By NEIL HARTNELL
Tribune Business Editor
The deputy prime minister has blasted previous administrations for “taking advantage of the Bahamian people” by entering into contracts “nobody in a commercial sense” would agree to.
K Peter Turnquest, pictured, told Tribune Business that “there’s no doubt about that” when asked whether former governments had committed taxpayers to huge expenditures and liabilities without any idea of how such agreements would be financed.
With numerous multi-million dollar disputes between the government and private developers/investors seemingly headed for Supreme Court resolution, Mr Turnquest said many of the deals inherited by the Minnis administration were “clearly not in the best interest of the Bahamian people long-term”.
Declining to speak to particular examples, he told this newspaper: “It’s unfortunate that we have not used more discretion, more responsibility, in terms of entering into contracts where there’s absolutely no need for them, in some instances, and the commercial terms - or terms - are not ones you would usually see in a commercial lease.
“It’s not just about the Government. It’s about taking advantage of the Bahamian people and backing them into a circumstance that’s clearly not in the best interest of the Bahamian people long-term.”
Mr Turnquest said several contracts had been entered without funding being allocated to finance them, or any notion as to whether the already-strained taxpayer could take further exposure. While agreeing that the Ministry of Finance’s involvement in such negotiations “would obviously help”, he said it had participated in several of the contracts in question “maybe directed or otherwise”.
He added: “Some of them, the conditions that have been agreed, nobody in a commercial or objective sense would ever agree to. We’ll see what happens with all the claims made, and when they are finally resolved we will address it then I suppose.”
Tribune Business last week revealed that the Supreme Court gave a pre-Christmas oral verdict that the government’s lease of the Summerwinds Shopping plaza, owned by former Cabinet minister Leslie Miller and his family, was “valid and binding” on the Crown.
This has opened the way, potentially, for a damages claim against the Government and Bahamian taxpayer for more than $66m. Mr Miller’s lawsuit, filed in July 2018, and the five leases involved were among the contracts identified by Mr Turnquest during the 2018 mid-year Budget debate as “handcuffing” the Government’s financial plans.
It was one of two cases he cited where the Government owed between $13-$14 million for property leases and had “no exit clauses”, even though “not one single government worker has ever set foot in the building”.
Tribune Business also reported recently on the other “case”, which involves businessman and accountant Kingman Ingraham, who is asserting a $30m claim against the Government based on its alleged breach of an irrevocable lease agreement to rent the former Kelly’s Warehouse on Soldier Road for the Department of Public Health - a situation that has placed his family home in jeopardy.
Between his claim and that of Mr Miller, the Government - meaning the Bahamian taxpayer - could be facing a near-$100m payout liability if both their claims are upheld and they obtain the damages sought. There is also the litigation launched by Scott Godet, developer of the initial Post Office private-public partnership (PPP), after the Government ended his $17.43m project.
Tribune Business knows of other potential multi-million dollar claims against the Government by investors and companies who believe it has breached binding, legally enforceable contracts they have with it. This suggests the $186m figure quoted by former MP and Cabinet minister, Pierre Dupuch, as to the total liabilities faced by the taxpayer may not be completely far-fetched.
Mr Turnquest’s words will be of little comfort to these investors, who will argue that the proper course is simply for the Government to negotiate a financial settlement with them or pay them what is due under the deal’s terms rather than seek to wear them down by dragging the case out through the court system.
The cash-strapped Treasury, though, may provide one explanation for the Government. And Mr Turnquest told Tribune Business that it had “to be mindful of these issues” when doing its annual budgeting, since “unanticipated” claims “much more than you imagined” had a habit of emerging during the year.
“There’s always going to be something out there that you can’t control or unaware of,” he said. “We’ve put contingencies into the Budget to take care of these issues, some of which are much more than originally anticipated or higher than you can possibly imagine with respect to being unable to amend contracts out there that have no short of long-term benefit to the Bahamian people.”
Mr Turnquest added that the switch from cash-based to accrual accounting, which the Government hopes to complete by 2022, is “critical to know what our liabilities and signed-up commitments are”.
“From an accounting point of view it gives us a much more accurate picture of where we are as a country, what our commitments are from a revenue planning perspective, and we’re able to better plan our cash flow,” he explained.
“We can ensure that our vendors, particularly small and medium-sized enterprises, that have done work for the Government are paid on time. It’s a difficult and technical matter, but we are making progress.”