government’s reasoning to follow through with its negotiations with Hutchison Whampoa, perhaps the central focus was to prevent what the prime minister calls an “economic collapse” of Grand Bahama.
However, if we are to be honest, the collapse did not begin yesterday. The government had ample time to come into office with a progressive plan for Grand Bahama. Instead, we are watching them fumble through amateur hour – unable to make the Bahamian people believe we are being led by a visionary government.
To be fair, if the government truly believes what they are doing is the right course of action, then they should have published the economic analysis that showed purchasing the Grand Lucayan to be the best path forward. That is what should have been done, rather than patronising the electorate like we are a group of children.
Because as it stands, everything the government has said has pointed to absolute ineptitude as it pertains to this purchase.
Hutchison Whampoa’s clinic on how to successfully outsmart a Bahamian government was definitely a grand slam for the Chinese in our country. Successive administrations continue to exhibit a complete lack of fortitude when it comes to being tough on China.
While the prime minister may bluster about telling foreign investors where their requests can go and “how deep”, he certainly sung a much higher pitched tone as the government was being shafted on this deal.
With yet another burden on the taxpayers as a result of this purchase and costs all but certain to increase, the Minnis administration may have placed another nail in their political coffins.