The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

THE Opposition’s leader last night argued that the fees imposed by the air freight terminal’s new private operator should be “challenged legally” as he questioned the Prime Minister’s silence on the issue.

Michael Pintard, renewing his party’s attacks on the $25m deal to outsource the facility’s management to JDL, told Tribune Business the arrangement may also breach section ten of The Bahamas’ air transport agreement with the US by requiring all imports to go through the new operator’s hands. This was in addition to queries over whether JDL’s 20-strong fee schedule is lawful because it has not been approved by an Act of Parliament.

That section stipulates that all airlines “designated” by the agreement “shall have the right to perform its own ground handling in the territory of the other party (self-handling) or, at the airline’s option, select among competing agents for such services in whole or in part”. Such choice is only to be constrained by airport safety issues, with all charges “based on the cost of services provided”.

Mr Pintard blasted: “We should look at whether or not all security requirements are satisfied with respect to the cross-border movement of parcels with the US.” And, arguing that Philip Davis KC has a “fiduciary duty” as minister of finance to address the Bahamian people on the rationale for the JDL outsourcing and its implications, the Opposition leader said thus far it has been “mum’s the word” from the Prime Minister.

The Free National Movement (FNM) chief added that it was “really egregious” that Simon Wilson, the Ministry of Finance’s financial secretary and a civil servant, rather than a policymaker, had been left to “carry water” and explain an arrangement that he asserted is akin to a new tax and will impose millions of dollars in extra costs on Bahamians importing goods via air freight.

“This is a massive deal,” Mr Pintard told this newspaper. “You’re talking about a major policy decision being made that has significant implications in the tens of millions of dollars. It’s a $25m deal. A non-policymaker is in the front line discussing this process, and the Prime Minister has not a conversation to address the country on what is a new tax.

“It’s mandatory. You don’t have an option on whether or nor to comply. The Prime Minister, who is the minister of finance, it’s his duty to talk to persons raising legal concerns about a new tax not discussed in Parliament and the failure to put this out to an RFP (Request for Proposal).

“There’s no competitive bidding on the matter, and we’re left to understand what the motivations of the Prime Minister are. Where did it originate from, under whose authority, why did it not come to Parliament and why was there no competitive bidding in this regard,” Mr Pintard continued.

“The public has a legitimate reason to resist what the Government is seeking to do, should challenge the Government on this legally and, in the public sphere, should challenge the Government on what could be a wholly illegitimate tax.”

Mr Pintard spoke out after the Ministry of Finance yesterday met with industry stakeholders, including air cargo operators, freight forwarders and couriers, to address concerns and clarify how the arrangement with JDL is supposed to work.

One charter cargo operator, speaking on condition of anonymity, told Tribune Business that fears the JDL deal would significantly increase the cost of imports brought in by air freight had caused a slump in his business because Bahamians had switched to bringing in more goods via sea.

“I should have flown three flights this week and have not flown any,” he added. “This affects me indirectly. If the costs are prohibitive from JDL, which I think they are at this point in time, then it slows down my utilisation and that will affect my bottom line. In some cases, people have resorted to going by ocean freight.”

Meanwhile, a courier/logistics provider, also speaking on condition of anonymity, said the 20 cents per pound air freight terminal handling fee now being levied by JDL would make margins to thin for many in the business to survive.

They explained that air freight costs need to be kept in the range of $2 per pound to stay competitively priced for Bahamian consumers. With freight carriers such as Florida Air and Conquest Air Cargo charging $1.70 per pound, and now JDL introducing its 20 cents charge, they said companies have just a 10-cent margin left to meet expenses such as salaries and other overheads - making the economics impossible.

“It’s not just our industry. Think about what it’s going to do to the cost of living,” they said. “The numbers just don’t add up any more. We’re definitely winding down that part of the business. Today we paid them [JDL] over $500 in fees. This was for cargo for a charitable organisation. That money came from a donation for us out of our pocket. We felt the true brunt hit of that.”

Tribune Business revealed late last year that JDL, which has been charged with the $25m transformation of the Government’s air freight terminal, has as its principal Pete Deveaux, head of the Island Game web shop chain.

JDL’s ties to The Island Game’s principal emerged as international air freight providers voiced concern about the likely increase in the cost of imported goods and the extra complexity, that appears to be involved with the PPP outsourcing of the Lynden Pindling International Airport (LPIA) air freight terminal.

Thomas Cooper, president/owner of Miami Lakes-based Conquest Air Cargo, which provides “quite a bit of air freight” to The Bahamas via LPIA, told Tribune Business the extra cost imposed by the fees JDL plans to charge will “be a big pill to swallow” for all Bahamian consumers.

Other sources, speaking on condition of anonymity, also argued that the JDL deal as structured would effectively usurp the role of Customs as the sole authority lawfully responsible for managing and handling all imported cargo landed in The Bahamas. As a result, they argued that the PPP arrangement violates the Customs Management Act.

Besides cargo manifests being sent directly to JDL, instead of Customs as required by the Act’s section 72, the actual physical goods will also be received by the private company. Presently, all cargo is received by a broker/agent licensed by Customs, and held in a storage/bonded facility subject to the agency’s control and from which it earns rental fees.

However, JDL is now taking on this role, where it will become the landlord and - in theory - receive the rent instead of Customs. Queries have also been raised over JDL’s plans to break down shipments for scanning, given that the Act requires owners and/or their agents to be present when goods are examined, while its staff are not police or law enforcement agents and thus lack the authority to seize contraband.