Minister of Home Affairs Senator Michael Fahy has issued the following statement with regards to Par-la-Ville car park:

Over two weeks ago I gave a press conference where I advised the public that the Par-la-Ville car park was in receivership. At that press conference I also laid out a number of issues that were a cause of grave concern to me and the Government of Bermuda in connection with issues surrounding the governance of the Corporation of Hamilton, the placing of the Par-la-Ville car park into receivership and the use of funds that were secured by way of a loan from Mexico Infrastructure Finance, LLC. I undertook at that press conference to update the public when I deemed it appropriate given the sensitivity of the issues involved.

To be absolutely clear, I was first made aware of these issues during a meeting with the Corporation on January 22nd, 2015 and since that time I have been diligently making enquiries into the issues in the hope that I could ascertain all of the facts and, more importantly, rectify the situation by identifying the whereabouts of the funds with the obvious aim of retrieving them.

As a result of my enquiries, which are ongoing, in all the circumstances I thought it prudent on 12th March 2015 to advise the Bermuda Police Service of my immediate findings. Whilst I do not wish to in any way impede or prejudice the work of the Bermuda Police Service in the light of the way in which some have sought to characterise matters generally, I think it important that the public be aware of the following facts so as to put matters in perspective.

As stated above, it was not until January 22nd, 2015 that I was made aware of serious concerns that existed on the part of certain members of the Corporation’s Council that the proceeds of the loan by Mexico Infrastructure Finance, LLC to Par-la-Ville Hotel & Residences, Ltd. had been withdrawn from an escrow account and paid over to the principal of Par-la-Ville Hotel & Residences, Ltd., Mr. Michael MacLean. I was also informed that many of the Corporation’s Council members were unaware of the transactions at the time that they were entered into and concerns were raised that there was no resolution of the Corporation that authorised the transactions.

As a result of receiving this very concerning information, and for other reasons that I have previously articulated, on January 26th 2015, I again assumed Stewardship of the Corporation’s affairs. I then embarked upon a series of meetings with both the Corporation’s attorneys and the attorneys for Mexico Infrastructure Finance, LLC to obtain a better understanding of the facts. The first meeting took place on February 5th, 2015 and there have been a number of subsequent meetings between myself, the Ministry’s attorney, Mexico Infrastructure Finance, LLC and their attorneys, the Receivers, the attorneys for Par-la-Ville Hotel & Residences, Ltd., Mr. MacLean and the Corporation’s Mayor and Secretary.

I am thus now able to confirm the following facts:

(1) On July 9th, 2014 Par-la-Ville Hotel & Residences, Ltd. entered into a Credit Agreement with Mexico Infrastructure Finance, LLC whereby it borrowed the sum of US$18 million. The loan was described as a “discount loan” with the result that all interest that was to accrue during the term of the loan would be paid when the loan proceeds were dispersed by deduction from the proceeds of the loan. The same was true with respect to the negotiation fees relating to the loan. The purpose of the loan was to provide funds for the payment of expenses associated with a permanent loan which was to be negotiated for the funding of the future hotel development. The loan was to be repaid on December 30th, 2014.

(2) On the same date, the Corporation entered into a guarantee of the loan and, as security for that guarantee, it provided Mexico Infrastructure Finance, LLC with a first mortgage over the land comprising the Par-la-Ville parking lot. At the same time, Par-la-Ville Hotel & Residences, Ltd. executed a Deed of Surrender of the lease that it had over the Par-la-Ville parking lot. This Deed of Surrender was to be held in escrow and would be triggered into effect in circumstances where Par-la-Ville and Residences Ltd. defaulted on the loan.

(3) Also on July 9th, 2014 an Escrow Agreement was entered into between the Bank of New York Mellon, Mexico Infrastructure Finance, LLC, Par-la-Ville Hotel & Residences, Ltd. and the Corporation whereby the net proceeds of the loan after deduction of fees and interest, being an amount of $15,449,858.00, was deposited into an escrow account with the Bank of New York Mellon pursuant to a detailed escrow agreement. These funds were to remain in escrow until such time as Par-la-Ville Hotel & Residences, Ltd. could deliver documentation verifying that it had secured funding for the development of the intended hotel, that funding to comprise a loan of $225 million and an equity investment of $100 million. The funds in escrow were not to be released until copies of the permanent loan funding documents were delivered to the Bank of New York Mellon, as escrow agent, as well as Mexico Infrastructure Finance, LLC. It was an express term of the escrow agreement that the $15.5 million held in the escrow account was to be used only “for the purpose of paying expenses associated with the Permanent Loan”.

(4) On or about October 16th, 2014 a meeting was held in London between Mr. Michael MacLean, the Mayor and the Corporation’s Secretary with Mr. Robert McKellar, the principal of a Gibraltar company known as Argyle Limited.

(5) As a result of that meeting, on October 20th, 2014 Argyle Limited entered into a Co-Venture Trade and Profit Share Agreement with Messrs. Shane Mora and Matthew Hollis in their capacity as trustees of a Bermuda trust known as the Skyline Trust in Devonshire, Bermuda. Under the terms of that agreement, Argyle was to be paid a one-time irrevocable payment, referred to as a “fee payment”, in exchange for which Argyle extended a line of credit to the Skyline Trust. The beneficiaries of the Skyline Trust are understood to be Michael and Yasmin MacLean. The fee payment was to be not less than US$12,500,000 and the line of credit was to a maximum amount of US$125 million. The line of credit was to be used by Argyle to operate a co-venture business arrangement between the parties whereby Argyle would arrange for the purchase and resale of “instruments” for profit. The line of credit was for a period of one year.

(6) On the same day, Par-la-Ville Hotel & Residences, Ltd. wrote a letter to the Corporation certifying that the conditions for the release of the escrow funds held by the Bank of New York Mellon had been fulfilled by virtue of entering into the Argyle agreement and, as a consequence, Par-la-Ville Hotel & Residences, Ltd. requested that the Corporation execute and forward a release notice to the Bank of New York Mellon authorising the release of the escrow funds. This letter was signed by Mr. Michael MacLean. Par-la-Ville Hotel & Residences, Ltd. provided the Corporation with the requested form of letter to be sent to the Bank of New York Mellon and this letter, signed by the Mayor and the Secretary, was sent on October 24th, 2014. Also on that date, Par-la-Ville Hotel & Residences, Ltd. similarly wrote authorising the disbursement of the escrow funds to the personal bank account of Michael and Yasmin MacLean maintained at Clarien Bank Limited. It remains unclear as to the basis upon which it could be said that the Argyle agreement fulfilled the necessary conditions of the Escrow Agreement. Certainly, I have seen nothing that could support any contention that there now exists a Permanent Loan Funding Agreement and that a Permanent Lender has been secured for the Par-la-Ville Hotel project.

(7) As a result of receiving these letters, on October 31st, 2014 the Bank of New York Mellon deposited into the account of Michael and Yasmin MacLean the sum of $13,749,858, this being the amount of the escrow funds net of a $500,000 retention and the payment of agreed expenses already incurred in relation to the Par-la-Ville project in a total amount of $1,173,684. Again, I have seen no documents nor received any evidence that support the view that the Bank of New York Mellon was in a position to comply with the request to release the escrow funds. However, it did so.

(8) On the same day, October 31st, 2014 the sum of $499,999.99 was wired transferred out of the MacLeans’ account to an entity called Rational Foreign Exchange Ltd. This was followed by a wire transfer to Argyle UAE Limited in an amount of $11,500,000 on November 5th, 2014 and a further wire transfer of $500,000 to Rational Foreign Exchange Ltd. on November 7th, 2014.

(9) Subsequently, on December 31st, 2014 an amount of $869,748.00 was transferred to Par-la-Ville Hotel & Residences, Ltd.

It remains unclear as to how the remaining balance of the escrow funds has been dealt with. Neither the OBA, the Government, nor myself as Minister were aware of any of these transactions until after January 22nd, 2015. The Corporation did not seek or obtain my approval or consent to the entering into or the execution of the documentation that resulted in the escrow funds being released. Neither did the Corporation inform me at any time of the intended arrangement to be entered into with Argyle Limited. It is clear that notwithstanding the Financial Instructions and the good governance procedures that I caused to be put in place in March 2014, the instructions and procedures were not followed by the Corporation and the Government of Bermuda was kept uninformed.

It is highly regrettable that having afforded the Corporation the opportunity to enter into guarantees in order to facilitate a much needed, approved hotel project in the City of Hamilton, the Government was then kept in the dark as to these unfortunate arrangements which, on their face, appear to be very unwise. However, the Government was entitled to assume that the elected and unelected officials of the Corporation would have conducted the Corporation’s affairs properly and in the best interests of the Corporation. Clearly this has not happened here.

In the meantime, Mexico Infrastructure Finance, LLC has commenced proceedings in the Commercial Court against Par-la-Ville Hotel & Residences, Ltd., together with Michael and Yasmin MacLean, and those proceedings are ongoing with a summary judgment application scheduled to be heard on May 26th, 2015. As part of those proceedings, the Commercial Court has issued an injunction freezing the assets of Par-la-Ville Hotel & Residences, Ltd. and the MacLeans up to an amount of $15,449,858.

I have been assured by Mr. MacLean that the full amount of $18 million exists and is available to be paid over to the rightful parties. Whilst I have seen no tangible evidence of this, I am in ongoing discussions with Mr. MacLean with a view to the Government’s concerns in this regard being alleviated. I have been made aware that both Argyle Limited and Mr. MacLean have sought assistance from local lawyers to have the monies moved to a local escrow account and I believe progress can be made here. I am also in discussions with Mexico Infrastructure Finance, LLC and KPMG in relation to achieving repayment of the $18 million loan and the release of the Par-la-Ville parking lot from receivership.

Finally, whilst the issue is of no relevance whatsoever to the $18 million loan arrangements and the Par-la-Ville parking lot, in response to questions from the press as to whether I have had any discussions involving a guarantee for the Par-la-Ville Hotel project with Mr. Steven DaCosta, the answer is yes. In fact I and other members of Government were lobbied by a number of people, including Mr. DaCosta and Mr. MacLean to try and find a way to get the project up and running, including the provision of either a Bermuda Government guarantee or a guarantee by the Corporation of Hamilton. This was all in the context of the Government and myself endeavouring to ascertain the then current state of play insofar as both the Par-la-Ville and Hamilton waterfront projects were concerned, bearing in mind these were issues left over from the previous Government. I am at a loss to understand how we can be criticised for entertaining such discussions in circumstances where we were simply endeavouring to assist a developer realise an important project.

Finally, let me make it clear again so there is no doubt in anyone’s mind. I had stewardship of the Corporation of Hamilton from December 2013 to mid-March 2014. The Corporation of Hamilton was responsible for its own affairs from mid-March 2014 until I assumed stewardship again in late January 2015. The most recent Stewardship Order was confirmed by the Bermuda Supreme Court in March 2015 as valid. The funds were removed from escrow and various agreements were signed relating to the Mexico Infrastructure Finance LLC loan when the Corporation of Hamilton managed its own affairs. Checks and balances were put in place by the Government in March 2014 which appears to have been ignored. This is partly why a bill was laid in the last sitting of the Senate to further strengthen the Government’s oversight abilities and to ensure something like this does not occur again.

We will continue to work on a resolution of this matter, but “trial by press” is not the way to handle this delicate situation. When my discussions and enquiries are fully exhausted, I will give the public a further update. I remain hopeful that this matter can be resolved satisfactorily to all concerned parties.