Sandys 360 centre builder owed more than $1m
The construction firm that built the failed Sandys 360 sports centre is still owed more than $1 million almost nine years after work was completed.
BCM McAlpine was never paid in full after being hired for the $10 million job and its smaller subcontractors also lost out as they struggled during tough financial times.
Public records held by the Registry-General revealed the contractor’s fight to get paid by those behind the failed venture in Somerset.
The documents also showed how high running costs at the fitness centre and indoor heated swimming pool made it unsustainable.
The Government announced last week that it plans to buy the now-shuttered Sandys 360 Sports, Aquatic and Enrichment Centre from the trustees of Sandys Secondary Middle School for $1 million.
The Ministry of Public Works said it planned to carry out a survey and renovate the building for an as-yet-unknown sum.
If the deal goes through, it will mark the latest in a string of payments from the public purse for Sandys 360, so far known to have totalled at least $5.3 million, but which could be far more.
Payments included one made by mistake in August 2011 for $807,000, which was never paid back by the trustees, who include former Sandys 360 managing director Melvyn Bassett, Stanley Lee, Travis Gilbert Sr and Valerie Dill.
Records released under public access to information showed how taxpayers’ cash was used to bail out the trustees after they struggled to pay bills and rent on the property.
The last Progressive Labour Party administration agreed in 2012 to provide a $6 million capital grant from the Ministry of Government Estates and Information Services to the directors and board of trustees.
Only $1.5 million of it was handed over before the PLP lost the General Election that year.
The One Bermuda Alliance government then paid another $1 million to the trustees and, according to comments made in 2015 in the Senate by Michael Fahy, who was then home affairs minister, continued to contribute towards keeping the pool water circulating after Sandys 360 was forced to close its doors in November 2013.
The OBA administration refused, under Pati, to make public a report into the finances of Sandys 360 carried out at the Government’s request by professional services firm KPMG.
The PLP government has also not released the document and a request for its disclosure made to the Ministry of Public Works went unanswered this week.
The correspondence regarding payment for construction included letters to Sandys 360 trustee Mr Lee from Michael Ewles, the chief executive of BCM McAlpine.
The first, in April 2011, revealed that the outstanding balance for the building work stood at $1.2 million.
Mr Ewles wrote: “We continue to be supportive of Sandys 360/Sandys Secondary School Trustees and will actively help to find a solution for the current financial shortfall.”
He said that BCM McAlpine would fund a new wood floor for the gym after it was damaged by water at a cost of about $70,000 “in order to help the facility generate more revenue”.
That sum was to be added to the bill, with the total amount to be paid back to BCM McAlpine once Sandys 360 received enough money from “sponsors, government, additional borrowing or any other source”.
Mr Ewles wrote again in July 2012, and highlighted a “total indebtedness to BCM McAlpine of $1.3 million”.
He referred to an announcement by the Government in February of that year to give Sandys 360 a $2 million grant and asked for “a firm commitment on the timing and value of payments to clear our outstanding balance in full”.
Mr Ewles wrote: “We have maintained our support for your efforts in trying to raise funds and have resisted adding interest that contractually we could apply to the outstanding balance.
“However, we have now reached a point whereby we can no longer rely on vague promises and discussions that are reportedly taking place.”
The final letter on file at the Registry-General from Mr Ewles was dated September 2012.
He wrote to Mr Lee to say the $1.3 million balance was still outstanding and added: “We are coming under increasing pressure from our subcontractors to settle their long overdue accounts.”
After the change in government, Mr Ewles contacted public works minister Trevor Moniz the following April to ask for help.
He said in an e-mail that BCM McAlpine had received $100,000 from HSBC, on behalf of Sandys 360, in November 2012 as a “gesture of good faith” but $1.2 million was still owed.
Mr Ewles added: “I field regular calls from subcontractors who desperately need their funds in these difficult economic times.
“BCM McAlpine firmly believes that Sandys 360 is a good resource for Bermuda and, accordingly, we have been extremely patient in this matter.
“We have had no wish to resort to a legal approach to recovering our funds but clearly our patience has a limit and we must act responsibly in relation to our subcontractors.”
The file held by the Registry-General showed that the minister shared the email with his permanent secretary Randy Rochester, who forwarded it to financial secretary Anthony Manders and acting Registrar-General Thelma Trott.
Mr Rochester wrote: “This is a matter of some concern for the ministry. No telling what else might be out there outstanding ...”
Mr Moniz said yesterday he was sympathetic to BCM McAlpine’s plight. But he said the Government ceased all payments to Sandys 360 after the KPMG report showed the state of its finances.
“It was unsustainable with the albatross of the mountain of debt and with no way to even pay the monthly electricity bill,” said the Shadow Attorney-General. “There came a point in time where it became clear that it was unsustainable and had to be shut down in an orderly fashion.
“The trustees were irresponsible in continuing to operate it in that fashion.”
Mr Ewles told The Royal Gazette this week: “While we do not wish to be interviewed for your piece, we can confirm that the balance you note remains outstanding.”
Attempts to get comment from the trustees were unsuccessful.
Dr Bassett, who became the salaried managing director of Sandys 360 after retiring as principal of Sandys Secondary Middle School, said in an e-mail: “Sorry, I do not speak for Sandys 360.”
Mr Lee, who was acting chairman of Sandys 360 when it closed its doors, said: “I have no comment in regard to Sandys 360 — not until anything has been discussed, nothing at this point.
“You can ask those questions later, when more information comes out.”
He then hung up on the telephone call.
Mr Gilbert and Ms Dill could not be contacted.
Where the money went
The Bermuda Government paid out millions of dollars to Sandys 360 between 2007 and 2013.
Based on public access to information disclosures made by the Ministry of Finance and the Department of Public Lands and Buildings, the total sum is at least $5.3 million.
But the true cost to taxpayers of the failed project is likely to be much higher.
It is not yet clear if there were payments from the public purse made outside of the 2007 to 2013 timeframe and to entities other than Sandys 360, which went towards the now-defunct sports centre and swimming pool.
What is known is that Sandys 360 is in debt to the Government in relation to payroll taxes, land taxes and social insurance contributions. The Ministry of Finance refused to reveal the amount in response to a Pati request.
Those behind the Somerset facility were also given customs rebates by the Government for building materials, totalling hundreds of thousands of dollars.
The $5.3 million figure is based on the following disclosed payments:
• A $1 million capital grant from the Ministry of Education and Development towards the construction of the sports centre and 25m indoor swimming pool
• $61,355 in subsidies for use of the centre paid by various departments in 2009
• A $627,000 capital grant from the Government Reserves paid by the Ministry of Finance in April 2011
• A $180,000 capital grant from the Government Reserves paid by the Ministry of Finance in July 2011
• An $807,000 capital grant from the Consolidated Fund, paid by mistake by the Ministry of Finance and never recovered, in August 2011
• A $2 million capital grant from the Consolidated Fund paid by the Ministry of Government Estates from the 2012-13 budget in four installments of $500,000 each. The payments were made in June 2012, August 2012, November 2012 and March 2013
• A $500,000 capital grant from the Consolidated Fund from the 2013-14 budget paid by the Ministry of Public Works in November 2013
• $192,345.50 in subsidies for use of the facility by “seniors, youth etc” paid by various departments between 2010 and 2013.
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