Dear Sir,

The following was written to Curtis Dickinson, the Minister of Finance, and copied to The Royal Gazette.

I am writing to you with regard to the Bermuda Infrastructure Fund, which was announced by the Premier, David Burt, in November 2017. He explained that this fund would be supported by a $100 million investment from various members of Bermuda’s insurance industry, and that the new fund would create jobs and boost the local economy through major construction projects. He added that the fund will be used to pay for finance improvements to ports, docks, roads, bridges, industrial and healthcare facilities.

It was revealed that this funding idea is the brainchild of Brian Duperreault, the chief executive of American International Group, who said that the private sector needed to provide the financial impetus to invest in infrastructure improvements. This vote of confidence by Mr Duperreault and his fellow corporate investors is certainly reassuring to see and Bermudians should welcome and appreciate this endeavour because it means the Government can have access to funding for many essential and long outstanding infrastructure projects.

I know that a similar funding proposal was contemplated by Bob Richards, the finance minister under the previous One Bermuda Alliance government, but it did not come to fruition because of a disagreement over the fund management fees that would be paid by the Government.

However, an agreement for the cost structure was eventually struck under the present administration, and in May 2018 we were informed by local media that the BIF investors had raised almost $100 million and the fund had now been officially launched.

We are a year past the official announcement of this fund and I have seen no further government updates as to its deployment status. This government has obligated the taxpayer to a financial commitment about which we know very little and, while I commend the creativity of Mr Duperreault and this government for arriving at a solution for the much needed financing for the refurbishment of our roads, bridges and infrastructure, I also know that the public information surrounding the mechanics of this fund is sorely lacking.

To be clear, I realise this $100 million BIF is not a gift to the Government. My understanding is that it is an investment vehicle from which, presumably, the investors expect to make reasonable returns and from which the Government can borrow for completion of capital projects. The Government — we — will be paying for some of the management services of this fund, in exchange for the use of it, but the published terms and conditions under which the Government will access, and ultimately pay back, the fund have not been revealed.

When he announced the BIF formation in November 2017, our finance minister at the time, Mr Burt, outlined some key components of the fund’s cost relating specifically to the management fees as follows:

“The manager of the fund will be Fortress Bermuda Infrastructure Fund Advisers LLC, and the management fees are payable semi-annually in advance, in an amount equal to .75 per cent (1.5 per cent annually) of capital invested. The minimum fee is $1 million per year, and in the event that the management fee is less than $500,000 in a semi-annual period, the Government must pay the difference. The amount paid by Government will represent an interest in the fund. Government will be liable to pay the initial management fee of $500,000 and will be liable to pay some fees as long as the amount invested by the fund is below $66.7 million. The BIF will be able to borrow funds to facilitate investments or in connection with the Fund’s business.”

While all of the above may be perfectly logical to the financial minds in the room, many of us “on the outside” do not have a clear understanding of the full picture relating to the BIF and the obligations for the Bermuda Government.

From what little that has been published, it appears to be an “off balance sheet” financing vehicle — like the airport — but I see no details regarding the fund (bond?) term, the payback time frame or where the payback funds will come from.

It would be both reasonable and helpful, if the Government could present the taxpayer with an update on the status of the BIF, both with regard to the final cost/fee structure to which they agreed, and also the progress of the planned BIF capital/infrastructure projects that have been promised and yet to be delivered.

Also, clarification is needed regarding what exactly the fund manager (Fortress) is being paid $1 million annually to do. In addition, maybe a “fact sheet” could be published that outlines how the fund works, what it really costs us — management fees versus the cost to borrow — the protocols for how it is accessed, when (and how) it is paid back, a list of who is on the fund’s advisory board, and even details of investor returns criteria.

In the interest of transparency, good governance and good communications, I believe clarification is warranted.

As for the Government’s progress with actually deploying this fund, after doing a bit of research, I note that in December 2017, The Royal Gazette reported that after an international tender, the British company Double Unit had announced a design contract with consulting and architectural design firms Ramboll, Knight Architects and Eadon Consulting. The contract will deliver full architectural design services for replacements of two Bermuda bridges:

• Our defunct swing bridge entering St George

• The Longbird Bridge connecting the airport to the mainland, which has had temporary, bypass Bailey bridges in place for the past ten years

In October 2018, it was reported by international media that construction for these bridges would begin in the summer of 2019 and completed by 2021. This is very encouraging and I’m sure we all look forward to seeing this and other projects come to fruition.

I, and the public, look forward to your reply in due course. Thank you in advance.

BEVERLEY CONNELL

Pembroke