By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Grand Bahama Port Authority (GBPA) and the Government were yesterday urged to resume their “franchisee and franchisor collaboration” amid concerns that their $357m dispute “adds no value”.

Dillon Knowles, the Grand Bahama Chamber of Commerce’s president, told Tribune Business that a renewed partnership between the two is required to move Freeport and the wider Bahamas forward while admitting he is “sceptical” about any potential benefits emerging from both parties’ arbitration clash.

He said he views the Government’s claim for the GBPA to reimburse it for the cost of providing public services in Freeport, over and above the tax revenues generated by the city, as “an attack on the Hawksbill Creek Agreement”, its founding treaty, rather than a move against the city’s quasi-governmental authority.

With no public information provided on the arbitration proceedings’ progress, or even outcome, Mr Knowles pointed out that the Government - under successive administrations, both FNM and PLP - has a history of taking both legal and administrative actions challenging parts of the Hawksbill Creek Agreement but “has not been successful in any of them”.

“Both talk a good game when it comes to the relationship,” he said. “The arbitration seems to be the major issue hanging out there in space. We really have no idea where it’s going or if it’s going anywhere.

“I’m sceptical about the whole thing in the sense that the Government always brings actions against the Hawksbill Creek Agreement and it has not been successful in any of them throughout history. I don’t see this as an attack on the GBPA, the entity; I see it more as an attack on the Hawksbill Creek Agreement, the statute law.

“These attacks always end up in court or, in this particular case, in arbitration, but I don’t see the value from it. I don’t see how it helps anybody to proceed down this route. All that happens is that the lawyers get rich, which for my lawyer friends is good.”

Rather than a legal battle, Mr Knowles said the GB Chamber was “100 percent behind collaboration” between all stakeholders - itself, the Government and the GBPA - “for the benefit of all” and social plus economic growth in Freeport and the wider Bahamas. He added that the GBPA and government needed to revive this, with the former playing the role of franchisee and the latter acting as franchisor.

“From our perspective, the Port Authority is essentially a franchisee of the Government,” Mr Knowles told Tribune Business. “We would love to see them continue with the franchisee and franchisor collaboration on how to move the overall future of The Bahamas and Freeport forward. That would be our focus.

“These other issues, to me, are not necessarily the things we should be focused on. There’s always going to be a disagreement about what the real numbers are. I don’t think either side will provide evidentiary documents that are going to be conclusive. I don’t see it as value added.”

The Government is seeking reimbursement under section one, sub-clause five, of the Hawksbill Creek Agreement, Freeport’s founding treaty, which stipulates that it can seek payment from the GBPA for providing “certain activities and services” if the costs involved exceed certain tax revenue streams generated in the city.

The original 1955 clause required the GBPA to provide rent-free office and living accommodation to government employees involved in the “the maintenance of law and order, the administration of justice, the general administration of Government, the collection of Customs Duties and other revenue and the administration of the Customs Department the administration of the Immigration Department, Post Offices” and other functions to be mutually agreed.

The GBPA was also required to “reimburse the Government annually” within 30 days of detailed accounts being presented by the latter, but only if “Customs Duties and emergency taxes received by the Government in respect of goods entered or taken out of bond at the Port Area are less than the amount” spent by the Government.

However, multiple sources have questioned why the Government has waited until now - some 60 years or six decades - to try and enforce a Hawksbill Creek Agreement clause dating from the 1950s and 1960s. They argued that it smacked of the Davis administration using this as leverage to force the Haywards and St Georges to sell and exit after they declined to accept the Government’s purchase offer.

The Hawksbill Creek Agreement clause at the centre of the dispute may not be all it seems. It was last amended in 1960, when Freeport was five years-old, the city’s development very much in its infancy, and the only revenues earned by the Public Treasury at the time from the Port area were Customs duties.

While it indeed stipulates that the Government should not spend any more in the Port area than it earns in revenues, and that any excess costs over and above the latter should be reimbursed by the GBPA, that clause has not been amended to account for either the Freeport of today or multiple taxes that have been added since then.

Thus VAT, departure taxes and a host of other revenue streams have to be factored into the calculation of whether the Government is spending more than it is earning in Freeport. Several sources have suggested that, rather than go to arbitration, the two sides should instead negotiate amendments to section one, sub-clause five of the Hawksbill Creek Agreement to ensure it is fit for purpose and attuned to the modern world’s realities.