Identifier
Created
Classification
Origin
09NASSAU751
2009-12-18 16:21:00
SECRET
Embassy Nassau
Cable title:
PM Removes Major Port Manager for Deal with U.S. Company,
how-toVZCZCXYZ0000 OO RUEHWEB DE RUEHBH #0751/01 3521621 ZNY SSSSS ZZH O 181621Z DEC 09 FM AMEMBASSY NASSAU TO RUEHC/SECSTATE WASHDC IMMEDIATE 0092 INFO EC CARICOM COLLECTIVE IMMEDIATE
S E C R E T NASSAU 000751
SIPDIS
AMEMBASSY BRIDGETOWN PASS TO AMEMBASSY GRENADA
E.O. 12958: DECL: 2019/12/18
TAGS: PREL PGOV ECON EINT EINV EPET BF
SUBJECT: PM Removes Major Port Manager for Deal with U.S. Company,
May Prefer China Instead
CLASSIFIED BY: Timothy Zuniga-Brown, Deputy Chief of Mission; REASON:
1.4(B),(D)
S E C R E T NASSAU 000751
SIPDIS
AMEMBASSY BRIDGETOWN PASS TO AMEMBASSY GRENADA
E.O. 12958: DECL: 2019/12/18
TAGS: PREL PGOV ECON EINT EINV EPET BF
SUBJECT: PM Removes Major Port Manager for Deal with U.S. Company,
May Prefer China Instead
CLASSIFIED BY: Timothy Zuniga-Brown, Deputy Chief of Mission; REASON:
1.4(B),(D)
1. (S) SUMMARY: In an unusual move, PM Ingraham effectively
removed the foreign manager of one of the world's largest and
busiest ports after learning of his role in the partial sale of the
Grand Bahama Port Authority (GBPA) in Freeport to a U.S.-Singapore
Firm. Confidential sources speculate that the PM was blindsided by
the deal and had possibly preferred to see the Port Authority
(comprised of a major international airport, major transshipment
container port, cruise ship terminal and harbor and major petroleum
storage center) sold to Chinese-backed Container Port owner,
Hutchison Whampoa. The Chairman's removal puts into jeopardy
ongoing negotiations with major U.S. firms to bring Liquid Natural
Gas (LNG) re-gassification facilities and other badly-needed
commercial ventures to the country's second-largest city, which
suffers from nearly 15 percent unemployment. END SUMMARY
-------------- --
Blindsided by Port Deal; PM Retaliates
-------------- --
2. (S) PM Ingraham announced in a December 14 press conference
that the work permit of Hannes Babak, the Chairman of Port Group
Limited (PGL),which owns and operates the Grand Bahama Port
Authority, was due to expire on December 31, 2009 and that it
would not be renewed. The news came as a surprise to Babak, who
had served as PGL Chairman from 2006 until present and is a
permanent resident of The Bahamas and was granted a license and
work permit from Ingraham's government to carry out his duties. A
source associated with the incident told the Embassy that this move
is likely retaliation for Babak's involvement in the sale of Sir
Jack Hayward's ownership stake in the GBPA to Mid-Atlantic
projects, LLC and its Singaporean partners, International
Enterprise Singapore and Temasek. Sir Jack Hayward and the estate
of late Edward St. George had co-owned the GBPA since its creation
in 1955 and had been embroiled in a long-standing dispute over
what percentage of the GBPA each actually owned. The Prime
Minister had allegedly learned as recently as December 12 that
Hayward's 50 percent stake had been sold; Ingraham had previously
believed that the only company interested in purchasing the GBPA
was Hong Kong-based Hutchison Whampoa.
3. (S) Babak alleged that PM Ingraham was favorable to the Chinese
company and had, on numerous occasions, pressured Hayward and the
trustees of St. George's estate to sell their shares to Hutchison
Whampoa. He described the relationship between PM Ingraham and
Hutchison Whampoa as "unusual and unexplainable," because many
have criticized their management and the lack of development at the
Port. He cited rumors that Hutchison contributed USD 7 million
to PM Ingraham's last campaign.
--------------
Four Conditions for Renewal
--------------
4. (S) Babak was appointed as Chairman to the PGL in 2006 under
considerable controversy, due to his previous ownership of a
construction company with direct interests in the port's
development and his close relationship with Sir Jack Hayward. In
June of 2009 when PGL had submitted Babak's permit to the Ministry
of Immigration for renewal, he was called to a meeting at the PM's
office in Freeport with Minister of Immigration Branville
McCartney, Director of Immigration Jack Thompson , and Officer In
Charge for Freeport, Mrs. Fausteen Major-Smith. At this meeting,
McCartney allegedly told Babak that the GCOB would approve the
renewal of the work permit under four conditions. The first
condition was to solve the ongoing ownership dispute between
Hayward and the St. George's estate. The second condition was to
"treat Bahamians fairly." This was interpreted as a demand to
promote the daughter of Minister of Public Works and Transport Neko
Grant to General Counsel of the Port Authority, which Babak had not
done because she was reportedly not qualified for the position.
The third condition was to "compete fairly with Bahamian
companies." PolCouns was told that this represented an inaccurate
perception from the GCOB that Babak still owned shares in his
construction company and therefore had a conflict of interest when
granting contracts for port development. Babak reportedly sold all
of his shares prior to becoming chairman in 2006 and offered proof
of this to McCartney, who was "uninterested." The fourth condition
was to "not stand in the way of" cruise port terminal construction
in Williamstown. Babak had publically advocated for the terminal
to be located in Williamstown because no reef existed there.
--------------
A "Legitimate" Buyer?
--------------
5. (S) Two weeks after the meeting with McCartney, sources note
that Babak met with Sir Albert Miller, former President of the GBPA
and close confidant of PM Ingraham, to discuss the four conditions.
Miller told Babak that the PM wanted him to "get [Sir Jack Hayward]
to sell his share and sort out the contract." Miller added that
the PM did not want the dispute to have to go through arbitration
in London at the International Chamber of Commerce. In a later
conversation with the PM, Babak asked directly whether the GCOB
preferred that Hayward's and St. George's shares be sold entirely
to Hutchison Whampoa. Babak claims that the PM said that the
shares should be sold to Hutchison Whampoa if that company was "the
only buyer." Babak confirmed this information once again with Sir
Albert Miller who reiterated that "any legitimate buyer [was] fine"
with the Prime Minister. Babak said that he then proceeded with
negotiations with Mid-Atlantic LLC, who had proposed a "better
deal" for the purchase of Hayward's shares.
-------------- --------------
--------------
Major deals with U.S. LNG, Hospital Development Companies in
Jeopardy
-------------- --------------
--------------
6. (S) Sir Jack Hayward had publically proposed that Babak continue
as PGL's Chairman in the Cayman Islands, site of parent company
Intercontinental Diversified Corporation (IDC) headquarters,
although Babak told media sources that operating the Bahamian port
from the Cayman Islands 'would not work." One source told
PolCouns that Babak's dismissal or relocation would put into
jeopardy several major industrial deals with U.S. companies that
would have immediate economic benefits for Grand Bahama, which
suffers from an unemployment rate of 14.6 percent. One deal still
under negotiation involves the establishment of an offshore,
ship-based Liquid Natural Gas (LNG) regassification plant and
on-shore LNG storage facilities operated by Texas-based Excelerate
Energy and Virginia-based AES. The arrangement would enable
electricity delivery services via underwater cable to Florida Light
and Power as well as Bahamas Electricity Corporation (BEC). BEC,
Babak told one local newspaper, could save USD 250 million in
planned capital expenditures if this project were to become
reality. Babak is also negotiating with PPG, an American company
that maintains a property fund devoted to the construction of
hospitals for medical tourism. He said this deal, while tentative,
is worth over USD 100 million. The source emphasized that Babak
had spearheaded these deals, and they were unlikely to go through
without his daily involvement.
--------------
Babak Requests Embassy Assistance
--------------
7. (S) Babak has asked the Deputy Chief of Mission for assistance
in convincing Ingraham to reverse his position and to renew the
permit. Babak has been a long-time supporter of U.S. commercial
interests in The Bahamas and would continue to do so if he stayed
in his current role. The DCM was non-committal.
--------------
Comment
--------------
8. (S) Ingraham's decision not to renew Babak's permit was likely
made out of anger at Babak's move not to obtain Ingraham's blessing
before moving forward with the Mid-Atlantic deal as well as a
not-so-discreet desire to increase Chinese involvement in Grand
Bahama's development plans through Hutchison Whampoa. Ingraham's
public and well-reported announcement likely means that the
government is forced now to not renew the work permit. Babak's
ultimate departure, including maintaining the Chairmanship position
from the Cayman Islands, could result in further delays in Grand
Bahama's development just as the expected sale to Mid-Atlantic had
sought to jump-start progress.
AVANT
SIPDIS
AMEMBASSY BRIDGETOWN PASS TO AMEMBASSY GRENADA
E.O. 12958: DECL: 2019/12/18
TAGS: PREL PGOV ECON EINT EINV EPET BF
SUBJECT: PM Removes Major Port Manager for Deal with U.S. Company,
May Prefer China Instead
CLASSIFIED BY: Timothy Zuniga-Brown, Deputy Chief of Mission; REASON:
1.4(B),(D)
1. (S) SUMMARY: In an unusual move, PM Ingraham effectively
removed the foreign manager of one of the world's largest and
busiest ports after learning of his role in the partial sale of the
Grand Bahama Port Authority (GBPA) in Freeport to a U.S.-Singapore
Firm. Confidential sources speculate that the PM was blindsided by
the deal and had possibly preferred to see the Port Authority
(comprised of a major international airport, major transshipment
container port, cruise ship terminal and harbor and major petroleum
storage center) sold to Chinese-backed Container Port owner,
Hutchison Whampoa. The Chairman's removal puts into jeopardy
ongoing negotiations with major U.S. firms to bring Liquid Natural
Gas (LNG) re-gassification facilities and other badly-needed
commercial ventures to the country's second-largest city, which
suffers from nearly 15 percent unemployment. END SUMMARY
-------------- --
Blindsided by Port Deal; PM Retaliates
-------------- --
2. (S) PM Ingraham announced in a December 14 press conference
that the work permit of Hannes Babak, the Chairman of Port Group
Limited (PGL),which owns and operates the Grand Bahama Port
Authority, was due to expire on December 31, 2009 and that it
would not be renewed. The news came as a surprise to Babak, who
had served as PGL Chairman from 2006 until present and is a
permanent resident of The Bahamas and was granted a license and
work permit from Ingraham's government to carry out his duties. A
source associated with the incident told the Embassy that this move
is likely retaliation for Babak's involvement in the sale of Sir
Jack Hayward's ownership stake in the GBPA to Mid-Atlantic
projects, LLC and its Singaporean partners, International
Enterprise Singapore and Temasek. Sir Jack Hayward and the estate
of late Edward St. George had co-owned the GBPA since its creation
in 1955 and had been embroiled in a long-standing dispute over
what percentage of the GBPA each actually owned. The Prime
Minister had allegedly learned as recently as December 12 that
Hayward's 50 percent stake had been sold; Ingraham had previously
believed that the only company interested in purchasing the GBPA
was Hong Kong-based Hutchison Whampoa.
3. (S) Babak alleged that PM Ingraham was favorable to the Chinese
company and had, on numerous occasions, pressured Hayward and the
trustees of St. George's estate to sell their shares to Hutchison
Whampoa. He described the relationship between PM Ingraham and
Hutchison Whampoa as "unusual and unexplainable," because many
have criticized their management and the lack of development at the
Port. He cited rumors that Hutchison contributed USD 7 million
to PM Ingraham's last campaign.
--------------
Four Conditions for Renewal
--------------
4. (S) Babak was appointed as Chairman to the PGL in 2006 under
considerable controversy, due to his previous ownership of a
construction company with direct interests in the port's
development and his close relationship with Sir Jack Hayward. In
June of 2009 when PGL had submitted Babak's permit to the Ministry
of Immigration for renewal, he was called to a meeting at the PM's
office in Freeport with Minister of Immigration Branville
McCartney, Director of Immigration Jack Thompson , and Officer In
Charge for Freeport, Mrs. Fausteen Major-Smith. At this meeting,
McCartney allegedly told Babak that the GCOB would approve the
renewal of the work permit under four conditions. The first
condition was to solve the ongoing ownership dispute between
Hayward and the St. George's estate. The second condition was to
"treat Bahamians fairly." This was interpreted as a demand to
promote the daughter of Minister of Public Works and Transport Neko
Grant to General Counsel of the Port Authority, which Babak had not
done because she was reportedly not qualified for the position.
The third condition was to "compete fairly with Bahamian
companies." PolCouns was told that this represented an inaccurate
perception from the GCOB that Babak still owned shares in his
construction company and therefore had a conflict of interest when
granting contracts for port development. Babak reportedly sold all
of his shares prior to becoming chairman in 2006 and offered proof
of this to McCartney, who was "uninterested." The fourth condition
was to "not stand in the way of" cruise port terminal construction
in Williamstown. Babak had publically advocated for the terminal
to be located in Williamstown because no reef existed there.
--------------
A "Legitimate" Buyer?
--------------
5. (S) Two weeks after the meeting with McCartney, sources note
that Babak met with Sir Albert Miller, former President of the GBPA
and close confidant of PM Ingraham, to discuss the four conditions.
Miller told Babak that the PM wanted him to "get [Sir Jack Hayward]
to sell his share and sort out the contract." Miller added that
the PM did not want the dispute to have to go through arbitration
in London at the International Chamber of Commerce. In a later
conversation with the PM, Babak asked directly whether the GCOB
preferred that Hayward's and St. George's shares be sold entirely
to Hutchison Whampoa. Babak claims that the PM said that the
shares should be sold to Hutchison Whampoa if that company was "the
only buyer." Babak confirmed this information once again with Sir
Albert Miller who reiterated that "any legitimate buyer [was] fine"
with the Prime Minister. Babak said that he then proceeded with
negotiations with Mid-Atlantic LLC, who had proposed a "better
deal" for the purchase of Hayward's shares.
-------------- --------------
--------------
Major deals with U.S. LNG, Hospital Development Companies in
Jeopardy
-------------- --------------
--------------
6. (S) Sir Jack Hayward had publically proposed that Babak continue
as PGL's Chairman in the Cayman Islands, site of parent company
Intercontinental Diversified Corporation (IDC) headquarters,
although Babak told media sources that operating the Bahamian port
from the Cayman Islands 'would not work." One source told
PolCouns that Babak's dismissal or relocation would put into
jeopardy several major industrial deals with U.S. companies that
would have immediate economic benefits for Grand Bahama, which
suffers from an unemployment rate of 14.6 percent. One deal still
under negotiation involves the establishment of an offshore,
ship-based Liquid Natural Gas (LNG) regassification plant and
on-shore LNG storage facilities operated by Texas-based Excelerate
Energy and Virginia-based AES. The arrangement would enable
electricity delivery services via underwater cable to Florida Light
and Power as well as Bahamas Electricity Corporation (BEC). BEC,
Babak told one local newspaper, could save USD 250 million in
planned capital expenditures if this project were to become
reality. Babak is also negotiating with PPG, an American company
that maintains a property fund devoted to the construction of
hospitals for medical tourism. He said this deal, while tentative,
is worth over USD 100 million. The source emphasized that Babak
had spearheaded these deals, and they were unlikely to go through
without his daily involvement.
--------------
Babak Requests Embassy Assistance
--------------
7. (S) Babak has asked the Deputy Chief of Mission for assistance
in convincing Ingraham to reverse his position and to renew the
permit. Babak has been a long-time supporter of U.S. commercial
interests in The Bahamas and would continue to do so if he stayed
in his current role. The DCM was non-committal.
--------------
Comment
--------------
8. (S) Ingraham's decision not to renew Babak's permit was likely
made out of anger at Babak's move not to obtain Ingraham's blessing
before moving forward with the Mid-Atlantic deal as well as a
not-so-discreet desire to increase Chinese involvement in Grand
Bahama's development plans through Hutchison Whampoa. Ingraham's
public and well-reported announcement likely means that the
government is forced now to not renew the work permit. Babak's
ultimate departure, including maintaining the Chairmanship position
from the Cayman Islands, could result in further delays in Grand
Bahama's development just as the expected sale to Mid-Atlantic had
sought to jump-start progress.
AVANT