Putting politics ahead of principles
Curtis Dickinson’s statement on Friday on why he resigned as finance minister is a textbook example of statesmanlike conduct.
It is also a reminder of how badly Bermuda needs someone of Mr Dickinson’s calibre managing the finance ministry.
Mr Dickinson’s statement was measured and open-minded. It cogently explained why he resigned and when it is appropriate for a minister to do so.
It also laid out a rational path for achieving a deal with a hotel developer that would lead to jobs being recreated and the recovery of the tourism industry while also protecting Bermuda’s taxpayers and financial security.
And Mr Dickinson’s call for the island’s politicians to find ways to work together rather than trying to score points off one another was eminently sensible. It was also painful as it is unlikely that the current government leadership will give it a moment’s thought. That is Bermuda’s loss.
It is noteworthy that Mr Dickinson did not outright oppose giving a guarantee, contrary to much of the speculation that followed his resignation.
But he did give a much more nuanced description of the conditions and requirements by which a guarantee should and could be granted, including careful scrutiny by the public and by the House of Assembly.
As critically, Mr Dickinson argued that giving tax concessions in conjunction with a guarantee was too much of a giveaway, and this appears to be the straw that broke the camel’s back. In fact, Mr Dickinson suggested that the current ten-year tax giveaway is too much — the proposal appears to be offer much longer concessions than that.
One of the problems with this issue is that it is not yet known what the Government is offering Gencom, although it seems clear that Gencom must have an idea or it would not have been able to secure its $190 million in financing.
But for now, Mr Burt is not saying. He has not said how much of a guarantee the Government is providing, or how many years of tax concessions Gencom will receive.
Nor is it clear what role the as-yet-unformed Bermuda Trust Fund will play in the funding.
Mr Burt has said that the fund will be seeded by economic investors in Bermuda and that the Government’s agreement with Gencom provides for “profit sharing from the hotel’s operations”. Mr Burt said these profits will then be given to “the Bermuda Trust Fund on behalf of the people of Bermuda“.
This is as clear as mud.
Does this mean that investors will put money in this trust fund which will in turn provide some kind of financing to the Fairmont Southampton and will then get a share of whatever profits are generated?
If so, this is a risky proposition.
Nor is it clear what the guarantee is for. Mr Burt cannot be unmindful that only seven years ago he cogently argued against guarantees for hotel developments.
He said of hotel projects the One Bermuda Alliance Government at the time was contemplating guaranteeing that “they did not have plans let alone planning approval”.
He also rightly raised a “flag of caution” to the then Government's extension of a $160-million guarantee to the Ritz Reserve development at Morgan's Point saying that a guarantor was only needed when there was some doubt as to the ability to repay. The move “exposes the Government to a $160 million liability should the project be unsuccessful”.
Tragically, all of this turned out to be accurate. All of the same could be said of Gencom. But the David Burt now supporting the guarantee is the same David Burt who opposed the Morgan’s Point funding. And it is not at all clear why the Fairmont Southampton is different, except that it is being offered more.
It does not end there. From a negotiating standpoint, Mr Burt has been strangely cavalier.
To date, all that has been agreed are “heads of terms”. Mr Burt admitted that the size of the guarantee has not been settled. The duration of the tax increases has not been revealed. Like the letter of intent that Mr Dickinson signed in 2019, heads of terms are not binding. Instead, they set out the basis on which a negotiation will occur. Neither party is obliged to do anything.
But by announcing the agreement now and laying out that that will be a guarantee and that there will be extended tax concessions, along with the mystery investment by the as-yet-unformed trust fund, Mr Burt has weakened his negotiating position. In poker terms, he has shown his cards.
Having laid out what the Government is willing to do, he will be under pressure to make a deal, and Gencom will know this. Experienced and tough negotiators themselves, Gencom can now set the agenda, knowing Mr Burt will have difficulty backing out.
Why would Mr Burt do this? After a long wait, he may have felt that the public deserved to know what was going on with the negotiation and that the news that Gencom has finalised its financing should be made known.
But it is also possible that Mr Burt was aware that Mr Dickinson would be using the last session of the House of Assembly before its Easter break to deliver his explanation of why he resigned.
Mr Burt’s political instincts are finely honed, and he may well have seen the Gencom announcement as an opportunity to take some of the wind out of Mr Dickinson’ sails by pre-empting his statement with the announcement.
It’s debatable if he was successful in this. Mr Dickinson’s deliberate and detailed discussion of the risks of guarantees and the need for care in negotiations, especially with a company which has already behaved poorly, contrasted favourably with Mr Burt’s own statement, which was vague and begged as many questions as it answered. A straw poll of whom the public would prefer to have conducting these negotiations would likely be very one-sided.
If this is the case, it raises the same troubling concerns about Mr Burt’s leadership. Few can doubt his political skills. He led his party back to power, achieved two thumping majorities and has outlasted three leaders of the One Bermuda Alliance.
But being a very good politician, which Mr Burt is, is not the same thing as being a statesman or a good leader.
Mr Dickinson perhaps takes pride in being an anti-politician. But he showed on Friday that he was a man of integrity and principle. In a time of extreme economic risk, with war, epidemics, soaring prices, tax pressures and more weighing on the Government, it begs the question of whether Bermuda needs a politician or a statesman leading it.