The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

DR HUBERT Minnis is asserting he would never have agreed to any government borrowing being governed by a foreign lender’s own laws as the Davis administration has over the second New Providence hospital’s $195m financing.

The former prime minister told Tribune Business his administration would never have signed-off on a loan governed by the laws of a foreign jurisdiction, or agreed to the lender’s home country being the legal forum for resolving any disputes, after it emerged that the China Export-Import Bank funding will be subject to Chinese law with Beijing as the location for any arbitration proceedings.

The Killarney MP, arguing that selecting a “neutral” third-party venue such as the UK for arbitration was the only concession he would have made, said his administration’s reluctance to accept an 80/20 construction worker ratio in favour of the Chinese resulted in Beijing not providing financing for repairs to the Thomas A. Robinson Stadum during its 2017-2021 tenure.

And he reiterated that the controversy over the China Export-Import Bank funding, and the terms and conditions attached, would never have arisen had the Davis administration proceeded with the alternative financing already secured by its predecessor - along with plans to upgrade and expand Princess Margaret Hospital (PMH) - when it took office in September 2021.

Dr Minnis said his administration had obtained $115m from Banco Santander, which was guaranteed and underwritten by the World Bank’s Multilateral Investment Guarantee Agency (MIGA), and carried just a 1.8 percent interest rate that was lower than the 2 percent now-offered by the China Export-Import Bank for the second New Providence hospital project.

However, this financing was ultimately rejected by the Davis administration and returned to the lender. Dr Michael Darville, minister of health and wellness, previously explained that the Government was uncomfortable that a $20m portion of the World Bank-guaranteed funding had been allocated to funding the start-up and expansion of micro, small and medium-sized enterprises (MSMEs).

Dr Minnis, though, challenged why the Davis administration had been so opposed to funding that would have supported young Bahamian entrepreneurs and aided projects in the so-called “orange” and cultural economy. He added that this would still have left $88.4m from the $115m facility to finance PMH repairs and maintenance, plus construction of a new four-storey tower that would have offered the same maternal and child care services as the new hospital.

Meanwhile, the Government’s own feasibility study reveals that Bahamian construction companies and contractors are “fully capable of successfully completing” the second New Providence hospital, which is set to cost a total $268m, as opposed to handing the project to foreign rivals.

“From a technical perspective, the current construction companies in the Bahamian market possess the overall construction capabilities required to undertake this project,” the report, tabled in the House of Assembly last week by Dr Darville, reveals.

“The project involves the construction of a new hospital, and the construction techniques involved are well-established. The companies in the market are fully capable of successfully completing the project.”

However, while the Government is still trying to negotiate a better construction worker ratio than 50:50, or one Bahamian for every one Chinese, with the Beijing government and its state-owned lender, the project’s main contractor has been named as China Railway Construction Corporation. This entity has already attracted the Trump administration’s attention and been placed on a US sanctions list because of ties to the Chinese military.

China Railway Construction Corporation, which is also a Chinese state-controlled venture, will have been selected because all of Beijing’s overseas lending and investments deals require that they be accompanied by its companies and workers - as happened with the Baha Mar and British Colonial/Margaritaville projects.

Dr Minnis, though, told Tribune Business all this controversy and geopolitical tension with the US could have been avoided if the Government had stuck with the arrangements his administration had left in place. Asked whether he would have accepted the $195m loan’s terms, he replied: “I wouldn’t have agreed to receiving, accepting the money, and arbitration falling under their laws.

“No, arbitration should fall under our laws, and we are still a member of the Commonwealth. If not The Bahamas, why not the UK? No, no, no. Not for arbitration. It’s my laws, and if you want a neutral venue, it’s the UK. One has to ask the question: If their laws are being applied, does it have anything to do with Sarkis and Baha Mar? Did that play a role in why Chinese law is being utilised?”

China Export-Import Bank, the hospital lender, was also the financier for the $4.2bn Baha Mar project during the much-publicised ousting of original developer, Sarks Izmirlian. However, Dr Minnis said he believes the financing deal with Beijing is “too far gone” for the Government and Bahamas to withdraw from it, although he voiced scepticism in asserting “I’m not convinced they’re going to build a hospital” without explaining why.

Herschel Walker, the US ambassador to The Bahamas, last week argued that the second New Providence hospital’s financing is not “in the best interests” of this nation and pledged that the Trump administration will “help secure a better deal”. Dr Minnis added: “If you listen, I’m saying the same thing that the US ambassador said. I’m just saying it differently.

“If you are using arbitration, use our laws, and if you’re looking for neutrality go to the UK. That’s where our lawyers train and what our laws are based on. We’re saying the same thing; just saying it differently.” The Government, though, last week justified its decision to accept the Chinese financing on the basis that the US, through federal institutions such as the US Export-Import Bank, had failed to show interest and/or offer competitive terms.

“The agreement entered into with the government of the People’s Republic of China is concluded, and was undertaken, following careful technical, legal and financial assessment, with the overriding priority being the urgent health care needs of the Bahamian people. This project addresses long-standing capacity gaps in tertiary care, maternal health and critical services, and responds directly to pressures within our public health system,” it said.

“It is also important to place this matter in proper context. Prior to finalising the current arrangements, The Bahamas engaged at the highest levels of the US government on numerous occasions, including discussions with the US Export-Import Bank. While there were conversations, The Bahamas did not receive a financing response that met the scale, timing and certainty required to advance this critical national project.

“The US remains a valued and long-standing partner of The Bahamas across health, security, trade and development. That partnership is neither diminished nor displaced by this agreement, and the Government welcomes the continued engagement and dialogue with our US counterparts in areas of mutual interest.”

Dr Minnis, though, argued that this ignored what the Davis administration met in place. “First of all, we already had $115m approved by the World Bank at 1.8 percent interest,” he told Tribune Business. “What happened, I think, is $20m was for small businesses. Why did you have a problem with that?

“That was for young people who wanted to start their own business, young professionals, young entrepreneurs, the orange economy. Why would you be opposed to that? Some $88.4m was left for PMH out of the $115m. That was for the four-storey wing for exactly what they are trying to do now - maternal and child care, and additional wards, while some monies were for repairs and equipment for the hospital.

“That would have been far better than what they are doing now. The recommendation from the professionals was that should be done at the PMH site where all the infrastructure was already as opposed to a new site where they would have to put that infrastructure in and double the price. If they had done that, none of this would be an issue.”

Recalling tense negotiations between his administration and China, Dr Minnis added: “When we were trying to get money to repair the [Thomas A. Robinson] stadium, they wanted an 80/20 worker ratio. We opposed that; couldn’t accept that. We never got the funding. We opposed the 80/20 because too many Bahamians were looking for jobs…

“I have to pay the money back that I’m borrowing, and if I have to pay it back I must be able to dictate how it’s spent. This should not have been an issue. We had already secured the money.”

Banco Santander, to whom that funding was subsequently returned, is the same institution providing a total $150m for which the Government last week obtained House of Assembly approval to guarantee and underwrite its energy reforms. That $150m is split into a $90m revolving credit facility plus two “credit letters of performance” worth $30m each.