By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A prominent QC yesterday demanded that the Deputy Prime Minister retract his assertion that Freeport is “a smuggling gateway”, arguing that it had “tarred every business with the same brush”.

Fred Smith, the Callenders & Co attorney and partner, told Tribune Business that he had been “shocked” by K P Turnquest’s comments that Freeport was being used by unscrupulous businesses and individuals on other islands to evade due taxes.

“I am shocked that my representative, the Deputy Prime Minister, who I voted for should say these things,” Mr Smith told Tribune Business. “I don’t want my community to be known as the smuggling gateway of the Bahamas.

“If someone is smuggling, investigate and prosecute to the fullest extent of the law, but you can’t negatively paint my entire community. If the Government prosecutes a particular person for smuggling, so be it, but stop tarrring every licensee with this prejudicial brush.”

Mr Smith hit out after Mr Turnquest, at last week’s Chamber luncheon, warned that Freeport’s ‘bonded’ privileges were being abused by businesses and individuals who imported product ‘duty free’ before shipping it to other Bahamian islands without paying the necessary taxes.

“We must not allow Freeport to continue to be used as a smuggling gateway to the rest of the Bahamas to avoid tax responsibility, and to avoid detection of illegal activity,” the Deputy Prime Minister had said.

Mr Turnquest, when contacted yesterday, told Tribune Business he had not been implying that all 3,500 Grand Bahama Port Authority (GBPA) licensees were involved in such activity.

While conceding that neither he nor the Government knew how much revenue was being lost, the Deputy Prime Minister confirmed that he had indeed been referring to tax evasion stemming from goods imported via Freeport where duty, VAT and other taxes were not paid.

Describing his comments as a ‘polite warning’, Mr Turnquest told Tribune Business: “I’m sure it is no surprise to most people what has been happening out of Freeport for years, with people bringing in stuff on bond and transferring it to other islands, including New Providence.

“The scope and scale of it, I couldn’t tell you. But we know it happens. It was just a subtle warning: Get your house in order.

“We want to track down every abuse and ensure the Government collects what is rightfully due. We intend to pursue a level playing field where no one is able to scam the system to the disadvantage of another.”

Mr Turnquest said he was not targeting businesses who used Freeport’s ‘bonded’ status legitimately, bringing in inventory on ‘bond’ and only taking it out - and paying due taxes - when a sales order was received.

Such practices boost a company’s cash flow, and the Deputy Prime Minister said the Government “encouraged” and had “no problem” with such a use of Freeport.

But he added: “I think everybody is aware of our fiscal situation, and we recognise we all have to pay our fair share. It’s vitally important that the Government’s revenue streams are protected, and that’s what we intend to do.

“We’re not imposing any new or increased taxes; just seeking to enforce compliance as best we can.”

Mr Smith, though, argued that just because duty-exempt goods were taken out of Freeport’s Port area did not automatically mean they were being smuggled to another island in the Bahamas.

“I take great offense to the continual perception by successive governments that because one licensee in Freeport may have broken the law, every other licensee is engaged in the same exercise,” he told Tribune Business.

“The challenge that Freeport licensees have faced for decades is that the Government throws out the baby with the bath water. Instead of conducting forensic investigations and catching smugglers breaking the law, what they do is hammer all licensees with the heavy hand of government and disrupt the economy, mess up commerce and subject everyone to regulatory strictures, instead of doing their jobs, identifying individual smuggling abuses and prosecuting him or her.”

Mr Smith continued: “The behaviour of every administration so far, and I do hope this new FNM administration shows me to be wrong, is they treat everyone in Freeport as guilty instead of giving them them constitutional presumption of innocence.

“Just because of one licensee in Freeport does not mean we’re all smugglers. I have absolutely no difficulty with Customs enforcing the laws, but don’t paint me and every licensee as some kind of smuggler just because a few are doing it.

“This is what infuriates me as a 40-year licensee; that a continual picture is painted of Freeport licensees as law breakers, acting illegally, taking advantage of and abusing the system, and behaving unethically. It is very disturbing.”

Mr Smith added that there appeared to be “a fundamental failure” by every single administration to realise that “there is no such thing as a bonded area in Freeport”.

He explained that goods imported duty-free into Freeport via a licensee were not restricted to the Port area, provided they were used in the conduct of that company’s business. This was how Grand Bahama Power Company is able to use its vehicles and equipment elsewhere in Grand Bahama.

Mr Smith, though, warned that companies would be abusing their bonded privileges - and expose themselves to fines and tax penalties - if duty-exempt products were sold on or not used in the conduct of their business.