Government has breached the Hawksbill Creek Agreement and discriminated against Freeport by offering concessions to investors that exceed those given to the port area, lawyer Fred Smith told The Tribune yesterday.
Recent Heads of Agreements entered into between government and private investors, Mr Smith said, have not only breached the Hawksbill agreement but pushed investment away from the economically crippled island.
Mr Smith said that these agreements signed in “secret by government are not democratic”.
He said that the reason the Port Authority has not “demanded its respect” from government is because it is “afraid of the PLP”.
As a lawyer Mr Smith has litigated against several government entities for breaches in the agreement, once all the way to the Privy Council.
Mr Smith said that the exemptions offered by the Hawksbill Creek Agreement created a huge tax and licensing concessionary zone in the Bahamas. However, offering comparable and more concessions than the agreement is creating a situation where Freeport is being discriminated against.
Section two, subsection 28 of the agreement states that there should be no “restrictions, regulations or concessions…. that discriminate against the port area or any business therein….” and if there is a question that such restriction, regulation, condition or legislation is enacted which affects the port area differently than rest of the Bahamas, the Port Authority is able to take legal action against the government.
In the case of the $3.1 billion Ginn investment, Mr Smith said that government did Grand Bahama a disservice by moving it out to the west end where there is no infrastructure.
“Ginn does not need any agreement from government. The law states that the Port Authority has the ability to issue licences,” he said.
Under the Hawksbill Creek Agreement, the government granted the first 50,000 (acres) of Crown land in the centre of Grand Bahama to the Port Authority and gave it the exclusive right to develop it.
In return the Port Authority was required to dredge a deep water harbour, construct an airport, hospitals and schools and provide other services and amenities. Later, the Port Authority acquired additional land from the Crown and from private sources, giving it a total of 150,000 acres, or 233 square miles for development.
Also, as an incentive for doing this work, the government granted the Fort Authority the right to grant business licences. The Port Authority was then given permission to license casinos and to develop tourism within the Freeport area.
This fact, said Mr Smith, means that government should not enter into discussions with a private company, thereby pushing the Port Authority out of the picture, contrary to the agreement.
By offering exemptions that are greater than or equal to the exemption in the Hawksbill Creek Agreement, government is driving investors away from Grand Bahama and encouraging them to set up in other islands rather than in the economically depressed second city of the Bahamas, Mr Smith said.
He explained that it is unfair to the Port Authority to offer exemptions in other islands that Freeport cannot compete with.
“I’m not saying that investors should not be allowed to go elsewhere but government should say here are the exemptions under this agreement we can offer you them if you go here and this set if you go to another island. But when government is free handed in exemptions in other areas they are treating Grand Bahama poorly,” Mr Smith said.
He said that there was no need for government to offer exemptions in excess of those offered by the Hawksbill Creek Agreement, nor is it appropriate for the government to enter into commercial agreements with developers.
“It is not lawful for Cabinet to privately or in secret come to an agreement with a development for exemptions. If exemptions are granted, whether it is Crown land to be given or Treasury land that is sold, leased or given away, if it is citizenship, or property tax exemption, the government has no right to keep these things secret,” Mr Smith said.
Mr Smith said that deals made in “secret by government are not democratic”.
“When it comes to the birthright of the people of a country or taxes owed to a country in heads of agreement nothing is confidential, government should not hide the details from its people,” Mr Smith said.
He said that the way the Hawksbill Creek Agreement was passed should be model of how governments handle agreements with investors.
The Hawksbill Creek Agreement was created on August 5, 1955 to encourage foreign investors to come to Grand Bahama through the offering of a number of exemptions.
Also part and parcel of the Hawksbill Creek Agreement exemptions are guarantees that residents and/or licensees would have exemptions of some taxes until 2015.
The Agreement also provided that residents and licensees also be free from excise taxes, stamp duties and most customs duties until 2054.
This means that any building materials, machinery or other equipment used by businesses licensed by the Grand Bahama Port Authority will be exempt from duties. Companies that carry on business in the Port Area also will be exempt from the Bahamian business licence fee until August 2054.
“The Hawksbill Creek Agreement is the template for concessionary agreements for private development. At the time government tabled the concessions in parliament and an act was passed which authorized government to enter into the agreement there was no deal agreed to between the company and the cabinet behind closed doors. No government should be in the business of commercial transactions. It should not be in the business of approving or disapproving commercial transactions. It should allow private enterprises to do their businesses with other private enterprises and ensure that the rights of the citizens of the country are secure,” Mr Smith said.
By RUPERT MISSICK Jr., Chief Reporter
The Tribune – Nassau, Bahamas
