As the public are aware, I have been asking questions of the Government about what is happening at Morgan’s Point. My questions have been legitimate especially owing to its historical connection with Southlands, so that the people of Bermuda can gain a full understanding of what progress, if any, is being made to redevelop the property. This is of particular interest given the mixed messaging of housing projects, to retail development to a medical tourism facility.

Rather than answer the questions, the Government has chosen inevitably to concentrate on the manner in which the One Bermuda Alliance conducted itself with respect to the Morgan’s Point redevelopment project and the eventual loss of $165 million because the developers defaulted and the government guarantee was called. I have already acknowledged that this was desperately unfortunate, and for that matter unforeseen — I also said that the whole mess was a raw deal from the beginning.

Before the finger-pointing goes any farther, it is time to set the record straight. I thank the former Minister of Finance, Bob Richards, for his clarifications and assistance.

By way of reminder, a development company — whose principals were Brian Duperreault, Nelson Hunt and Craig Christensen — obtained an option to develop the Southlands property in Warwick. There was widespread objection to the development of a hotel at Southlands. In an effort to defuse the situation, the Member of Parliament for the area, former premier Alex Scott, arranged for a land swap between the developers and the Government to exchange Southlands for the old US Naval Annex — now called Morgan’s Point.

This was no like-for-like swap. While Southlands was primarily green space, including a beautiful South Shore beach, Morgan’s Point was a brownfield space — at least twice as large and anything but pristine. The US Navy had exited leaving the property extensively polluted by petroleum, industrial and human waste, derelict above-ground buildings and other structures, as well as extensive underground structures. Essentially, it was unusable and unsafe.

Early in 2013, the new OBA government became aware of a contract signed by the former Progressive Labour Party government, which committed the country to remediating the entire Morgan’s Point property to so-called “Residential-1” condition. After a technical survey of the property, it was clear that this would be extremely costly, and in any case, it was impossible to remediate Bassett’s Cave, into which waste-petroleum products and sewage had been pumped by the US Navy for decades.

As a new government, we expressed our reluctance to carry out this commitment, but it was not long before the developers formally threatened to sue the Government for $100 million for reneging on its contractual commitment. Upon consultation with our legal advisers, it was clear that the developers had a strong case. Something had to give.

It is important at this stage to refresh our memories as to the economic conditions in the island at that time. The Great Recession of 2007 had translated into a Great Depression in Bermuda. In 2013, Bermuda was in its fourth year of negative GDP growth. The local private sector had not been in such bad shape since the Second World War. Thousands of jobs had been lost, with local businesses failing all round. Butterfield Bank’s failure resulted in the evaporation of millions of dollars of local wealth. Bermudians’ favourite asset class, local property, was falling in value for the first time in living memory. Other than the international business sector, which was holding its own, confidence in the rest of the economy was on life support. There was no local capital to revive the local economy, and the Government was already up to its eyeballs in debt, as well as running large annual deficits.

The only way to arrest the slide was for the Government to engineer some sort of economic stimulus. As the Government’s own finances were precarious, the only stimulus to be had was private-sector capital stimulus from abroad. We set about finding ways to attract foreign direct investment into Bermuda, the type that would create short-term as well as long-term employment opportunities for Bermudians. This meant investment in tourism. The Morgan’s Point development represented a unique opportunity to positively impact these difficult circumstances.

After very tough negotiations between Morgan’s Point developers and the Government, it was agreed that the property would be divided into several subdivisions. The Government would remediate, to the required standard, the subdivisions that could be remediated and pass them on to the developers. Those where remediation was impracticable, the Government would retain and cordon off as unsuitable for development.

On this basis, the cost to remediate the pollution at Morgan’s Point was about $33 million instead of hundreds of millions. The developers, having now acquired usable property and had it cleaned up by the Government at its expense, would be responsible for their own project finance. We, in the OBA government, thought we were done.

As time passed, it emerged that, in spite of the Government’s clean-up efforts, the overseas capital markets were not satisfied that the contamination risk for potential guests or residents in the new facility had been completely eliminated. The liability of any such contamination was potentially very large. Insurance costs against such a risk would have scuttled the project; the only other option was a guarantee by the entity that did the remediation — the Bermuda Government. Without the guarantee, the project was not financeable and therefore dead.

However, the government guarantee also covered the risk of poor execution by the developers. It was this risk that ultimately upended the project. The OBA government inherited these developers from the former government as sole-source contractors. The OBA government sponsored several foreign direct investments in tourism during its tenure; Morgan’s Point is the only one that failed. Hindsight is always 20/20. However, decisions are never made in hindsight; they’re made in foresight, which is fraught with risk.

In hindsight, a few things stand out.

First, Morgan’s Point Ltd was the sole-sourced developer, selected by the former PLP government. And, despite the quality of its principals as individuals, the company had no experience in a development of this type, scale and complexity. The OBA government had no choice but to work with them. This contrasts starkly with the sole-source selection of Aecon Group, which had a solid balance sheet and more than a century of relevant global experience. Moreover, Aecon had a seasoned team of professionals to execute the job of airport redevelopment from Day 1.

Second, the crucial point that sets Morgan’s Point apart from all other local projects was that it was a highly polluted site. The contractual commitment of the former PLP government to remediate all of the former base to “Residential-1” quality without regard to the costs was reckless. It forced the incoming OBA government to be “partners” in solving specific issues such as pollution, while there was no one analysing the project’s overarching issues, like financial feasibility, which at that time were unknown or undefined.

Third, there was a lack of experience in financing development on a highly polluted site on both sides: that of the developers and the Government. No one knew that international lenders would not be satisfied despite the substantial efforts of the Government’s remediation programme. If we had known that at the outset, we might have scuttled the project before we spent $33 million cleaning it up.

Fourth, the Cabinet was of the opinion that the financial stature of the majority principal of Morgan’s Point Ltd, and his proven commitment to Bermuda, was such that the risk that the guarantee ever being called was low. In retrospect, the judgment of that risk was incorrect.

The public do not know, at this time, all the pertinent details leading up to the creditors activating the government guarantee, as these events happened during the succeeding PLP administration. The public knowledge of these matters would be an appropriate ending to this narrative.

In conclusion, Morgan’s Point was a poisoned chalice from the start, passed on from one PLP government to an OBA government then back to another PLP government. Great care should be taken by the next person that drinks from that chalice. There is more than enough blame to go around. But let’s remember this whole debacle began to save Southlands, a property that the existing PLP administration is now keen to develop.

Amazing how things can come full circle.

• Michael Fahy is the Shadow Minister of Municipalities, Housing and Home Affairs, and the MP for Pembroke South West (Constituency 20)