FNM Leader On Renward Wells Saga


August 6, 2014

It is now three weeks since it was reported that the Prime Minister demanded the resignation of Renward Wells. Wells has blatantly refused to resign; and the Prime Minister is obviously not man enough to fire him. If this situation were not so serious it would be laughable. But this is no laughing matter.

Where a Prime Minister appoints any person, he also has the right to dis-appoint that person. This is an important Parliamentary convention that underpins our democratic tradition. No appointed politician has a right to tell a Prime Minister that he will not resign when asked to do so; yet last week Wells told the nation that he would not resign.

There has been a clear breach of the Conventions that have always governed operations of Cabinet governance, and which have, thus far, underpinned the system of Parliamentary democracy. The fundamental principal is Accountability to Parliament and the People for the wrongdoing of elected officials. If the governing Party is not going to hold itself accountable for its actions then we are left only with a Parliamentary Dictatorship of the majority. This is a sad and deeply alarming state of affairs.

Wells has clearly acted without authority. He has committed the Bahamian people to a letter of intent, which will subject the Bahamian taxpayer to ascertainable financial penalties that could amount to millions of dollars if certain conditions are not met. All hard working Bahamian taxpayers will pay for this egregious act if this Government does not move quickly.

The Bahamian People are right to have the deepest suspicions about the apparent lack of integrity and accountability of those persons who hold the highest offices in this Christie government. This Wells affair is only the latest of many such acts, including……Gaming Referendum, Renew Bahamas, Noelle Prosequi, and Privatization of garbage trucks.

The Bahamian People are right to ask why the Prime Minister is, either afraid or, unwilling to act.

The latest example of this comedy of malfeasance in a public office was the publication last week, and the apparent reliance by the Christie government, on a so-called opinion by the Permanent Secretary.

The impression the government is trying to create is of their having made some kind of genuine inquiry, by asking for the views of the Permanent Secretary. This is a deceptive strategy, and the Christie government ought not to make the Permanent Secretary, who is a longstanding public servant, a scapegoat in this matter. If the Christie led government seriously wanted to assess the legal validity of the Letter of Intent, why did they not ask the Attorney General? What we want to know is “what is the legal opinion of the Attorney General?” who we assume is legally qualified to give a legal opinion.

The Government has either not sought, or not disclosed to the public, any such advice from the Attorney General.

Today I produce to you, and to the Bahamian People a copy of a document which appears to be the full Letter of Intent, signed by Parliamentary Secretary Renward Wells for and on behalf of BEC and on behalf of the Government of The Commonwealth of The Bahamas.

The Agreement ends with a general Indemnity Clause (Clause 8) which states that “if for any reason the project does not proceed…” then each party “will bear their own expenses and opportunity costs and… will indemnify the other party from any claims whatsoever in this regard.”

A close reading of this clause shows that the document is ambiguous as to the quantum of liability that Mr. Wells may have subjected the Bahamian taxpayer to, and the conditions under which such financial liability will be assessed. It requires the government of the Bahamas to indemnify the private developers under certain conditions without specifying a limit, which could possibly amount to hundreds of millions of dollars. Nor does it provide for exclusive jurisdiction of the Bahamian courts should disputes arise.

The Free National Movement is of the view that these very serious questions ought to be the focus of the full legal analysis of the Attorney General.

Additionally, Clause 6 of the Agreement specifically defines what steps are necessary to “proceed”, and Clause 7 prescribes a consequence for failure to approve the proposal after the Developer shall have complied with Clause 6.

By Clauses 6 and 7 of that Letter of Intent the Project Developer Stellar Waste to Energy Ltd and its Partner Stellar Energy Ltd are foreshadowed to borrow up to $40 Million Dollars prior to engaging in what are called “Front End Loader Studies (FELS)”. The next stage of the proposed development envisages that after the completion of three (3) FELS then BEC should enter into a “Power Purchasing Agreement (PPA)” with Stellar Waste to Energy, which will be the basis for further borrowings up to $650 Million to fully fund the project.

By Clause 7 of the Letter of Intent it is stated that the intention of the Parties to the Agreement that “should the Off-take fail to proceed until the PPA after the (Third) Front End Loader Study (“FEL3”) is performed, the Project Developer (Stellar Waste to Energy) shall be entitled to compensation to be agreed.”

On the face and by the very terms of these two clauses of the Letter of Intent Mr. Renward Well has, in fact, signed an Agreement which binds the Government of The Bahamas to a Contingent Liability which could well exceed $40 Million if the proposed project does, in fact, “proceed” as set out in Clause 6, but then fails to receive NEC approval, and in the event that the Project Developer has fully complied with the production of the three FELS stipulated in the Agreement.

In short, if the projects “proceeds” and the Developer complies, but the government breaks the deal, then the government is liable to pay “Compensation”. In such a case, where the project “proceeds” but government approval is not granted, the government by this document may have incurred a contingent liability of up to the amount of the borrowing by the Developer, if the Government fails to approve the signing of a Power Purchase Agreement by BEC!

There is no question that, should the project “proceed” as envisaged in Clause 6 of the Agreement, then the government would be bound to approve the Power Purchase Agreement, or pay “Compensation” in an un-determined amount. On its face, once the Developer “proceeds” there appears to be a binding agreement which could tie the hands of the government! Moreover, if the money was borrowed from a source outside the Bahamas, the Government could find itself fighting a legal battle in a foreign court, where punitive damages could be assessed far in excess of the $40 million dollars that Stellar may have borrowed.

The signing of such a Letter of Intent is far more serious than was previously thought. Mr. Wells has not just interfered with the portfolio responsibility of another government Ministry, he has gone much further and has signed a document which binds the Bahamas Government itself, and makes the Government liable to pay some amount of contingent “Compensation” to a foreign investor if the Government should fail to approve the execution of the Power Purchase Agreement by BEC!

There is also a question whether any liability to the government might arise if Stellar Waste to Energy Ltd take the Letter of Intent and use it to raise the more than $600 Million needed for its proposed development from international Capital Markets, institutional lenders or Pension Funds, and whether the Letter of Intent could well be binding upon the government to repay those investors should the money disappear, or the proposed investment not be implemented.

Contrary to the bland and uninformed views of a Permanent Secretary, I am advised that there could well be a very substantial contingent liability for the Government, hinged upon the duty to pay “Compensation”, and to “indemnify the other party”.

On behalf of the Bahamian People the FNM demands a formal Statement from the Attorney General on the issue of whether or not the Letter of Intent signed by Wells creates a substantial contingent liability for the Government.

The FNM demands the formal repudiation of the Letter of Intent by the National Economic Council, and the full Cabinet of The Bahamas without penalty to the Bahamian Treasury and taxpayer.

The FNM demands that the government must honor, abide by, and implement fully the sacred Conventions that bind every Cabinet Minister and Parliamentary Secretary, and in the process we pray that the Prime Minister will find the courage to terminate Wells for creating this financial nightmare for the Bahamian people.

The FNM demands transparency from the Christie government, so that other potential investors will be assured that their competitor will not be given an unfair advantage, as appears to be the case with this letter of intent.

Failing the above we demand the full resignation of a government which is apparently irredeemably dishonest and compromised, and we call for National General Elections to be held forthwith, so that Bahamians might be rid of this corrupt and bungling Christie government!