Government has let Union Asset Holdings Ltd. off the hook for all of the $6.8 million owed under a bond due when the Berkeley school project failed.

But in return the Bermuda Industrial Union, the sole owner of Union Asset Holdings Ltd. (UAH), has agreed to a cooling off period of up to 72 hours before taking industrial action.

At a joint press conference with the BIU today Premier Dr. Ewart Brown said money would have been lost by pursuing the case through the courts and a strong union was vital for a healthy Bermuda.

UAH had been paid $700,000 by Government to buy the bond — which acts as insurance if a project fails — for original contractors ProActive.

But the company was sacked in 2004 after delays in completing the secondary school which eventually came in three years late and more than $55 million over budget.

Asked why UAH was not willing to pay the money owed under the bond BIU president Chris Furbert said the company had not been given its statutory right to put in its own team when ProActive were removed.

On the cooling off issue he said: “Let’s say an issue comes up tomorrow, the membership has agreed that unless the issue is of urgent importance where a supervisor came in and broke somebody’s leg, somebody’s arm and put them in hospital, you want that dealt with immediately, but under normal circumstances or a normal grievance the Premier is saying let’s follow the normal recourse.

“The membership has said to me, we will give your office as well as the executive board 48 to 72 hours to deal with those sort of things.”

Dr. Brown summarised the history of the issue as follows: “The Government of Bermuda terminated Proactive Management Systems after it mismanaged the Berkeley Institute construction project. ProActive sued for wrongful termination and ultimately the issue went before an arbitration tribunal.

“The tribunal ruled in favor of the Government — five years after the original performance bond was enacted. By that time Proactive was defunct and could not pay its $6.8 million performance bond obligation.

“In October of 2008, Cabinet agreed that our next legal recourse was to pursue Union Asset Holdings — a subsidiary of the BIU. We pursued aggressively through legal channels in an effort to recoup the performance bond.”

He said over several months and through numerous meetings both formal and informal, he personally, along with colleagues, had “devoted considerable energy” to the recovery of the sums owed by Union Asset Holdings.

But he added: “Faced with the prospect of another lengthy legal battle the costs of which could easily have reached hundreds of thousands of dollars, Cabinet determined that the taxpayers of this country could not afford the dogged pursuit of this debt in what would have become a fight of pure legal principle and not good economic sense.

“Ultimately, Cabinet has decided it is in the best national interest of Bermuda to release Union Asset Holding, and by extension the Bermuda Industrial Union, of its burden in the $6.8 million dollar performance bond.”

He said the four main reasons were:

• To continue legal pursuit of the performance bond could mean a new multi-million dollar, multi-year legal challenge with no guaranteed result for either side; Dr. Brown said Government had already spent millions on the Proactive legal fight

• UAH contributed $9 million to Proactive during the Berkeley project when the contractor was short on cash; UAH can never recoup that money

• Even if the Government won its case, the BIU and its 4,000 workers would be a damaged organization, unable to stand-up for workers’ rights as it has done since 1947. “In essence we could win the case, but lose the country’s largest union,” added the Premier.

• The Premier said he believed “we can use this agreement to turn a page and further strengthen our relationship with organized labour as it relates to work performance and labour action; there is certainly room for improvement in that area”.

And the Premier added: “You will recall that not long ago, Cabinet made the unprecedented decision to guarantee $200 million in preferred shares for Butterfield Bank.

“The message in that instance was clear and concise — it is critically important to ensure our banks are strong and can withstand the stress of a further worsening of the economic climate. Banks are the lifeblood of our economy.

“Similarly, we believe unions are the lifeblood of our community. They too must be strong and stable. I am firmly confident that this decision reinforces the strength and stability of the BIU and protects our economy from a further threat.

“This Government is a Government elected by the people to make decisions. There may be some who do not like this decision but a decimated and weak Union does not benefit any country.

“However, the taxpayers of Bermuda have a very simple demand in all of this. They want to know that they can rely on the members of the BIU to deliver the services they have been hired to carry out.

“They want to know that bus drivers will pick up their children, that garbage crews will haul their waste and that engineering crews will fix their streets. That is all taxpayers want — confidence in Government services.

“If our two organizations can come to a joint resolution on this matter, one of the most complex we have ever contemplated… then surely we can fix whatever issue has upset you in your workplace.

“If you have a problem let’s talk like grown ups before downing tools like something less than adults. Why not come to the table before rushing to a picket line?

“Whatever the problem in your workplace let’s find a resolution together before we inconvenience the public. That is what taxpayers want. And I hasten to add, it is at least what taxpayers deserve.”

* Full story, reaction and background to the Berkeley fiasco in tomorrow’s Royal Gazette.