By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

THE Auditor General says a Senator’s relatives stand to earn “an enormous sum” from leasing their Gladstone Road property to a government agency that typically loses over $1m per year.

Terrance Bastian and his staff, in their audit examination of the National Training Agency (NTA) that was tabled in the House of Assembly, said the $7.9m in rental income that Dr Michael Darville’s family stands to gain over the ten-year lease of their Gladstone Road property represented a significant commitment on the Government’s behalf.

“Annually, $790,000 is expended for the agency’s rental office space, New Providence head office,” the auditor general’s report added. “At the end of the ten year lease agreement, the expenditure will amount to $7.9m. This outlay is considered an enormous sum.

“We recommend that consideration should be given to having a government-owned facility for the agency in place at the end of the lease agreement as a means of cost effectiveness. In addition, any suitable existing government-owned property that could be transformed or renovated for the same should be utilised to maximise scarce resources.”

The report details two office space rental agreements that were signed for the National Training Agency, both for a ten-year term.

The first, agreed on June 1, 2014, involves an annual $137,500 in rental payments, while the second - agreed a month later on July 30, 2014 - was for $652,500 annually. Together, they total $790,000 or $7.9m.

It is unclear why two lease agreements were signed, but the auditor general’s report states they apply to the same building - the New Providence head office. Both lease deals were signed under the former Christie administration when Dr Darville was minister for Grand Bahama, but he has vigorously denied any suggestion of wrongdoing or conflict of interest, adding that he played no part in the then-Cabinet’s decision.

Details of the National Training Agency’s Gladstone Road lease surfaced several years ago, with the Opposition arguing at the time that they were deliberately leaked to distract from the furore surrounding the Government’s decision to lease space at the Town Centre Mall from Brent Symonette and his family for the General Post Office.

Carl and George Darville, Dr Darville’s brother and late father, respectively, and the principals of Darville’s Wholesale, were named as the landlords on the lease document.

The details were slightly different, though, to those cited in the auditor general’s report, with the lease purportedly signed on June 1, 2015, for $58,453 per month over a ten-year period. Some 26,100 square feet was involved. Based on that property size, sources told Tribune Business yesterday that a $790,000 annual rental rate amounted to a price of $30.27 per square foot. They pointed out that this was far in excess of the $12 per square foot at which the Post Office had leased the Town Centre Mall from Mr Symonette - a detail that Senator Darville’s party became extremely vexed about.

However, other real estate sources speaking on condition of anonymity said the few details provided in the auditor general’s report did not enable a proper analysis of whether the $30.27 per square foot price was “enormous”.

They explained that a deeper dive into the lease agreement, and its underlying terms and conditions, was required given that the $30.37 price could include items such as common area maintenance (CAM) charges; utility charges; and compensation to the landlord for making leasehold improvements or fix-ups to the property to entice the National Training Agency to move in. “There’s got to be multiple components to that,” one contact said. “It’s not clearly defined what’s in the price per square foot.” They added, though, that any leases longer than five years require parliamentary approval, while the Government is also following an unwritten policy of keeping rental rates for properties it leases below $25 per square foot. Meanwhile, the auditor general’s report revealed that Bahamian taxpayers are having to subsidise the Gladstone Road head office lease payments given the National Training Agency’s minimal income and seven-figure annual losses.

The agency suffered net operating losses of $1.278m and $1.032m during the 2016-2017 and 2017-2018 fiscal years, respectively, with income for those two years standing at just $29,024 and $107,298. There was an improvement in 2018- 2019, though, as revenues jumped to $792,585 and the net operating loss dropping to $732,515. So-called “government grants” amounting to a collective $3m, and running at $1.278m, $1.032m and $732,515, were required to cover the losses across the three fiscal years detailed in the auditor general’s report.

Noting that the National Training Agency did not begin charging VAT until September 17, 2018, despite the tax being implemented in January 2015, the auditor general also urged it to “adequately maintain” its bank accounts so as to avoid being charged bank overdraft fees even though it has no such facility.