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Ex-Boss ‘Robbed’ Ferry Firm Of Bahamas Route

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The former chief executive of Balearia Caribbean must pay his ex-employer $2.844m in damages for effectively stealing the Resorts World Bimini ferry contract from under them.

The Spanish ferry operator, which already services Freeport from Fort Lauderdale on an almost-daily basis, was deprived of the chance to bid on the Bimini deal because Hernan Calvo concealed the opportunity from it.

Calvo, according to a US court ruling obtained by Tribune Business, first entered into secret talks to steer the Resorts World contract to a rival Argentinian ferry company, Buquebus. When it pulled out in April 2016, he found a German transportation company, Forde Reederei Seetouristik GmbH (FRS), to take over the deal and it duly signed a contract with the Bimini resort’s owner.

Judge Kathleen Williams found that Calvo, while still working at Balearia, was competing against his then-employer for two months over the Resorts World deal prior to his eventual departure. She ruled that he had “breached his fiduciary duty” to the Spanish ferry operator, and therefore needed to pay it $2.844m compensation for loss of profits.

Documents filed with the the US south Florida federal court, which have been obtained by Tribune Business, also allege that Calvo kept secret negotiations he was holding with the Bahamian government over investment incentives for the Resorts World Bimini ferry route.

“The Government of the Commonwealth of The Bahamas figures prominently in any proposed tourism activity affecting The Bahamas,” Balearia, in its original action, alleged. “Calvo, as Balearia Caribbean’s chief executive, knew that on Balearia Caribbean’s existing ferry operations between Fort Lauderdale and Grand Bahama, Balearia Caribbean was able to obtain through negotiations a reimbursement of certain marketing expenses from the Government of the Commonwealth of The Bahamas as an incentive to promote these ferry operations.

“Calvo also held discussions with Bahamian government representatives when he was negotiating the Genting ferry deal for Balearia Caribbean, and these discussions would have included the marketing reimbursement tourism incentive.

“Calvo kept [Balearia] in the dark about the discussions he was having with representatives of the Government of the Commonwealth of The Bahamas at the time he was also negotiating the Genting ferry deal.”

Balearia claimed that a representative for Genting Group, the Malaysian conglomerate that owns Resorts World, informed it that the agreement with FRS involved the ferry operator “ceding to Genting the marketing incentives that FRS would obtain from the Bahamian government”.

In other words, Resorts World and Genting would be the ones to benefit from substantial concessions granted on the Bahamian taxpayer’s behalf - in addition to the multi-million dollar tax breaks and other incentives already granted to them for the resort’s development.

Balearia, upon learning of Calvo’s conduct, initiated a lawsuit for breach of fiduciary duty and the US Trade Secrets Act against the man it appointed head of its Caribbean (really Bahamian) operations in 2013.

Judge Williams, in her ruling, said Calvo knew Balearia was “on the look-out for an opportunity with Genting Group to provide ferry service between Miami, Florida, and a casino in Bimini, The Bahamas [Resorts World]” from the time he was appointed.

While Balearia had serviced the Bimini route from 2011 to 2013, Genting ultimately decided to use its own Superfast vessel to service Resorts World once the latter opened. “However, Balearia knew that the Superfast was too big for the route and that, ultimately, Genting would need a third party to operate that line,” Judge Williams noted.

The Spanish operator was the only company then providing ferry service in the Caribbean, and Genting contacted Calvo in March 2015. He met Genting’s outgoing president for the Americas, Dana Leibovitz, and his replacement, Ed Farrell, with the duo visiting Fort Lauderdale to inspect the company’s vessel, the Pinar Del Rio, one month later.

Calvo then visited Bimini to inspect Resorts World’s dock, but cancelled a test visit by the Pinar Del Rio in early July 2015. He resigned the following month, supposedly to move to Plastic Energy, an energy company, but was persuaded to remain until October 2015 to train his replacement.

While in Spain, Calvo received an August 26, 2015, e-mail from Dana Liebovitz seeking to re-open negotiations on Genting’s behalf over the Bimini route. Concealing this from Balearia, Calvo set up a meeting for September 8 and contacted Buquebus - the Argentine firm and his employer’s rival - in the interim to alert it to the opportunity.

He also ensured Buquebus’s vessel, the Silvia Ana, was certified by the US coast guard while still in Balearia’s pay. And, on November 22, 2015, he sent Bimini Bay’s founder, and Genting’s partner, Gerardo Capo, a draft Memorandum of Understanding (MoU) for the Argentine firm to take over the Bimini route.

Balearia finally found out that the contract was available when Genting announced on January 6, 2016, that the Superfast was ceasing operations. It sought to begin talks with the Malaysian conglomerate but was unaware of how far advanced Calvo and its rival, Buquebus, were.

Even the Argentine firm’s withdrawal in April 2016 failed to faze Calvo, as he swiftly found a replacement in the German firm, FRS. It sealed its own deal to operate the Miami to Bimini route some two months later, using virtually identical terms to those sought by Buquebus.

“During the negotiations with FRS, Calvo used an Excel document template that had been created by Balearia,” Judge Williams found. “The document contained revenue and cost projections based on data points used by Balearia including seasonability percentages; commission rates; average price per passenger; average price per cargo unit; ration of bins to pallets.”

Balearia argued that Calvo had breached the US Defend the Trade Secrets Act because he used its confidential, proprietary information to assist a competitor in the shape of FRS.

This, though, was rejected by Judge Williams on the basis that the information Calvo used came from his 20 years’ experience in the ferry industry, and that most of the details in the spreadsheet could be obtained by anyone in the sector.

She also found that Balearia “did not take reasonable steps to protect” itself, as Calvo was not required to sign an employment contract or non-disclosure/confidentiality agreement. Nor was he asked to return any confidential information when he left.

However, Judge Williams found the former Balearia Caribbean chief did breach his fiduciary duties by concealing the Bimini opportunity from his employer. She brushed away Calvo’s claim that he did not compete with his former employer until after he left, and that his actions prior were “just pre-departure planning activities”.

“The court finds that from late August 2015 until the end of October 2015 - while he was still Balearia’s chief executive - Calvo was, in fact, competing against Balearia,” Judge Williams ruled.

“The court concludes that by keeping the opportunity from Balearia since September 2015, Calvo effectively robbed Balearia of a corporate opportunity.... But for Calvo’s actions, neither Buquebus nor FRS would have even become aware of the opportunity had it not been for Calvo.”

Judge Williams accepted Balearia’s claim that it had suffered $2.844m in lost profits as the damages Calvo must pay, but rejected its argument for an additional $1.982m to cover costs relating to having a ship sit idle.

Comments

sealice 1 year, 10 months ago

and there we thought the Symonette's were the only evil honkies trying to screw up shipping for Bahamians?

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DDK 1 year, 10 months ago

With all the governmental fiscal clarity we never do learn what, if anything, from these deals goes to The People of The Bahamas. It would seem the "investors" are always granted monumental tax and other exemptions, politicians' paws are greased, but the benefits to The People are always hidden in murky places. It does not get any more clear than that! Quite sickening really.....

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truetruebahamian 1 year, 10 months ago

Sealice - you are full of seagull poop. The Symonettes have done more for this country than you ever could do, Somehow I can't imagine sealice as allowing development or prosperity in this country - just another flapping mouth like so many others with nothing material to offer. This includes you too, lowbrow political trolls.

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TheMadHatter 1 year, 10 months ago

To Mr. Calvo i say, "Ya beast !!!"

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ohdrap4 1 year, 10 months ago

he can pay this money by offering himself as a consultant around here.

or by reviving the fyre festival

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banker 1 year, 10 months ago

This is funny. And this is the reason that most people do not want to do business in the Bahamas. A good example of Bahamian entrepreneurship. This guy's sin was not guarding the interest of his employer.

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joeblow 1 year, 10 months ago

... no , this guys sin was using his position in a company for personal profit to the detriment of his employer. A basic breach of duty causing loss to his former employer!

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