An independent panel has given the thumbs up to the airport redevelopment deal.

The Blue Ribbon Panel, tasked by the Bermuda Government to probe documents surrounding the proposed project, announced its decision at a press conference yesterday afternoon.

Chairman Malcolm Butterfield said: “The Blue Ribbon Panel has found that this transaction is commercially sound and reasonable and likely to meet the Government’s stated objectives of long-term sustainability and increased traffic volume and revenue.

“We have also found that its terms are within the parameters of similar P3 airport projects and in some cases this project exceeds those norms positively.”

However, the Blue Ribbon Panel acknowledged that the “entire project would have benefited from clearer disclosure of the transaction, its terms and the participants at a much earlier stage”.

Mr Butterfield said that the panel had concluded that the 30-year term of the project was “reasonable and consistent with similar projects”.

He added: “Overall, the panel’s views is that this is a good deal. It’s not perfect.”

In recent days, the Progressive Labour Party has complained that its MPs has not had access to the financial model behind the agreement, although finance minister Bob Richards has argued divulging the financial model would not put politicians in any better position to assess the project’s value for Bermuda, and that the information contained in the model was “not Government’s to give”.

Asked if the panel would have benefited from seeing the financial model for the project, Mr Butterfield said: “No, that would not have benefited us. We had volumes of material and a lot of it was the financial information.”

He told the press conference that it would have been “unusual” for the financial model of the project to be shared in the public domain before it was completed.

Mr Butterfield said the panel concluded that the approach of the Government to enter into a negotiated agreement instead of a competitive tendering was “reasonable” and he also rejected questions that had previously been raised about the panel’s independence.

“There is no doubt in my mind that this was an independent panel,” he said. “There was no influence from Government. It was independent in every way.”

The panel met with several opponents of the airport development plan over the last three weeks, including Chris Furbert, president of the Bermuda Industrial Union, and David Burt, the leader of the opposition, Mr Butterfield said: “It should be noted that our analysis has revealed the challenges associated with this project.

“Legitimate concerns have been expressed as to the process, the representations made to Parliament and the people of Bermuda and the significant opportunity transferred to a private company for an extended period of time.”

The panel was unveiled last month by Mr Richards, and tasked to review the controversial airport redevelopment project.

It was given access to the Project Agreement and “any other documentation related to the transaction so that it may form its independent view of whether the deal is reasonable and fair”. It looked at documentation related to the transaction, the Bermuda Government’s legal, financial, technical, and project management advisers, senior representatives of the Canadian Commercial Corporation and Aecon Concessions.

The panel was chaired by Mr Butterfield, a retired managing director at KPMG, and included Craig Simmons, economics senior lecturer at the Bermuda College, Gil Tucker, retired chairman of Ernst & Young Ltd, Barclay Simmons, a managing partner of ASW Law and chairman of Butterfield Bank, Anthony Joaquin, retired partner of Ernst & Young and chairman of HSBC Bermuda, and Caroline Foulger, retired partner of PwC.

• For Malcolm Butterfield’s statement in full, click on the PDF under “Related Media”.

Panel’s key findings

• The cost presented by the Government of $302 million is the correct number to use.

• The cheapest option is to repair and renovate, however the best value for money comes from the Government’s proposed option.

• The risk transfer of the costs of construction in this proposal is better than would normally be achieved, albeit not 100 per cent.

• The gaps identified in the Deloitte report are closed.

• The minimum revenue guarantee is an appropriate mechanism to reduce costs and the upside revenue sharing is a reasonable way to ensure that Bermuda benefits from its own success in increasing airport traffic above estimates.

• The terms of the proposed agreement are at least consistent and in some measures superior to similar P3 airport concession transactions globally.

• The deal provided limited and not commercially unreasonable benefits to the project company and did not give them an unfair competitive advantage.

• The costs of the project are within a range of comparison projects and are towards the upper end due to Bermuda-specific factors.

• The substance of the transaction has been achieved on reasonable and commercial terms.

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