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Minnis blames Christie Gov’t for Oban debacle

FORMER Prime Minister Dr Hubert Minnis.

FORMER Prime Minister Dr Hubert Minnis.

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Dr Hubert Minnis yesterday sought to blame the last Christie administration’s failure to conduct “proper due diligence” for the $5.5bn Oban oil refinery debacle, while admitting that his government “took the hit”.

Challenged over the controversy by government MPs in the House of Assembly during debate on the National Investment Funds Bill, which will repeal and replace the Sovereign Wealth Fund Act, the former prime minister argued that his assumption of responsibility for the lack of scrutiny applied to Oban’s principals was “what leadership is about”.

Tribune Business revealed multiple concerns about the background of several Oban executives, including one who was accused of misappropriating multi-million dollar sums in two separate lawsuits, immediately after the group signed a Heads of Agreement with the then-administration for its Grand Bahama-based project.

Taunted by government MPs on the matter, Dr Minnis argued that Oban was inherited from the former Christie administration which should have performed the necessary due diligence. He added that his government “assumed” this had been done, but it was not, as he sought to shift blame to his predecessor.

“Unfortunately what we did not know was they did not do proper due diligence, and we got caught with that,” Dr Minnis said of the predecessor administration. “We took the hit, but government should be continuous. When documents are ready for signing, Memorandums of Understanding, you must assume the former government had done due diligence.

“It was not done, and I took responsibility. That’s what leadership is about. We took responsibility even though we knew others had not done the work.” The revelations ultimately proved fatal for the Oban project. The Minnis Cabinet appointed a ministerial committee to renegotiate the deal, but talks appeared to make little to no progress and the refinery proposal appeared to fall off the radar - perhaps as the then-administration had wanted.

It is unclear whether Dr Minnis’ explanation, and attempt to shift the blame to his predecessor, will cut it with Bahamian voters. His government had been in place for more than eight months prior to the Oban Heads of Agreement signing in February 2018, and would have sufficient time to conduct its own due diligence especially given the tendency of administrations to stop, review and cancel much of what their opponents left in place.

The Government’s normal practice is for the Bahamas Investment Authority (BIA) and National Economic Council to use Interpol and other established sources to conduct background checks on the principals involved in foreign direct investment (FDI) projects, ensuring they have clean records and no criminal past.

This newspaper revealed how Oban’s chief promoter confirmed his involvement in two lawsuits alleging misuse of investor monies. Peter Krieger, its non-executive chairman, told The Tribune he was one of three defendants who were accused of misappropriating more than $3.7m of investor monies by US government regulators.

That lawsuit, which was filed by the Securities & Exchange Commission (SEC) in 2005, was settled without going to trial some three years later. Mr Krieger, who challenged the allegations against him, paid a $110,000 civil penalty “without admitting or denying” the claims, and agreed to be bound from committing future securities law violations.

And, following further research by The Tribune, Mr Krieger confirmed he was also named as a defendant in a legal action filed in 2013 by the Bahamas-based judicial manager for a sister company of the insolvent insurer, CLICO (Bahamas).

John Lopez, the KPMG (Bahamas) accountant who took over British American Insurance Company (BAICO) in the wake of its collapse, and that of its CL Financial parent, alleged that Mr Krieger misappropriated $8.7m of the company’s funds for his own personal use. The case against Mr Krieger, though, was dismissed on a technicality, as it was “time barred” according to the “statute of limitations” that applies in the US.

The Oban Energies principal said the claim against him had subsequently been defeated in the appeals courts, and added: “They really have no grounds to stand on.” Mr Krieger argued that he was the injured party, given that BAICO had failed to fully pay him the purchase price for 14,000 acres of land he sold to the insurer prior to its failure.

He alleged that he had obtained a $70m judgment against the company, and that the judge had “scolded them for perjury and making these outrageous claims against me, and dragging my wife into it”. However, The Tribune could find no record of the case or judgment, which Mr Krieger said he had filed in the middle district Florida court, despite an extensive search of that court’s case database.

Questions were also raised about the backgrounds and experience of other Oban executives, including its its president, Satpal Dhunna; senior vice-president, Russell Erickson; and finance chief, Mark Michel. Mr Krieger admitted at the time there were “clearly mistakes which need to be clarified” on Oban’s website.

“We did state Mark Michel was managing director, which is not correct,” he conceded. As regards Russell Erickson’s background, he said : “I believe once we have established he has extensive construction experience it will clarify any confusion we may have caused.

“We have disclosed everything to both governments (PLP and FNM) in order to get their approval. We have been upfront. We have hid nothing from anyone.”

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