The controversial lease agreement awarded to businessman John Jefferis for the former Stonington Beach Hotel in 2003 was not ?a sweetheart deal? but a sensible business decision which is now paying handsome dividends, Premier Alex Scott has argued.

However, speaking during the debate on Government quangos in the House of Assembly on Monday night, Mr. Scott admitted that ?lessons had been learned? over how to draw up contractual agreements in the future.

But he insisted the deal had been in the best long-term interests of the once floundering enterprise. revealed in July, 2003 that the lease awarded following the tendering process to Bermudian Mr. Jefferis and his company Island Resorts was substantially altered six months later to include a number of lucrative additions ? saving Mr. Jefferis millions of dollars in rent.

Terms that were not part of the original agreement included a lease extension from 21 to 50 years, a five-year rent free period, an extra 5.9 acres of land boasting two cottages with ocean views, and the right to build and sell condominiums on the property.

The process was lambasted by Auditor General Larry Dennis, who called for the lease to be re-tendered, while Government actions were further brought into question when it was revealed that Mr. Jefferis had paid for Trinidadian political consultant Roy Boyke to work with the Progressive Labour Party during the 1998 election campaign.

It also emerged that Government had blocked the choice of the Bermuda College Board of Governors in awarding the lease to Mr. Jefferis. The lease itself was not ratified by the board but signed in June, 2003 by PLP politicians Raymond Tannock and Larry Mussenden without the board?s approval.

?Much has been made of how the lease agreement for Stonington Beach was handled and negotiated,? Mr. Scott said.

?Let me say that if at first blush it appeared that the developer, the leaseholder had been given a sweetheart deal, that is only one side of the story and it needs to be put in context. He (Jefferis) had to take over a failing concern. Previous governments had not seen it through to a successful conclusion. It was haemorrhaging money and was not productive.

?The developer had the responsibility of putting millions of dollars into a property which is a lease agreement and still the property belonging to Government. Coco Reef has seen investment of between $2 million and $6 million.

?The developer has a high bar to reach ? a responsibility to deliver for Bermuda a successful hotel operation. Even now the progress made reflects a good decision.

?It is a handsome property and a lot has been done there. We don?t want it to appear that we handed over this wonderful asset, and the developer put two dollars into it and made a mint ? au contraire.

?Lessons have been learned over how to draw up contractual agreements in the future. But it took a bit of selling [on the part of Government and a commitment by that developer. He had to invest considerable money into that property before he could enjoy a return.?

The Opposition did not buy into the Premier?s explanation, arguing that Mr. Scott had convincingly failed to explain why the lease was renegotiated at all.

Shadow Works and Engineering Minister Patricia Gordon-Pamplin also queried why there are currently no hospitality courses being offered at Coco Reef ? one of the key terms of the lease agreement.

?How can the Premier argue that it wasn?t a sweetheart deal when the terms of the lease changed so significantly after Mr. Jefferis and Coco Reef was awarded the contract?? she questioned. ?Had the intent and the terms of negotiation been put on the table for all bidders, there might have been an even better proposal made by the other serious bidders. Clearly, the process was flawed, and Government needs to explain why the interests of the Bermuda College and the Bermudian employees at Stonington were not properly protected. Furthermore, we have been reliably informed that no student hospitality training is being done at Coco Reef Hotel, in spite of the fact that this was supposed to continue under the new lease with Mr. Jefferis.

?While it may have been true that the Stonington Beach Hotel was not profitable in the mid- to late-1990s, the real haemorrhaging appears to have taken place post 1998, particularly after the three beach cottages were no longer available for hotel guests and were used for housing senior College administrators.?