business@tribunemedia.net
THURSDAY, FEBRUARY 25, 2021
$4.52 SENIOR ACCOUNTANT ‘DISPUTES’ $10.8M NIB LOAN FINDINGS
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net A PROMINENT Bahamian accountant yesterday said he “completely disputes” a forensic audit report’s conclusion that he and his firm “neglected their obligations” over a $10.8m government housing loan. Philip Galanis, the HLB Galanis & Company principal, told Tribune Business the company was “absolutely compliant with the due diligence we were required to do” as administrator for the $10.8m facility advanced by the National Insurance Board (NIB) to the Ministry of Housing and the Environment. He hit back after a forensic investigation performed by the BDO accounting firm (see other article on Page 1B) suggested that up to $1.119m “improper payments” to Bahamian contractors for home construction work SEE PAGE B6
$4.52
$4.39
$141m deficit increase ‘a tremendous warning’ • Governance chief says ‘no silver bullet’ • Urges ‘unwavering’ structural reform resolve • ‘Shore up’ gaps to maximise COVID rebound By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE $141m increase in the Government’s forecast 2021-2022 fiscal deficit “is a tremendous warning” that The Bahamas’ must urgently address longstanding structural woes to maximise COVID recovery. Matt Aubry, the Organisation for Responsible Governance’s (ORG) executive director, yesterday told Tribune Business that this nation must be “unwavering in shoring up” workforce skills gaps and other deficiencies that have restricted GDP output for decades. He added that the Government’s mid-year Budget, unveiled in the House of Assembly yesterday, had reinforced the reform
drive given that it indicated COVID-19’s economic and fiscal devastation is much deeper - and will last longer - than originally anticipated. For the Ministry of Finance is now forecasting that the fiscal deficit for the 2021-2022 budget year, which begins in just over four months on July 1, will increase from the $813.4m projected last May to some $954.6m - a 17.4 percent rise. Marlon Johnson, the Ministry of Finance’s acting financial secretary, told this newspaper that the $141.2m increase in the upcoming fiscal year’s projected deficit was directly tied to “the rebound from COVID19 taking longer than anticipated”. Tourism, which drives more than 50 percent of economic output and
60 percent of Bahamian employment, is predicted to recover only gradually during 2021 as the vaccine roll-out in key visitor source markets helps to rebuild traveller confidence. While the sector’s rebound has been weaker, and slower, than expected, Mr Johnson said the revised deficit was consistent with the Fiscal Strategy Report. Mr Aubry, though, said yesterday’s fiscal data - which shows the Government could take on over $3bn in gross new debt over a three-year period - further highlights that there is “no silver bullet” for curing the economic and fiscal ills created by COVID-19. With vaccine distribution proving a challenge in many of The Bahamas’ key source markets, Mr Aubry SEE PAGE B4
MATT AUBRY, the Organisation for Responsible Governance’s (ORG) executive director.
PRIME Minister Dr Hubert Minnis.
$4.39 CRUISE PORT CHIEF: ‘WE’LL IGNITE FUSE’
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net Nassau Cruise Port’s top executive yesterday pledged that Prince George Wharf’s $268m transformation will “ignite the fuse” to spark the downtown improvement both Bahamians and cruise lines desire. Michael Maura told Tribune Business that “while no one will disagree there’s room for improvement”, converting downtown Nassau and Bay Street into a city destination attractive to locals and visitors alike will require significant investment and time. Explaining that Nassau Cruise Port and its controlling shareholder, Global Ports Holding, were taking the longterm view alongside the Government and other stakeholders, Mr Maura said comments by Giora Israel, Carnival Group’s senior vice-president for port and destination development, that the Bahamian capital needs SEE PAGE B6
GOV’T TARGETING $74.5M NIB ‘LOST CONTROL’ OF $11M HOUSING LOAN IN ADDITIONAL SPENDING • Housing ministry incurred $2.75m By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
THE Government yesterday unveiled a $74.511m spending increase beyond its initial Budget approvals that may have to increase further after Bahamasair used up all its extra subsidy in six months. The mid-year Budget, tabled by the Prime Minister in the House of Assembly, disclosed that the cashstrapped national flag carrier had MARLON JOHNSON, spent virtually the entire additional the Ministry of $15.885m allocated to it by end- Finance’s acting December 2020 due to COVID-19’s financial secretary. devastating impact on its business. That sum, together with the $19m allocated in the initial May budget, took taxpayer support to $34.885m for the full 2020-2021 fiscal year. Yet the mid-year Budget showed some $34.801m had been spent to keep Bahamasair from collapse during the first six months of the year. With its latest subsidy almost fully spent, and almost triple the $11.752m outlay incurred during the 2019-2020 fiscal half-year, a further call on the Public Treasury is inevitable and has already been made. Tommy Turnquest, Bahamasair’s chairman, revealed recently that taxpayer subsidies were now $40m “and counting” as the public continues to bail-out the carrier from its COVID-induced crisis. Other new spending allocations include $8.8m to the Ministry of Disaster Preparedness, Management and Reconstruction to restart the Hurricane Dorian home repairs initiative, which had stalled amid the wait for additional taxpayer monies. SEE PAGE B5
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
The National Insurance Board (NIB) “lost control” of its $10.8m loan to the Government’s housing scheme, a forensic audit probe found, leading to $2.753m in “unauthorised obligations” being incurred. The BDO accounting firm’s investigation, tabled in the House of Assembly yesterday, exposed another episode where the Bahamian people’s monies were improperly managed due to multiple breaches and control violations by those entrusted with their care.
‘unauthorised obligations’ • Forensic probe says loans arrangements ‘alarming’ for public • Identifies $1.12m in ‘improper payments’, mostly to contractors
In particular, the BDO investigators said it was “alarming” that NIB’s Memorandum of Understanding (MoU) with the Ministry of Housing and the Environment, and
accompanying documents for the loan, “lacked some basic and usual information that is expected of a typical facility agreement”. It described SEE PAGE B5
PAGE 2, Thursday, February 25, 2021
THE TRIBUNE
Ensuring your photos are cream of the crop
THERE is a saying I learned over a decade ago that I still try to live by; measure twice, cut once. It is a fantastic rule, especially when manipulating photos. While there is certainly something to be said for getting your photos just right, you have a myriad of tools at your disposal if you wish to
fix pictures later. Things such as exposure, contrast, colour saturation, black-and-white conversion, and even adding and removing elements can all be done with the touch of a button in Photoshop. But there is this fantastic tool available in every image editor that can have a powerful impact on images, and
which is quite easy to use. And all it takes to give your photos the added punch you are seeking is a few clicks of the humble tool referred to as the “cropping tool”.
• What is cropping? To “crop” an image is to remove or adjust the outside edges of an image (typically a
photo) to improve framing or composition.
offer. Nevertheless, unless you are turning photos into wall-sized posters there is clearly a lot of room within those megapixels to crop to your heart’s content.
• What is the difference between cropping and resizing an image? Resizing and cropping are two of the most basic image editing functions. Resizing changes the dimensions of the image, which usually affects the file size (and the image quality). Cropping always involves cutting away part of the original image and results in some of the pixels being discarded. • Why would you crop a photo? Typically you can crop a photo to remove an unwanted subject or irrelevant detail from an image. You can also alter the aspect ratio of an image or improve the overall composition of the image. • Is cropping considered editing? This process is one of the most basic photo manipulation processes. Cropping is widely considered one of the few editing actions permissible in modern photo journalism, along with tonal balance, colour correction and sharpening. • Does cropping photos reduce quality? Cropping takes a portion of the image only, and does not affect image quality. If, however, you print or display the crop as the same size as an image from the whole sensor, it will not look as good simply because it has a lot less information. It is the increased magnification that reduces quality, not the cropping. • Why is cropping important? Cropping is easier than
• Online size There is also the issue of posting and sharing your pictures online. A good rule of thumb for that is to keep the maximum dimension, either width or height, to no more than 2048 pixels.
you think. When planned carefully, cropping can greatly improve the composition and visual impact of a digital photo. It is an easy yet important step to consider when editing photos. Every image editing program has a crop tool that lets you trim, or eliminate, the edges of an image. • The math of cropping and why it is fine to do it Before getting too deep into the art of cropping, it is important to know what your goals are for your photography and look at the math behind those megapixels. • Printing size If you are going to print your photos it is a good idea to prepare them at least 200 dpi or dots per inch. This means you are able to take an uncropped image from a 20 megapixel camera and print a pristine picture 27 inches wide. If you are making standard 4×6 inch prints, it is even better. A 200 dpi print at that size contains about one million pixels or five percent of what the 20-megapixel camera has to
I fear all of this might seem a bit off the beaten path, but the moral of the story is that you should, of course, do whatever you can to display your photos at their best without worrying about losing quality. Ultimately, when deciding what to crop from your images there is no hard-and-fast rule that will guarantee perfection every time. Crop to reframe your subject Cropping can help immensely when you are looking for ways to portray your subject in an interesting or more compelling light. Until we meet again, fill your life with memories rather than regrets. Enjoy life and stay on top of your game. NB: Columnist welcomes feedback at deedee21bastian@gmail.com About columnist: Deidre M. Bastian is a professionally-trained graphic designer/ marketing co-ordinator and certified life coach with qualifications of M.Sc., B.Sc., A.Sc. She has trained at institutions such as: Miami Lakes Technical Centre, Success Training College, College of The Bahamas, Nova Southeastern University, Learning Tree International, Langevine Internation al and Synergy Bahamas.
Student exposure key for Engineers Week INDUSTRY and educational groups have united to ensure National Engineers Week exposes Bahamian students to the profession and its full range of specialist sub-disciplines. The Bahamas Society of Engineers (BSE) and Bahamas Engineering and Technology Advancement Camp (BETA Camp) have teamed to host a series of presentations for public and private school students from February 22-27 in partnership with the Ministry of Education. This digital event, which was launched under the theme “Imagining Tomorrow”, features presentations where a Bahamian engineer teaches students and educators about what engineering is all about, what it takes to become an engineer, and what engineers do.
QUENTIN KNOWLES, president of the Bahamas Society of Engineers (BSE), meets with Lionel Turnquest, director of projects and facilities at Nassau Cruise Port, to discuss the activities for National Engineers Week 2021. Aided by the the Ministry of Education, 15 Bahamian engineers will make 22 presentations to primary and high school students from 27 participating schools this week. Three of the presenters are engineers from the Ministry of Works. “We’re very excited to partner with BETA Camp, the Ministry of Education and Nassau Cruise Port to do something different to mark our professional week this year,” said Quentin Knowles, the BSE’s president. “We have over 200 members who are at various stages in their professional careers, so the presentations that the students will receive this week will offer great variety in terms of the advice and knowledge presented. “The COVID-19 pandemic forced us to think differently about how we could make an impact this year, so hosting a digital event enables us to bring students from around The Bahamas and Bahamian engineers working at home and abroad together,” he added. “We have been able to connect with so many more students than we might have if we had hosted these presentations in person, which is particularly important when trying to ensure that students in the Family Islands are included in our activities. Our goal was to reach as many students as possible.” The presenters are involved in civil, structural, geo-technical, coastal, oceanographic, electrical, mechanical, environmental, and chemical
engineering, building services and telecommunications. Trenicka Rolle and D’Andre Wilson-Ihejirika, BETA Camp’s co-founders, shared their excitement about introducing a new crop of students to engineering through this event. “Some of the students who will experience this week’s presentations have attended our BETA Camp summer engineering programme, and have a strong interest in engineering, but through this event we are connecting with so many kids who don’t know anything about what we do but may find a match for their interests,” said Ms Rolle. “It’s exciting to be able to share elements of our BETA Camp programme with students during the school year through this partnership. We hope this collaboration leads to more opportunities to expose young Bahamians to the beauty of engineering through the STEM Revolution.” Mrs Wilson-Ihejirika described the final event, which will be held online on February 27. She said: “We’ve created an entertaining and educational online STEM Scavenger Hunt specifically for this week. “The challenge will require the students to work in groups while considering the principles of engineering design, applying engineering thinking and using their problem-solving skills as they analyse the clues. They’ll need to recall much of what they learned during the presentations to be successful.” Students have signed up to participate in the scavenger hunt through the Ministry of Education. Lionel Turnquest, Nassau Cruise Port’s director of projects and facilities, said: “The benefits of these kinds of opportunities to young minds are immeasurable. As a BSE member, I am very proud of the growing community of industry professionals that our organisation has developed to ensure that Bahamian engineers support each other.”
THE TRIBUNE
Thursday, February 25, 2021, PAGE 3
Davis: We will explore lower VAT rate scope By YOURI KEMP Tribune Business Reporter ykemp@tribunemedia.net
THE Opposition’s leader yesterday pledged that any VAT review would examine whether there was scope to lower the current 12 percent rate if his party was elected as the next government. Philip Davis, speaking after the Government unveiled its mid-year budget, said any reforms enacted by a Progressive Liberal Party (PLP) government to the country’s major revenue source “would be determined from the outcome of that review”. Promising to alleviate the tax burden faced by lower income Bahamians, he added: “Consequent to that, that would be looking at it to see whether it could be lowered.” Speaking earlier this
PLP leader Philip Davis. month, Mr Davis said a PLP administration would explore whether or not VAT is still a “viable” and “appropriate” tax for The Bahamas. The former Christie administration, in which Mr Davis was deputy prime
minister, implemented VAT at 7.5 percent in 2014. It had initially looked at a 15 percent rate, but Mr Davis said yesterday: “First of all, when it was suggested at 15 percent, we did a complete analysis of what I call the fundamentals of our economy, and we recognised that revenues could be had other than going to 15 percent. “Hence, we struck where we would arrive at 7.5 percent after talking to stakeholders, the business community, Chamber of Commerce, and all stakeholders. “We arrived at this compromise number, 7.5 percent, which we felt would have been adequate. We felt that the VAT regime was the appropriate regime for the tax structure.” To soften VAT’s impact, Mr Davis said the former government had increased the minimum wage to
assist persons faced with an increased tax burden while also reducing import duties. He added: “We would again review and look at what the present circumstances are and say, yes, 10 years ago those circumstances were such that it was being recommended at 15 percent. We recognised in those circumstances that 7.5 percent would have been adequate.” Refusing to commit to replacing VAT and customs duties with an income tax, as some have suggested, Mr Davis said: “Again that will be part of our review exercise. “I think the time has come for us to review our whole tax structure to ensure that those who earn more pay more, and those who are in need are assisted through a tax regime that is compassionate and sensitive to those who are in need.”
TAXI CHIEF BACKS CARNIVAL’S DOWNTOWN NASSAU CONCERN By YOURI KEMP Tribune Business Reporter ykemp@tribunemedia.net
THE taxi union’s president yesterday backed a senior Carnival executive’s concerns that downtown Nassau has little fresh product to offer cruise passengers for when the industry returns. Wesley Ferguson told Tribune Business it is the “Government’s fault” that downtown Nassau has nothing to offer, adding: “I keep giving the media the same information over and over. “What happened is that since the cruise ship harbour is completely closed down, there is nothing in that immediate area to attract tourists.” Pointing out that “there is no movement in the straw market”, he added: “The entire government is waiting on Global Ports Holding to now come up with a programme to make the downtown area or the cruise port area an entertainment metropolis.” ] Construction on the new $268m cruise port, which will feature a new cruise terminal at Prince George Wharf, a waterfront park, amphitheatre, Junkanoo museum, retail and restaurant stores, is scheduled to be completed by 2022. However, Mr Ferguson said: “Carnival is absolutely right, because the Government has no plan. It has put nothing in place for the revitalisation of the tourist industry to attract tourists to come downtown.” Calling on the administration to “stop sticking its head in the sand”, and instead use this opportunity revitalise the tourism industry, he added: “This is the time when you start thinking outside the box and think about what can we do to co-exist in this COVID-19 environment. This is no time to be talking about lockdowns because whatever it is that they do, this is no time for that.” “We already had the lockdowns. The Government is supposed to be proactive and get ahead of this COVID-19 pandemic,
DOWNTOWN Nassau pictured during the COVID-19 lockdown.
and find innovative ideas for the tourism industry to be revitalised.” Arguing that visitors want authentic Bahamian and Caribbean experiences, Mr Ferguson said: “There’s no native restaurant downtownn where you could go and sit down, and have peas and rice and coleslaw.” The taxi union chief spoke out after Giora Israel, Carnival Cruise Lines senior vice president for global port and destination development, told Tribune Business that downtown Nassau needs more than a new port because three quarters of passengers declined to book excursions pre-COVID-19. He told Tribune Business the Bahamian capital must do far more to overhaul its “product” post-pandemic as the identity of its most popular tour, visits to locals hotels and their amenities, “tells you a lot”. While praising the private-public partnership (PPP) with Global Ports Holding for Prince George Wharf’s $268m transformation, Mr Israel said he and other Carnival executives had repeatedly urged the government to constantly refresh Nassau’s attractions, excursions and tours offering if it was to rebuild its reputation as a leading tourism destination. He explained that this was especially important as many of the passengers on Carnival’s three, four and five-night cruises through The Bahamas were repeat customers who had visited the city before, and therefore needed new and exciting activities to entice them off the ship.
TAXI UNION PLANS RENEWED PROTEST By YOURI KEMP Tribune Business Reporter ykemp@tribunemedia.net TAXI drivers yesterday said they will resume their Rawson Square protests next week after the Government failed to address their grievances, their union president said yesterday. Wesley Ferguson, the Bahamas Taxi Cab Union (BCTU) chief, said he was becoming tired of empty promises when it came to changing the colour of taxi cab licence plates so that they were distinguished from self-drive cars. He added: “We have intentions of going back downtown to protest next week. The minister for transport [Dion Foulkes ] had asked me to give him a minute. He told me that Cabinet had made a decision to change the colour of the SD (self drive) plates back to white. But the whole point is there was no public announcement to that effect and there is no date on that.” The union has been at odds with the Government on several matters, including the issuance of new taxi plates now that the moratorium has been lifted. “What the minister is giving us is another promise, pie in the sky, by and by. That’s all that was, another promise,” Mr Ferguson added. Taxi union members, who staged one protest in
front of Parliament earlier this month, had called off the second on February 17 after Mr Foulkes spoke to Mr Ferguson and told him that Cabinet had come to a decision on the plate colour change. The taxi union chief said: “Unless the minister can come to me and tell me that, during this licensing period, my members can rest assured that we have all of the requisite steps in place to change the self-drive plates to another colour, and this is going to be implemented on a particular day and in this particular time, then we can talk, but that wasn’t done. “They were supposed to change the colour of the taxi plates last year during the licensing period. Then they blamed COVID-19. Then it was supposed to be again for October of last year, and they blamed COVID-19 again. “So who is to say it won’t be COVID-19 again for this summer’s licensing period? Because if I wait until May for them to figure out that they really haven’t done anything, then the next excuse will be COVID-19 again.” The union is waiting on an approval for the protest from the Commissioner of Police. Should it be received, the protest will be held on Wednesday at 9am in front of Parliament. “I have already told my members that we will be heading downtown on Wednesday coming,” said Mr Ferguson.
PAGE 4, Thursday, February 25, 2021
THE TRIBUNE
$141M DEFICIT INCREASE ‘A TREMENDOUS WARNING’
FROM PAGE B1 said that “recognising it’s going to be an even more difficult time” rebounding from the pandemic than first thought” sounds reasonable. With the Government’s fiscal forecasts matching prior recovery predictions given by the Central Bank and International Monetary Fund (IMNF), he told Tribune Business: “I would love that there is a silver bullet, but I don’t think there is one.” The ORG chief, though, argued that the Government needed to maximise income from its existing revenue source prior to entertaining new and/or increased taxes to fill the fiscal holes and $10bn-plus national debt blow-out created by COVID-19. “It’s spending the money in the most efficient way, and cleaning up areas where revenues have not been maximised; those outstanding payments and taxes on the books,” Mr Aubry said, referring to the $600m in unpaid real property tax recently referenced by the Auditor General. “There needs to be much
PRIME Minister Dr Hubert Minnis speaks in the House of Assembly. Photo: Donavan McIntosh/Tribune staff more effort to draw those in. This discussion on other types of revenue needs to be had, but we need assurances that what is being done with monies owed is a priority.” Improving the ease of doing business, increased economic diversification, enhancing the workforce’s depth and closing skills gaps, and facilitating the growth and development of
Bahamian businesses were all key to “helping us be better prepared for when things start up”. “The ‘wait and see’ model is a tough one, and we’re challenged by that because we don’t have full control of our destiny. But keeping ourselves sharp and doing what we can to address longstanding skills gaps can be very beneficial,” Mr Aubry
AG MEETS ON PLANNED MARIJUANA LEGISLATION
said. “What are we doing now to prepare them to be a viable workforce? We know 2021 and 2022 will be the start of the uptick in tourism and other spaces. These are all to make sure we come out of this as prepared as possible. Many businesses and families are struggling to get by, but if we’re going to shore up these longstanding issues this is the time to do it.” Suggesting that the Government’s increased short-term deficit forecast represented another alert for The Bahamas and its economy, Mr Aubry told Tribune Business: “This is the time to act. This is the time to move forward, and not to waver in that direction. This confirms that change really needs to happen for sustainability. “That the Budget has been revised creates a warning that things are going to be harder than anticipated. It’s a tremendous warning that we need to be unwavering in addressing these long-standing issues. We must make sure everything is flush so that we don’t see wastage or a missed opportunity.” The Prime Minister, in unveiling the mid-year Budget, said the Government will cut spending to match missed revenue projections with its overriding objective being to hit the record $1.327bn deficit target set for the 2020-2021
fiscal year. “While we are indeed facing unprecedented times and incredible challenges, we are remaining true to our pledge of fiscal probity,” Dr Minnis told the House of Assembly yesterday. “While times are indeed tough, we have sought to manage the country’s finances in a responsible manner to ensure that where there are revenue shortfalls we have made - and will continue to make -reductions in expenditures. The goal is to ensure we maintain the originally budgeted deficit position of $1.3bn throughout the fiscal year.” With revenue now forecast to be $104.3m off the original 2020-2021 Budget forecast, at $1.656bn, the Government has trimmed its recurrent or fixed cost spending by $18.3m to $2.556bn according to the projections unveiled yesterday. Capital spending has suffered a deeper $86m cut to compensate for the remaining revenue underperformance, having been slashed to $429.5m. The $736.1m fiscal deficit for the six months to end-December represented 55.5 percent of the full-year estimate, although the size of the ‘red ink’ was worsened by the lockdowns and other restrictive measures implemented early in the 2020-2021 fiscal year to curb COVID-19’s so-called “second wave”. Total revenues, though,
contracted by $415.3m from the prior fiscal half-year’s $1.089bn, falling to $673.4m as the lack of economic and tourism activity continued to bite. The latter figure amounted to 38.1 percent of the full-year forecast, although the three months to end-March are traditionally the richest for the Government due to tourism’s winter peak, Business Licence fee payments, real property tax and commercial vehicle licensing month. Rick Lowe, an executive with the Nassau Institute think-tank, yesterday said the Government’s bare fiscal cupboard is “creating a real dilemma”. He told Tribune Business: “We should all be concerned because taxes are going to have to go up to pay for it one way or another. “Sooner or later the taxes are going to have to rise, and that’s the unfortunate part. How much can we bear? The Government is in a catch-22. They have no revenue and are still paying all those employees. They haven’t cut back like certain people in the private sector. With few tourists coming in the economy has ground to a halt. “It’s amazing how fast it adds up. Without an economic turnaround it’s certainly doom and gloom. It’s not a spot we should be happy to see, but what do we expect? We can’t anticipate anything other than what’s going on.”
BAHAMIAN LAW FIRM IN ‘BAND 1’ STATUS
CARL BETHEL QC, attorney general and minister of legal affairs, and his permanent secretary, Cecilia Strachan, met with Renaldo Cartwright, founder of Marijuana Bahamas (standing centre) during a courtesy call where they discussed the marijuana/cannabis industry legislation that is now being drafted. (BIS Photos/Patrick Hanna)
A BAHAMIAN law firm says it has been awarded “Band 1” status by the latest Chambers Global 2021 Guide, which is the highest recognition granted by the publication. Lennox Paton received this ranking from the independent research company, which operates across 200 jurisdictions delivering detailed rankings and insight into lawyers, for general business law, which covers its major practice areas of banking and finance, dispute resolution and real estate.
The firm’s British Virgin Islands (BVI) office was ranked for dispute resolution. In addition, eight of the firm’s attorneys have been individually ranked in the guide. Senior partners Brian Simms QC, Michael Paton and David Johnstone maintain their top rankings in “Band 1”, while litigation partner, Metta MacMillan-Hughes, entered this year in “Band 3”. She joined partners Michelle Neville-Clarke, Scott Cruickshank (BVI), Christopher Jenkins and Sophia Rolle-Kapousouzoglou.
THE TRIBUNE FROM PAGE B1 the funding’s structure as “unusual” and featuring “irregularities”. These flaws, the report concluded, resulted in “inappropriate payments” of $1.119m from funds that belonged to the Bahamian people. Of this sum, BDO said $300,693 concerned “unauthorised mobilisation prepayments” for contractors, while a further $417,249 was paid out for work building government homes that was never performed. Of that latter figure, some $269,690 in such “improper payments” went to contractors in Abaco, while the $147,559 balance related to Grand Bahama. The report also identified $118,025 worth of “duplicate payments” made to contractors, while $283,264 was defrauded by an employee at the HLB Galanis & Co accounting firm, which acted as the loan’s administrator.
Budget BDO also disclosed that, given the Ministry of Housing and the Environment entered into housing commitments worth $12.576m when the budget under the MoU with NIB was $9.823m, some $2.753m in “unauthorised contractual obligations” were incurred in “violation” of the agreement between the two sides. NIB was found to have committed “a dereliction of oversight responsibilities” by waiting almost 18 months to contact HLB Galanis for more timely updates on the project’s progress, resulting in housing commitments exceeding the agreed budget by almost 25 percent come March 2016. “Thus by March 2016
NIB ‘LOST CONTROL’ OF $11M HOUSING LOAN the NIB had lost control of the programme, effectively ceding it to the Ministry of Housing and the Environment,” BDO concluded. “The NIB did not conduct best practices with respect to its oversight duties and obligations. “It appears that NIB personnel released the funds based solely on the requests for the funds. “The terms of the MoU were not followed, and signatories on the NIB accounts followed instructions to process these payments.” While the Opposition yesterday made no secret of their belief that the BDO report’s release was timed to distract public and media attention from Lanisha Rolle’s departure as minister of youth, sports and culture, especially given that it was completed 13 months ago in January 2020, its contents illustrate a disturbing failure to safeguard the public’s social security funds held in trust for their benefit. In particular, the BDO report suggested that the $10.8m loan was structured to evade parliamentary scrutiny and also remove the need for its approval by the then-minister of finance, who was prime minister Perry Christie. Discussions on raising the loan were initiated in September 2012 four months after the Christie administration was elected to office by Simon Wilson, the Ministry of Finance’s financial secretary, who it is understood still holds the title and remains on full pay despite
the current government’s attempt to remove him. With the debt-laden Bahamas Mortgage Corporation cash-strapped, and unable to finance the Government’s housing initiative, Mr Wilson turned to NIB and Phaedra MackeyKnowles, its deputy director of investments, as an alternative option. The initial proposal for a $60m “bridge loan” from
The Department of Social Services is to receive an extra $12.522m for benefits to support those left destitute by COVID19 and the subsequent economic collapse, taking the year’s allocation for this assistance to more than $55m. Another $5.8m has been provided as subventions to troubled private schools, while the Public Treasury and Ministry of Finance are to get an extra $20.7m and $3.5m, respectively, beyond their original 20202021 Budget allocations. Marlon Johnson, the Ministry of Finance’s acting financial secretary, told Tribune Business that the extra funding for the latter two agencies was required to cover financing charges associated with the Government’s recent bond offering and other transactions. Acknowledging the increasing drain imposed by Bahamasair and other lossmaking state-owned enterprises, he said: “The Government has a stated policy that they want to retain employment at the state-owned enterprises (SOEs). “The Water & Sewerage Corporation’s revenues have been impacted because of the downturn, with residential and business collections taking a hit because of the economy. Bahamasair’s revenues have dropped precipitously. “The Government intends to help them meet their operating expenses, and particularly payroll, because it’s part of an employment retention policy.” Although the Government’s half-year fiscal deficit, standing at just over $736.1m in ‘red ink’, was equivalent to 55 percent of the full-year total, Mr Johnson said it was “pretty much in line with expectations”. The Prime Minister, in unveiling the midyear Budget, sought to find some crumbs of positive news by saying: “Since the reopening of the tourism economy in November, government revenues for the months of November, December and January have modestly exceeded our revenue forecasts for those months.” This message was reinforced by Mr
guarantee. To overcome this problem, a September 5, 2013, meeting at NIB headquarters agreed to “simplify the draft MoU” so that the money could be provided as a direct loan to thenminister of housing, Kenred Dorsett, as “a corporation sole” - a move that gave him the status of a legal entity. “We found that a degree of care was followed during the early and initial discussions about most aspects of the credit facility, its purposes and plan for the use of the funds and subsequent repayment. Interest rates, in particular, were reviewed and scrutinised in great detail,” BDO said. “Following two months of discussions, the Mortgage Corporation Board approved a bridge loan from the NIB and the parties started work on the MoU.
Information NIB, together with a $5m revolving credit facility, was reduced to $10m after Ms Mackey-Knowles “raised concerns about the amount of the loan to the Mortgage Corporation and availability of funds considering the limitations of the NIB cash flow. She also raised concerns about the interest rate and highlighted.... the lack of a [government] guarantee”. However, the Attorney General’s Office subsequently pointed out that the Mortgage Corporation Act required all borrowings over $1m to be approved by the minister of finance, while a House of Assembly resolution was required for the government
GOV’T TARGETING $74.5M IN ADDITIONAL SPENDING FROM PAGE B1
Thursday, February 25, 2021, PAGE 5
Johnson, who said “the revenue numbers have picked up” through the second and third quarters of the Government’s fiscal year-to-date due to the trickle of tourist arrivals and the domestic economy’s continued re-opening. The first three months of the 2020-2021 fiscal year were hit by lockdowns and further COVID-19 restrictions, but Mr Johnson added: “We’re in a fairly stable position right now so fingers crossed it stays that way.” While providing no figures, he said: “These past three months we’ve either met or been slightly above Budget for revenues in each of those months. What it indicates from where we sit is that the domestic economy has been able to open up a bit more, and we’ve got the Budget back on track. “Even though the tourism numbers are nowhere where they were, the hotel openings and rise in employment is helping us meet budget targets. “From the ministry’s perspective we’re hopeful we stay where we are and the tourism numbers pick up. We recognise there’s a great deal of uncertainty, and we’re being very cautious in how we plan and very restrained in how we spend.” Dr Minnis, meanwhile, sought to reassure Bahamians that the fixed exchange rate regime and one:one peg with the US dollar is under no threat of devaluation with the external reserves, at $2.4bn at year-end 2020, providing 43.6 weeks of import coverage compared to 27.7 weeks at end-2019. With the reserves having increased by $622.4m during 2020, thanks to the boost from the Government’s foreign currency borrowing, the Prime Minister said: “A guiding principle of my government is the assurance that we never put the Bahamian dollar under any threat of devaluation. “Despite the twin economic catastrophes of Hurricane Dorian and the COVID-19 pandemic, the Bahamian dollar remains as strong as it has ever been. I repeat: The Bahamas maintains a record level of foreign reserves and our Bahamian dollar is as secure as it has ever been.”
“While the same highlevel qualified persons carried out the task, including a complete review by NIB general counsel, Heather Maynard, it is alarming that the final MoU document and the accompanying facility letter lacked some basic and usual information that is expected of a
facility agreement.” The report added some NIB directors had voiced concerns about the loan, and changes to the MoU allowing funds to be paid directly to the Ministry of Housing, asking if NIB “will get its money back”, but the Board went on to approve these terms. “It appears that the revision of the loan counterparties was devised to circumvent the need for the Government’s guarantee,” it said. BDO said the MoU made no mention of the interest rate payable on the loan, while both it and the loan documents failed to set out a repayment schedule. This, the accounting firm added, made NIB’s enforcement of its rights difficult should the ministry of housing default, while there were no “consequences” for the latter if it did fail to pay. The forensic investigation added that no loan security was provided, increasing NIB’s risk making it potentially “unsafe” and breaching the social security system’s own investment policy and guidelines. “The MoU and facility letter are legally binding documents, and omission of critical and material details is alarming,” BDO said. It added that the proposed interest rate attached
to the loan, of “91-day Treasury Bills plus a spread of 2 percent”, also breached NIB’s requirement that the benchmark yield of its investment portfolio be set at Bahamian Prime “at least”. Liquidity, given that the loan proceeds were to be invested in constructing housing assets that take time to monetise if needed, was another concern.
Letter “BDO identified lax oversight in following policies and procedures in that the MoU and facility letter covenants were not followed,” the report said. “While the loan origination process appeared sound and diligent, the loan granting procedure including the approval of an inadequate MoU and facility letter - lacked the level of scrutiny and judgment required for all NIB investments. “Due to the unusual nature of the loan and other irregularities, and given the loan’s illiquid nature, best practice at a minimum would dictate that consultation should have occurred between the minister of finance [Perry Christie] and minister of labour and national insurance [Shane
PAGE 6, Thursday, February 25, 2021 FROM PAGE B1
that was never performed “may have been avoided” if HLB Galanis had “conducted its work in a thorough and professional manner”. Of that sum, BDO said $300,693 concerned “unauthorised mobilisation prepayments” for contractors, while a further $417,249 was paid out for work building that was never done. Of that latter figure, some $269,690 in such “improper payments” went to contractors in Abaco, while the $147,559 balance related to Grand Bahama. The report also identified $118,025 worth of “duplicate payments” made to contractors, while $283,264 was defrauded by an employee at the HLB Galanis
SENIOR ACCOUNTANT ‘DISPUTES’ $10.8M NIB LOAN FINDINGS & Co accounting firm who subsequently made a “plea bargain agreement” in the courts. BDO produced a chart allegedly showing that Mr Galanis and his firm were in full compliance with just one of their 19 obligations, which was to open a bank account. The company had been selected for the administrator role because it was the lowest bidder at $25,000, although it ultimately received an approved budget of $124,700. “The administrator performed little or no due diligence and otherwise neglected his obligations under his agreement,” the
BDO report, completed in “Thus the administrator January 2020 and laid in the made payments to contractors House of Assembly without reviewing yesterday, said. contracts, payment “We learned schedules or change through our disorder files. We also cussions with Mr learned from our Philip Galanis of discussion that the HLB Galanis & administrator was Company, that in not provided with processing contraca list of persontor payments for the nel authorised to programme that the approve contractor administrator did work or copies of nothing more than their signatures,” it PHILIP Galanis look to see that the continued. contractor requests received “The inappropriate payfrom the Ministry of Housing ments identified in this report and the Environment con- may have been avoided had tained an approval from the the administrator conducted (ministry). its work in a thorough and professional manner.” The BDO report also accused HLB Galanis & Company of “ignoring its contractual obligations” to provide monthly financial status reports on the use of the loan proceeds, and construction progress to all parties - especially NIB. The first report from HLB Galanis & Company, for the period May 1, 2014 to August 31, was dated September 11, 2014. Subsequent reports were issued quarterly, and
only provided to the Ministry of Housing and the Environment. NIB only informed the administrator that it had received one report in 18 months on March 6, 2016. Mr Galanis, while asserting that he has yet to be provided with a copy of the BDO report, denied the allegations that his firm had failed to conduct adequate due diligence on the contractor payments. Noting that he was not in the construction industry, he added that HLB Galanis & Company relied upon the Ministry of Housing and the Environment to inspect the housing work, verify that it was properly completed and approve the necessary payments. “The due diligence we were required to do, we were absolutely compliant with that,” the former PLP and Senator told Tribune Business. “That entailed ensuring the contractor receiving the payment was approved by the ministry, that their business licence was vetted by the ministry before we made any payments to them, and that the actual amounts were consistent with what the ministry advised us.
THE TRIBUNE “We received the change orders and payment amounts from the ministry. I would never say we never did due diligence. We’re not a contractor or quantity surveyor, so we did not know if the work was being done and relied on the ministry. I don’t understand that comment at all.” As for the failure to meet the monthly reporting obligation to NIB, Mr Galanis said that criticism was “fair enough”. However, he said his firm was working for the Ministry of Housing and the Environment, not NIB, and was not reporting to the latter. And while the contract required monthly reports, he added that these were effectively a waste in periods where no activity was occurring. Some nine reports were provided over the project’s lifetime, Mr Galanis said. Acknowledging there had been “some deficiencies” with how his firm’s role was structured, he added: “I dispute completely that we didn’t do due diligence or were deficient in reporting to the persons who engaged us.”
CRUISE PORT CHIEF: ‘WE’LL IGNITE FUSE’ FROM PAGE B1
to upgrade its product offering are nothing new. “He is speaking to comments, in my opinion, that Carnival has offered to the Government for the last several years around the need to improve the product; that downtown was dirty and old, and there needed to be more interesting things to do; a fresh reason for passengers to disembark the ship,” he explained. “When you consider what he is saying, I don’t think anyone would disagree that there’s room for improvement, but it takes time and it takes money to make that kind of improvement and investment. We as Bahamians, no one wants a better product than the residents of New Providence. But these things take time.” Mr Maura continued: “We have to have that catalyst, that trigger, that fuse that, when it ignites, it causes other things to happen. We have to have a catalyst, we have to have something that starts it all. That is the development we are undertaking, which is going to be that catalyst. “Our port is going to be the catalyst to cause people to improve their product, and improve that piece of land on Bay Street or building they own. It’s going to cause a lot of creativity around the development of new excursions. We know there aren’t any other Caribbean waterfront cities I’m aware of at this time that will match what happens in Nassau over the next year or two.” Mr Maura said the failure of the shipping companies’ relocation from Bay Street to Arawak Cay almost ten years ago, which had been demanded by the cruise ships, to spark a downtown turnaround by itself showed the need to take a long-term approach. The enhanced cruise port, besides food and beverage and retail offerings, will also include an amphitheatre acting as an entertainment venue for live concert and music events in a bid to entice the cruise ships to stay in port overnight. Mr Israel had told Tribune Business the Bahamian capital must do far more to overhaul its “product” post-pandemic as the identity of its most popular tour, visits to locals hotels and their amenities, “tells you a lot”.
While praising the private-public partnership (PPP) with Global Ports Holding for Prince George Wharf’s $268m transformation, Mr Israel said he and other Carnival executives had repeatedly urged the government to constantly refresh Nassau’s attractions, excursions and tours offering if it was to rebuild its reputation as a leading tourism destination. He explained that this was especially important as many of the passengers on Carnival’s three, four and five-night cruises through The Bahamas were repeat customers who had visited the city before, and therefore needed new and exciting activities to entice them off the ship. “I think that the maritime improvements that are being done, adding strength to one of the piers and expanding another, are welcome,” Mr Israel told this newspaper of Nassau cruise port upgrades. “Enhancing the arrivals experience is welcome as well. We are encouraged these things are being done. “One of the issues we’ve stated to the Bahamian government is what Nassau needs more than the maritime facilities is the enhancement of the destination for activities,” Mr Israel said. “Over the years there has been very little product to offer people coming again and again. “It’s not the port itself, it’s the product; the availability of” new attractions and excursions for passengers on short-haul cruises who have visited Nassau before on previous trips. In the absence of new and upgraded products, Mr Israel added: “Prior to COVID-19, we were only able to sell 26 percent to 28 percent of passengers a tour.” This, he added, meant that only 700-800 passengers on a 3,000-person cruise ship went on a tour or excursion, limiting the income and revenue earned by the Bahamian-owned tourism operators that typically populate this space. “Some don’t get off the ship,” the Carnival executive added, as some perceived there was little to do in Nassau beyond shopping while others went off on their own sight-seeing. “What a great destination needs, and it is true anywhere in the world, is that people come to a destination wanting things to do, tours and so on,” Mr Israel said. “There are some ports in the Caribbean that reinvent themselves and add new attractions.”
THE TRIBUNE
Thursday, February 25, 2021, PAGE 7
BIDEN ORDERS A REVIEW OF US SUPPLY CHAINS FOR VITAL GOODS By JOSH BOAK AND TOM KRISHER ASSOCIATED PRESS WASHINGTON (AP) — President Joe Biden signed an executive order Wednesday intended to boost manufacturing jobs by strengthening U.S. supply chains for advanced batteries, pharmaceuticals, critical minerals and semiconductors. The United States has become increasingly reliant on imports of these goods — a potential national security and economic risk that the Biden administration hopes to address with the planned 100-day review and the possibility of increased domestic production. However, Biden will also look to work with international partners to ensure a stable and reliable supply chain. “These are the kinds of common sense solutions that all Americans can get behind,” Biden said at a White House ceremony. “It’s about resilience, identifying possible points of vulnerabilities in our supply chains and making sure we have the backup alternatives or workarounds in place.” White House officials emphasised that the order would help to create manufacturing jobs, a promise made by past presidents with decidedly mixed results. There are 12.2 million manufacturing jobs in the United States, down from 17 million in 2000, according to the Bureau of Labor Statistics. Biden’s team declined to say how many manufacturing jobs could be created, only that the benefits would extend past factory work. Sameera Fazili, deputy director of the White House National Economic Council, said there will be spillover research and development and jobs in the services sector. The orders were also distinctly bipartisan as Biden met with Republican and Democratic lawmakers at the Oval Office Wednesday before the signing. Former President Donald Trump signed an executive order last year to boost U.S. production of critical minerals. “This is a critical area where Republicans and Democrats agreed — it was one of the best meetings I think we’ve had so far and we’ve only been here about five weeks,” Biden said. “It was like the old days. People were actually on the same page.”
PRESIDENT Joe Biden closes the folder after signing an executive order relating to U.S. supply chains, in the State Dining Room of the White House, Wednesday, in Washington. (AP Photo/Evan Vucci) Republican Sen. John Cornyn of Texas attended the meeting and said afterward that Biden was very receptive during the conversation. “He said, ‘we’re all in,’” Cornyn said. “We all understand this is important, not only to our economy, but to our national security, because these cutting edge, high-end semiconductors – they operate on everything from the F-35 fifth generation stealth fighter to our cell phones.” Senate Majority Leader Chuck Schumer of New York has said the chamber should consider emergency spending to rebuild the capacity of the U.S. semiconductor industry, a sign that congressional support could go beyond Biden’s executive order. The order also included sectoral reviews to be completed within one year for defense, public health and biological preparedness, information communications technology, energy, transportation and food production. Over the past year, the fragility of vital supply chains has been revealed repeatedly. The coronavirus outbreak led to an initial shortage of masks, gloves and other protective medical equipment. Automakers in the United States and Europe are now dealing with a shortage of computer chips. Administration officials have met with automakers and are talking with foreign counterparts on how to boost supplies in the short term. But there is no magic bullet to immediately fixing the lack of semiconductors for automakers, an administration official said.