Friday, May 19, 2017
By NEIL HARTNELL
Tribune Business Editor
The Minister of Tourism yesterday slammed as “absolute bull s*” claims by the ill-fated Fyre Festival organisers to have been given $8.4 million worth of Bahamian land, while conceding that “maybe we were caught blind” by the fiasco.
Dionisio D’Aguilar yesterday express considerable scepticism over the organisers’ claim to have been granted land in Exuma in exchange for holding Fyre Festival in this nation and promoting the Bahamas.
His comments came after Tribune Business obtained a 43-page private placement memorandum (PPM), or offering document, that Fyre Festival’s organisers were using to pitch the event to potential investors in their search for additional financing.
The document’s 30th page, headlined ‘Land Ownership’, claimed: “Fyre has been given $8.4 million of market value land on Black Point, Exuma, in exchange for hosting the festival and advertising the island.”
Mr D’Aguilar said he had no knowledge of any Bahamian land being “given” to the organisers, hip hop artist, Ja Rule, and his technology entrepreneur partner, Billy McFarland, suggesting it was more likely they had leased a site for the Fyre Festival.
The newly-appointed Minister of Tourism told Tribune Business that the organisers appeared to have been using the land to increase Fyre Festival’s value, and its attraction, for potential investors, in their bid to attract desperately-needed capital prior to the event falling apart.
“They’re including that in the equity worth they have, [but] $8.4 million of land is absolute bull s*. They would have leased the land, paying a rental and lease fee,” he said.”
“I don’t know what the arrangement was as to land use, who gave them the ability to use the land. I don’t know what deal was struck.”
The Fyre Festival organisers’ claim to have been “given” $8.4 million worth of Bahamian land is assuming increasing importance in the US courts, amid the numerous lawsuits spawned by the event’s cancellation, which left hundreds of attendees “stranded” in Exuma.
One investor, Oleg Itkin, is alleging that he loaned McFarland and Fyre Media some $700,000 on the basis of written representations that the event organisers had been granted Bahamian real estate worth that amount.
Itkin’s lawsuit alleges that the land’s $8.4 million was more than 25 per cent, or one-quarter, of Fyre Media’s claimed assets. US media reports are suggesting that should the Bahamian land prove a mirage, it could expose Fyre Festival’s organisers to criminal lawsuits on the basis of fraudulent misrepresentation.
Mr D’Aguilar, meanwhile, took a notably different stance from his predecessor, Obie Wilchcombe, admitting yesterday that Fyre Festival’s collapse had caused “significant reputational damage” for the Bahamas and its tourism brand, with the fall-out continuing.
Mr Wilchcombe, prior to the May 10 general election, had sought to downplay and brush off any impact for the Bahamas, saying: “I believe that the brand, the Bahamas’ brand, will withstand any negative fallout.”
Mr D’Aguilar, though, agreed that the Bahamas would need to conduct greater due diligence on festival and event organisers seeking to use this nation as their host.
He suggested that they should be required to submit business plans, proof of adequate accommodation for attendees, and even possibly provide the Government with proof they possessed the necessary financing.
Mr D’Aguilar added that enhanced scrutiny should be especially applied to first-time event organisers, such as Messrs McFarland and Ja Rule, while indicating that his Ministry may have automatically assumed they had the capacity to pull off Fyre Festival because of their perceived wealth and celebrity status.
“I had a discussion with the person under whose purview that fell under in the Ministry of Tourism,” Mr D’Aguilar said of his inquiries into the Fyre Festival.
“The feeling by the employees at the Ministry of Tourism was that this was something very much handled by the promoters and organisers, and they were basically responsible for accommodations and the whole set-up.
“The Ministry was not involved in that process; in fact, not involved at all. It was only when we realised that incredible numbers of people had showed up, and the organisers couldn’t handle that amount, that the Ministry stepped in and tried to assist.”
However, the Ministry of Tourism’s press releases on Fyre Festival, issued under the former administration just one month before it was held, gave the impression of a much closer relationship with the organisers.
An April 3, 2017, press release from the Ministry of Tourism described itself “as a partner for the festival”, liaising with all government and Exuma-based authorities to ensure the organisers obtained the necessary permits and approvals.
It added the Ministry of Tourism was “working tirelessly with Fyre Festival organisers to ensure that the 2017 festival is unforgettable” - and unforgettable it certainly has been, but for all the wrong reasons.
“Maybe we caught blind,” Mr D’Aguilar admitted yesterday, “but the assumption was these were great, expert promoters with significant money, quite high profile, and people were interested in coming to an event organised by these people.”
Bahamian private sector executives, including Pedro Rolle, the Exuma Chamber of Commerce’s president, previously told Tribune Business that there were clear warning signs Fyre Festival would fail four to eight weeks out, with vendors not being paid.
Mr D’Aguilar said he was unsure whether due diligence was conducted on the Fyre Festival by his ministry, but said this was needed in the future to protect the Bahamas’ reputation and brand.
“We must make greater efforts to find out how many people are coming in, whether they have accommodation, and to get a plan of action from the organisers,” he told Tribune Business.
“Give us a comfort level. Demonstrate you know what you’re doing. If this is your first event, we must do more in-depth due diligence.”
Mr D’Aguilar said requiring foreign festival organisers to post performance bonds was likely a step too far, as it would deter them from coming to the Bahamas.
Yet this had to be balanced with ensuring a Fyre Festival-type fiasco is never repeated, the Minister adding: “We must make sure this doesn’t happen again, given that the damage to the brand is significant and it hasn’t stopped. It’s ongoing.
“While we can say this was not our responsibility, it has caused substantial reputational damage to the country. Obviously, the take away from this is that while we can say, great, look at all these festivals, we’ve got to look after the reputation and brand of the Bahamas.
“It’s not that the Bahamas didn’t deliver. No one asked us to provide anything but, at the end of the day, this happened in the Bahamas and we’re considered a co-conspirator in the fiasco,” Mr D’Aguilar continued.
“We learn from these mistakes, and once bitten twice shy. We have to do our best to guard against this.”