Cannonier calls for investigation into NSC solar deal
The Opposition is calling for an investigation into the funding of a controversial energy project at the National Sports Centre.
At a press conference yesterday Craig Cannonier, the One Bermuda Alliance spokesman for public works, also called for an immediate halt to the $3.2 million contract to install solar panels at the centre “until we get to the bottom of this mess”.
The contract was awarded to Atlantic Energy Solutions Group in May – almost three years after the company was first named as the preferred bidder. AESG is owned by former Progressive Labour Party chairman Damon Wade.
Documents leaked to The Royal Gazette show that NSC took out a bank loan for $3.2 million with HSBC at the beginning of last month. It is understood that more than $1.1 million was drawn down and instructions were issued to pay it to AESG to enable it to mobilise for the contract within two weeks.
The NSC board of trustees raised concerns about the development with the permanent secretary of the ministry of sport, claiming that there may have been a breach of financial instructions.
And according to draft minutes of a board meeting made public by Mr Cannonier at the press conference, chairman Jache Adams – a Government backbencher – was grilled by fellow trustees about the loan.
In the document, deputy chairwoman Katura Horton-Perinchief pointed out that, when AESG was originally chosen, it had secured funding for the project – and that NSC would not have to pay AESG until it was complete and energy savings kicked in.
According to the minutes Ms Horton-Perinchief said that, after AESG lost its funding, a request for a loan was submitted to NSC operations manager Craig Tyrrell – but was not put before the board.
The minutes quote Ms Horton-Perinchief saying: “That never came to the board. We had no knowledge that any of this was going on. That was not actioned by the board.
“So I am not sure where you can give feedback, chair [Jache Adams], but we are now at a loss because we are hearing now that this has been actioned without us saying this should be actioned. We have not requested a loan because we can’t pay back a loan.”
Speaking in the House of Assembly last night, Mr Adams dismissed the allegation, claiming that the loan taken out by NSC was approved by the board of trustees in May.
Mr Cannonier listed a slew of questions that he said Government should answer
(1) If the board of trustees was unaware of the loan, then who took out the loan in the name of the National Sports Centre?
(2) What was the bank told about the lack of authorisation by the board of trustees?
(3) Who signed the loan agreement on behalf of the National Sports Centre as borrower?
(4) Given that the Bermuda Government was the guarantor of this loan, did cabinet formally approve the transaction?
(5) How can a loan have been granted to the sports centre when the board of trustees never authorised any loan?
(6) What is the position of the remaining five trustees? They must make their position clear to the public.
(7) Why is this project being progressed at all when the government is in such economic dire straits?
(8) Why is the sports centre entering into multimillion dollar contracts when the sports centre has no funds to support or repay the monies being loaned?
The documents also show that AESG wanted to be paid an additional $12,000-a-month for ten years once the project was up and running.
When Mr Cannonier raised the issue in the House of Assembly yesterday, David Burt, the Premier, implied that the $12,000-a-month payments had been withdrawn.
He said: “I can confirm that the $12,000 is not part of the contract of which he speaks.”
And Mr Adams, also speaking during the motion to adjourn, said that “no such agreement exists”, and that Mr Cannonier’s claim was “baseless”.
But a letter from the finance ministry to Ms Horton-Perinchief said: “It is to be noted that the proposed O&M fee schedule, as presented at $12,000 per month, is not supported by the ministry and needs to be substantially revised or put out to competitive bid.”
The letter went on to say that the NSC should negotiate improved terms on its loan with the bank because Government was now acting as a guarantor.
Further documents obtained by The Royal Gazette suggest that NSC will have to pay more than $1.4 million in interest on the loan over ten years.
The letter states: “It is the ministry’s belief that the proposed Government of Bermuda guarantee substantially reduces the credit risk on this loan and is therefore deserving of a correlated lower rate of interest.”
Mr Cannonier said that the project raised “some very disturbing questions”.
He said: “The National Sports Centre is managed by a small board of trustees – there are only six of them.
“One of these six trustees has now resigned and called for an internal investigation into how the loan and government guarantee were obtained.
“This trustee has alleged that the board of trustees never requested or approved the loan to the National Sports Centre.
“However someone went ahead and arranged for a loan and the contractor in question has apparently drawn down significant monies from the loan facility to the sports centre.
“The trustee who has resigned properly raised these concerns with the permanent secretary of the Ministry of Youth, Culture and Sport.
“The trustee properly demanded an internal investigation into these serious concerns. An investigation must happen now.”
The Royal Gazette first revealed concerns about the project’s funding last week. Mr Adams subsequently issued a statement defending the project – although he gave no details at all about project financing or final cost.
This week The Royal Gazette e-mailed questions to Government asking for details about the final cost of the project.
The Royal Gazette asked how much interest NSC would be paying on its loan and if AESG would be paid a fee for managing the project over the next ten years.
A spokeswoman replied: “The ministry doesn't have anything further to offer regarding this.
“The Ministry is of the view that the questions posed are answered in Jache Adams’ letter shared over the weekend.
“Therefore any questions should be posed to the NSC chair. The ministry is not commenting further.”