By NEIL HARTNELL
Tribune Business Editor
An outspoken QC yesterday apologised to the government for previously blasting its decision to acquire the Grand Lucayan, and said: “They have pulled a rabbit out of Freeport’s hat.”
Fred Smith QC, the Callenders & Co attorney and partner, told Tribune Business that the Minnis administration’s revelation of the resort’s impending sale to the ITM/Royal Caribbean joint venture had dispelled his fears that it would become a “haemorrhage for the Public Treasury”.
Provided the sale closed, and the government sealed the deal with the Mexican port developer and cruise line, Mr Smith said the revival of Port Lucaya and Freeport Harbour will combine with Carnival’s separate $100m cruise port to create “the second economic coming of The Bahamas” in Grand Bahama.
He added, though, that Freeport now needed to reverse the “brain drain” and depopulation it has suffered over the past 15 years by attracting former residents to return home and take advantage of the potential new opportunities.
And Mr Smith again reiterated his long-standing calls for the government to take “a hands-off approach” to regulation in Freeport, calling for it to specifically relax exchange control, immigration and investment board approvals so that the city’s revival can be fast-tracked.
Acknowledging that he had been among the most vociferous critics of the government’s Grand Lucayan purchase, Mr Smith told this newspaper: “Assuming that the Grand Lucayan deal goes through, I wish to take this opportunity to publicly apologise to the prime minister and the government for any previous unreserved criticism and resistance to the government buying the resort.
“I believed that it was going to be a haemorrhage for the Public Treasury, and it has been in the past - for instance, when the Hotel Corporation and Genting owned the casino and the Lucayan strip in the 1980s. I take my hat off to the Minnis administration for having pulled this rabbit out of Freeport’s hat.”
The government on Wednesday signed a Letter of Intent (LOI) with the ITM/Royal Caribbean consortium to trigger “exclusive negotiations” between the parties for the Grand Lucayan’s sale, and a Heads of Agreement for their wider redevelopment project which calls for the creation of water-based adventure theme parks at Port Lucaya and Freeport Harbour.
Both Dionisio D’Aguilar, minister of tourism and aviation, and Michael Scott, the Grand Lucayan’s chairman, have touted the agreed $65m purchase price for the Grand Lucayan as being the same sum that the Government itself paid to acquire the resort from Hutchison Whampoa last September.
The duo suggested this meant the Government will not take a loss on the property’s sale, and may even realise a return on its investment, although the purchase price alone will not recover all expenses incurred to-date. Some $13m was spent to cover the Grand Lucayan’s operational expenses during the four months to end-2018, for instance, and other costs could be forthcoming.
The $65m sales prices was also likely set for political reasons, and ITM and Royal Caribbean may well be compensated for agreeing to pay more than the Grand Lucayan is worth via tax breaks and other investment incentives to be determined during Heads of Agreement negotiations.
Still, providing that the Grand Lucayan’s sale is now closed relatively quickly, it appears that the fears of Mr Smith and others that the resort would become a bottomless financial “black hole” sucking the Public Treasury dry with subsidies may not materialise.
Mr Smith yesterday said a revival of the Grand Lucayan, its casino and wider Port Lucaya area was “desperately needed” to create critical mass, attract multi-million dollar investment and turn around a Freeport economy that has been mired in recession since 2004.
“Since the Carnival Grand Port announcement there has been a very positive and hopeful air in Freeport, and that augurs well for the future,” he added. “I just hope that with all the renewed interest the central government agencies will bend over backwards to process any applications they are involved in.
“Hopefully they eventually have enough faith in the Hawksbill Creek Agreement, and responsibility of the Port Group of Companies to be the one-stop shop investment authority, to take a hands-off approach for Freeport.
“If the central government takes a hands-off approach from regulation by its central agencies Freeport will be the second economic coming of The Bahamas. I truly believe that if the Central Bank, Investments Board and particularly Immigration will bless Freeport by leaving us alone there will be no holding Freeport back.”
Mr Smith reiterated that “Freeport needs every bit of investment and co-operation to survive”, and expressed hope that it now had sufficient activity through a combination of the ITM/Royal Caribbean and Carnival projects to attract former residents home.
“We have been dying of thirst in our economic desert for far too long,” he told Tribune Business. “All of this is going to bring the ‘Magic City’ back to life, but what will be required is a return of human resources, population and foreign Immigration from outside.
“Freeport will not be able to sustain the level of investment that is proposed without a huge influx of foreign workers and expatriates to complement the very meagre local resources that have remained.
“Regrettably, over the last decade or so there has been a brain drain and many of the more skilled labour resources have migrated to other areas in The Bahamas. I’m so glad it will now be time for the citizens of Grand Bahama to come back home and take advantage of these home grown opportunities once again.”
Mr Smith reiterated previous calls for the Government to further relax exchange control restrictions so that Bahamians can buy shares in publicly traded companies that are active in The Bahamas, such as Carnival and Royal Caribbean.
“This is so that Bahamians in Freeport can own a piece of their own economic pie,” he said. “We don’t only want to be servants; we also want to be part-owners.”