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Business Bites: Right Decision - Now It’S All About Delivery

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Richard Coulson

By Richard Coulson

Last October the Ministry of Tourism, noting that 3.5 million passengers annually were visiting Nassau via several cruise lines, issued a detailed Request for Proposal (RFP) for “an upgrade and revitalisation of the downtown Nassau tourism product”. Although we are statistically the largest Caribbean destination, it was common knowledge that we ranked low in guest satisfaction and tourist spending.

The government RFP demanded not simply physical improvement and expansion of the Prince George Wharf complex, but “upland redevelopment for improving the guest experience”. In other words, the winning bidder must land more passengers and also show how to entertain them. Three bids were submitted by the deadline of December 7, each meeting the RFP’s required capital commitment of at least $100 million, which it would operate for a concessionary period of 25 years.

Last month the Evaluation Committee headed by Director General of Tourism Joy Jibrilu made its recommendation to Cabinet, and now government has announced the winning bidder: the UK company Global Ports Holding (GPH), controlled by Turkish principals but publicly quoted on the London Stock Exchange

GPH started business with tourist ports in Turkey and the Aegean and expanded to major European tourist travel hubs such as Barcelona, Lisbon and Venice. Its only Caribbean ports to date are the recently opened Havana and Antigua sites. It sees Nassau as its major entry into this hotly contested cruise market and has been studying our city for over a year, having made an unsolicited proposal well before the RFP was announced.

Since GPH is a public company issuing detailed annual reports, its financial picture and track record are transparent, as are details about more than a dozen ports it manages, extending as far as Singapore. It’s clearly the world’s largest enterprise specializing in the shoreside handling of cruise-line passengers. But it should not be forgotten that two other competent bidders entered the lists against this formidable competitor.

Port of Nassau Partnership was composed of two elements: the Bahamian company Cruise Ports International with a 60 percent stake and Cruise Lines Group, with 40 percent, a coalition of the four leading cruise lines serving Nassau, Carnival, Royal Caribbean, Disney, and Norwegian. The local ownership was led by well known retired insurance executive Gerard Strachan who for over ten years has been trying to launch his multi-party “Culture Village” concept . However, more public attention was focused on the possible conflicts of interest posed by the cruise lines’ major role, and Minister of tourism D’Aguilar emphasized this factor in Government’s rejection of this bid.

The other rejected bid came from Nassau Port Partners, carefully constructed by Kenwood Kerr, CEO of financial firm Providence Advisors, administrator of our largest public pension funds. Although technically Bahamian owned and committed to opening a dedicated pier park, this entity had to rely on expertise from foreign-owned contractors like Metro Cruise Services, a California company managing cruise ports on the US east and west coasts, a prize-winning venture but lacking the international scope of Global Ports Holding.

Neither of these two candidates could match the proven management expertise and financial resources of GPH. Its video presentation has been widely seen and has drawn comments from local retailers such as “They were far away the most ambitious of the revitalization project bidders—exactly what downtown has been needing for many years now”—including a dramatic open-air amphitheatre.

To assure substantial local ownership of the project, GPH is partnering with investment bank CFAL in creating a fund to offer participating shares for as little as $1,000, financing a up to 49 percent of the estimated $250 million capital cost.

Of course, nothing is proven until successful execution, but GPH has already dispatched its senior executive Colin Murphy to shuttle between Miami and Nassau, and Minister D’Aguilar is clearly keen to put a feather in his political cap by welcoming a Nassau renaissance long before the next election.

A misunderstanding of history

The ineffable Ms Sam Duncombe has proclaimed she is “more than irritated” by government’s decision to extend to year-end 2020 Bahamas Petroleum Company’s (BPC) licence to drill an exploratory well on its concessions southwest of Andros. The president of activist group Re-earth has often expressed her implacable “NO” to drilling in Bahamian waters. Together with fellow environmental extremists, she cites an apocalyptic risk of oil-spills fouling our beaches and destroying our tourist-based economy.

This time, she simply accuses government of being “duplicitous”, since we had “been told that there would be absolutely no oil drilling”. In fact, no such promise was ever made or even implied. As far as ten years ago when licencees were first negotiated, government recognised they might someday lead to actual production, for the benefit of both BPC and the State.

Ms Duncombe is concerned that by granting this extension, government will be distracted from a higher mission to develop renewable energy. However dilatory the authorises may be in exploiting solar or wind power, they are not in any way hindered by a new fossil fuel licence to BPC. That company alone, with any farm-in partner, will be spending the time and money, not our Treasury or public ministries.

The lady’s long and respected efforts to protect our environment are undermined by her misunderstanding of history and the use of alternative resources.

Boycott of web-shop deposits is intolerable

A brewing dispute between our web shops and our banks is upsetting the usually sedate world of finance. Disputatious words are being exchanged between Gowon Bowe, chairman of our Association of Clearing Banks, and Gershan Major, Director of BGOA (Bahamas Gaming Houses Association). The banks (all except Bank of the Bahamas) are refusing to accept large deposits of cash from the gaming houses.

This leaves Mr Bowe defending one sacred banking principle: the right of any bank to choose its own customers; while Mr Major defends an opposing principle: the right of any lawful business to deposit clean funds in a bank of its choice. The dispute breaks down further: Mr. Bowe claims these deposits may be tainted by funds from money launderers, and it costs too much for banks to exercise due diligence to exclude the bad stuff; while Mr Major claims the web shop customers are shown to be clean and the corporate deposits must be clean too.

To this observer, Mr Bowe’s position is harder to defend, since banks by now should have low-cost systems capable of detecting money laundering. Also, he seems to throw the whole problem back to foreign banks, particularly the three Canadians who are licenced here: their policies exclude web shop deposits and to maintain correspondent banking relationships we must follow their lead.

It occurred to me that since all wagering funds accepted by web shops must be in Bahamian dollars and not foreign currencies, no correspondent banking is needed. Could web shops simply do B-dollar business with our Central Bank, or set up a specialised credit union serving the web shop industry?

However, this would be a complex solution. Much better would be a face-to-face meeting between the clearing banks and the BGOA to thrash out the details of their differences, monitored by the Central Bank together with the Canadian banks. Although owned by Canadian parents, the local branches or subsidiaries must be governed by the laws and banking rules of the Bahamas, the country which licences them to operate. The present boycott of web-shop deposits is intolerable. Why not also exclude our casinos?

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