The Tribune

• PM confirms Port talks over 'path to fulfill potential'

• Amid push for buyer or regulatory power devolution

• Gov't taking control of city branded 'touchy situation'

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Prime Minister yesterday said the Government is in talks with the Grand Bahama Port Authority (GBPA) to place Freeport "on the right track" as it pushes for a major shake-up in the city's governance.

Philip Davis KC's comments, in a prepared statement issued through his spokesperson, came in response to Tribune Business inquiries concerning the Government's efforts to effect ownership and leadership changes at the GBPA - either via itself or a private investor(s) buying out the Hayward and St George families, or the hand back of regulatory and quasi-governmental powers to Nassau.

The full statement attributed to the Prime Minister neither confirmed nor denied this, merely saying: "Grand Bahama over the many years has failed to live up to its true promise and potential. And we are are in discussions with the Port Authority for the purposes of identifying a path towards putting Grand Bahama on the right track to enable it to fulfill its full potential and promise."

Rupert Hayward, a member of one of the GBPA's ownership families, could not be reached for comment. However, multiple sources have confirmed to this newspaper that the Davis administration is driving for what some may argue is the biggest transformation in the running of Freeport since its founding treaty, the Hawksbill Creek Agreement, was signed in 1955 with ambitions of creating a city and free trade zone in the northern Bahamas.

Darren Cooper, the Freeport businessman who led last year's protest march to the GBPA's headquarters, told this newspaper yesterday that he had requested a meeting with the Port Authority and its president, Ian Rolle, specifically to address suggestions that the Government is seeking to acquire, or find a buyer, for Freeport's quasi-governmental authority.

"Yes, I've been hearing that," he said. "That's the conversation I had with the president of the Port Authority a couple of days ago. The rumour on the streets needs to be addressed. That is the Government is looking very strongly at removing the Port Authority families and looking at taking over."

Rev Frederick McAlpine, the former Pineridge MP who was also prominent in last year's march, confirmed to this newspaper he was aware of the discussions surrounding the Port's ownership and Freeport's governance. However, both himself and Mr Cooper were less enthusiastic about the prospect of the Government taking over Freeport's management, with the ex-MP firmly against and the businessman split over "a touchy situation".

"I've never agreed with that," Mr McAlpine said. "I don't believe the Government should take the Port Authority. Not the Government that cannot collect garbage in Nassau. One thing I can say of the Port Authority currently is that they collect garbage on time.

"I'm not interested in the Government of The Bahamas. Do you see the streets in Nassau? Do you see the Family Islands? I'm not looking for the Government or the Government's cronies to acquire it. It will be just like them acquiring it."

Mr Cooper, speaking to the possibility of the GBPA's acquisition by the Government, said: "I'm 50/50 on it. I like the management of the city and the zone management of the Port, but some areas of the Port I'm not in favour of. It's a touchy situation. Let's get rid of the Port and bring in the Government. We've had so much petty politics in the past, so the Government taking control over the Port will be rather touchy because of politics."

Multiple Tribune Business sources, speaking on condition of anonymity, confirmed that the Prime Minister and his administration last year effectively gave the Hayward and St George families an ultimatum to either find a private buyer for their GBPA ownership interests (split 50 percent each) or the Government would find one for them.

Mr Davis and his advisers are understood to have become convinced that drastic change is needed to break the status quo and revive Freeport after a near two-decade decline, given that it is potentially the best source of higher economic growth due to its available land, location and tax-free zone status.

However, this newspaper understands that, while moderating its stance somewhat since the ultimatum, the Government has not given upon on its Freeport ambitions. There is talk that the Government itself may now seek to acquire the GBPA or, more likely due to the Public Treasury's cash-strapped state, seek to gain control of Freeport's regulatory and quasi-governmental functions.

"Brave put an ultimatum on them to find a buyer, and my understanding is that the Port principals were quite concerned about that," one Freeport source said yesterday. However, another contact said the Government appeared to have backed down from any attempt at "strong arming" while the Hayward and St George families explored their options.

"There was clearly pressure on the two families to do some transaction," another source said, "but the Government has rolled back a bit and stepped back from doing it itself." They added that there was "active interest" from the two Port Authority families in securing outside investors and partners, especially when it came to their real estate interests such as Grand Bahama Development Company (DevCO) and Freeport Commercial & Industrial.

And there was also said to be a feeling that, with multiple investments such as Carnival's cruise port, Royal Caribbean's Freeport Harbour plans and Weller Development's Six Senses resort either progressing or on the drawing Board, the GBPA and its owners would be given time to let these come to fruition rather than be subject to government pressure.

"Freeport was most successful when the Government was not involved," one contact added. "It makes no sense." Another prominent Freeport contact, though, said any deal could simply involve the GBPA handing back its regulatory and quasi-governmental powers to Nassau while allowing the families to retain ownership of the key economic assets.

"The Port believes it's not going to be a buy-out. The Port believes it's going to be a hand over of executive control, but they keep the assets. I know the Prime Minister wants to announce it to coincide with the 50th independence celebrations; they want to announce the Bahamianisation of Freeport," the source said.

The GBPA, while described by some as a 'regulatory shell', still possesses considerable powers that include business licensing, building code and environmental enforcement, city management, and the power to levy fees and service charges together with the operation of a free trade zone that offers multiple forms of tax relief.

However, its income-earning assets have been transferred to Port Group Ltd. These include the 50 percent equity stakes in DevCO and the Freeport Harbour Company, likely to be the two families' most valuable assets, together with interests in multiple other companies.

Should the Government seek to take over the GBPA's regulatory powers, one source said it would amount to an "abrogation" of the Hawksbill Creek Agreement and raise multiple legal issues that would have to be addressed. Among these, they added, would be the provision that requires four-fifths (80 percent) of licensees to approve the devolution of quasi-governmental authority to a local government-type entity.

Mr McAlpine, meanwhile, said the problems and challenges that sparked last March's protest still "persist". He blasted: "Grand Bahama is still in the same quagmire, still in the same rut, and the economy is still in the doldrums. What they [the GBPA] have done is a good job of a public relations exercise. They've made themselves more visible in terms of PR.

"Other than that, I think a lot of people are disappointed in the way Grand Bahama is being run, either by the Port or the Government. Period. The reality is things are still the same. I've always said there needs to be a change at the Port Authority and it still lacks the vision we need for investors and investment. The fact that the city has become so dilapidated, you can't put that on the hurricanes. It's a lack of vision.

"There's been a lack of vision coming from the Port Authority for well over 12 years. We're still in the same quagmire. For me, if it's not working why continue doing the same thing if we're going to get the same results? The Government continues to talk the talk but has not been walking the walk. A large number of people are in wait and see mode but time is running out. It's almost been a year," he added.

"I doubt much is going to be done this year. This government is going to be partying all the way to July 10. You can almost write this year off. If it's not happening in Nassau, it's unlikely that it's going to happen in Grand Bahama or anywhere."

There is sufficient blame to go around over Freeport's present plight. The Government has always been reluctant to let Freeport go, fearing it gave too much away via the Hawksbill Creek Agreement, while the GBPA is seen as not having lived up to its governance and development obligations.

Until now, little has been done to move forward with the 2016 Memorandum of Understanding (MoU) that was signed between the Government, GBPA and Hutchison Whampoa, which committed the Hayward and St George families to seek out a purchaser of their Port shares.

It also committed the Grand Bahama Development Company (DEVCO) and Freeport Commercial and Industrial, Freeport’s two largest private landowners, to produce a 20-year ‘master plan’ for their holdings by April 26, 2017. And the GBPA agreed to permit two government-appointed directors to its Board “to achieve a more effective working relationship” between Nassau and Freeport, and “vibrant and sustained economic growth” for the latter city.

The Haywards and St Georges also agreed to far-reaching governance reforms, and the potential devolution of some of their quasi-governmental powers/regulatory authority, via their MoU commitments. The agreement committed them to working with the Government to create “a mechanism to ensure the exercise of the regulatory powers and functions vested in the GBPA are consistent with the national policy, regulations and laws of the Bahamas”.