By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government pushed the National Insurance Board (NIB) to examine acquiring the former City Markets head office on the East-West Highway, it was revealed yesterday, with appraisal values for the property gyrating between $7.2 million and $9.9 million.

A memorandum sent to NIB’s acting director, dated December 20, 2012, described the Government as “requesting” NIB to assess the potential purchase of the now-defunct supermarket chain’s head office and warehouse building.

The fact the deal appears to have been pushed by the Government, rather than the NIB Board, management or investment committee, is again likely to raise suspicions that it was initially conceived as a way to get the Christie administration out of a ‘political jam’.

The Government is effectively caught between the proverbial ‘rock and a hard place’, not wanting to push City Markets’ 78 per cent majority owners, the Finlayson family, who are among their political supporters, too hard over the severance pay and benefits - including pensions - that former employees claim are due to them.

The former head office and warehouse is owned by the City Markets employee pension fund, and its sale - at the optimum price - is key to the fund’s winding-up and being able to pay beneficiaries 100 per cent of what is owed to them. The property is the pension fund’s main asset.

The former City Markets employees have been putting pressure on the Government to help resolve their plight, holding a public demonstration in Rawson Square last week.

Thus getting NIB to acquire the property would have enabled the Government to effectively ‘get off the hook’ with both the City Markets staff and the Finlayson family.

The internal NIB memo was disclosed in the House of Assembly yesterday by Dr Hubert Minnis, the Opposition leader, during the debate on the Employee Pension Fund Protection Bill.

It prompted a swift response from Shane Gibson, the minister with responsibility for NIB, who confirmed that a key reason for the Government pushing the deal was helping the former staff to receive their pension fund money.

Referring to NIB management, Mr Gibson said: “They were recommending that we not make an offer, and of course we will not make an offer based on that recommendation.

“We were not trying to purchase it to assist the company that owned the building. We were trying to assist the employees so that they could be paid their pension money.”

Tribune Business exclusively revealed that NIB was contemplating the purchase of the former City Markets head office, and the fears that it might massively overpay for the property.

Those concerns were reinforced by the appraisal values supplied to both NIB and Mark Finlayson, the principal of Trans-Island Traders, the Finlayson family-owned vehicle that held the majority interest in City Markets. Mr Finlayson is also a trustee of the employee pension fund.

The NIB memo said: “The property is currently owned by the pension plan for the employees of Bahamas Supermarkets, and was appraised by Robin Brownrigg of Bahamas Realty on August 8, 2012, at $8 million on behalf of Mark Finlayson....

“NIB has had the property independently appraised by James Newbold, a government-appointed appraiser, assessor and licensed broker/appraiser, and Alvin Rolle, a licensed architect, construction manager and senior certified valuer.

“The property was valued at $9.9 million and $7.2 million respectively.”

All three values massively exceed an appraisal that was conducted by Morley Realty for Bahamian wholesaler Lightbourn Trading, which had previously been negotiating to acquire the City Markets head office from the pension plan.

Tribune Business previously revealed that Lightbourn Trading offered between $4.5-$5 million based on that appraisal - yet one of the appraisals presented to NIB was for almost double that sum.

This newspaper was also informed that the offices at the former City Markets headquarters are effectively unusable, and need to be demolished. The floor, which is laid over water tanks, is said to be collapsing, with a new roof also needed as the 28 year-old building starts to show its age.

In other words, NIB would also have to invest a substantial seven-figure sum - on top of the purchase price - to bring the property up to standard.

NIB appears to have taken these considerations into account when deciding not to go through with the deal.

The memo said: “The building appears to be structurally sound, but requires major repairs as it has been vandalised and stripped of all electrical/copper wiring...

“Previous offers for the property were around $4-$5 million.”

The rationale for the purchase had been leasing it out to Bahamas Customs as warehouse space, but the NIB internal memo said the Department did “not have an immediate need for the property”.

It added: “Management is recommending that an offer not be made for the purchase of the Bahamas Supermarkets warehouse and land located on the East-West Highway until the Government has identified a suitable tenant with acceptable repayment terms.”

Mr Gibson backed this line yesterday, telling Tribune Business: “The Government said if the Customs Department has interest in this building, then we should look at purchasing it.

“Of course, when we spoke with Customs, Customs said they had an interest. Subsequent to that, Customs obviously said they didn’t have an interest.

“Since Customs had no interest, since the investment manager at NIB is recommending to us and the Opposition that we do not purchase it, then it wouldn’t make sense to purchase it at this stage to help the [City Markets] employees.”