A 41-year-old man from Smith’s has been arrested on suspicion of theft in relation to the “misappropriation” of $18 million in connection with the Par-la-Ville hotel development deal.

The announcement came yesterday from the Bermuda Police Service, who said that they are conducting a criminal investigation into the allegation. The suspect is said to be assisting police in the inquiry, which is being headed by Detective Chief Inspector Nicholas Pedro.

It relates to a loan made to Par-la-Ville Hotel and Residences Ltd by Mexico Infrastructure Finance (MIF) that was intended to help to secure funding to build a hotel and residences at the Par-la-Ville car park in Hamilton.

The loan was guaranteed by the Corporation of Hamilton after legislative amendments by the Bermuda Government that allowed the municipality to use the parking lot property as collateral.

The funds were placed in a New York escrow account and subsequently withdrawn in 2014, but the developers defaulted on the loan, sparking legal action between MIF and the developers.

Michael Fahy, Minister of Home Affairs, said last year that a criminal complaint had been made to the police, and that efforts had been launched to locate the funds, much of which were reportedly sent to Gibraltar-based Argyle Ltd.

The Government passed legislation aimed at increasing the corporation’s borrowing power to help it to repay the loan. However, MIF threatened this month to claim several corporation properties, including the Hamilton Fire Station, the Chamber of Commerce building and the Custom House, if the loan was not repaid with the interest due by January 15.

After that deadline Charles Gosling, the Mayor of Hamilton, said that the group had become “more understanding in terms of what we need to do”.

Mr Gosling said yesterday that the corporation is still working to secure a loan to allow it to repay MIF.

“We are continuing our process of getting valuations on a final list of properties which are acceptable to our bankers to be used as collateral,” he said.

“They have also requested a letter from the Bermuda Government giving them assurances that the necessary legislation will be tabled in the House of Assembly over the next couple of months and the options available if we do not live up to our obligations.

“We have had numerous further meetings with lawyers to review the lending agreement and are trying to be proactive in this process, seeking assignments rather than waiting for requests.

“This is not a process that happens overnight, especially with a sum of this magnitude.”

A police spokesman urged anyone with any information relating to the matter to contact 247-1340 or the confidential Crime Stoppers hotline on 800-8477.

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