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Public to fork out $1m for failed Sandys 360

Public works minister Lieutenant-Colonel David Burch

The public are to fork out $1 million to pay off the mortgage on the failed Sandys 360 sports centre and lender HSBC has agreed to write off more than $8 million.

Lieutenant-Colonel David Burch, minister of public works, told MPs that HSBC was prepared to take $1 million as “full and final settlement” of the $9.24 million still owed by the trustees of Sandys Secondary Middle School.

The deal, approved without objection in the House of Assembly and due to be rubber-stamped by senators on Wednesday, will take the total amount of public money spent on the now-shuttered Sandys 360 Sports, Aquatic and Enrichment Centre to at least $6.3 million — but the real amount is likely to be higher.

Those behind the project still owe the Government $800,000 for a duplicate payment made by mistake, plus an unknown amount in unpaid land taxes, payroll taxes and social insurance contributions.

The $6.3 million covers known payments from the public purse and does not reflect how much money was received for and spent on the centre by the trustees.

The Government has refused to make public a report into the finances of Sandys 360 carried out by professional services firm KPMG and the Information Commissioner’s Office is reviewing that decision.

As well as grants and payments from the public purse and the original $9.5 million loan from HSBC, hundreds of thousands of dollars were donated by corporate sponsors and community members towards the construction of the Broome Street building, which opened in 2009.

Construction firm BCM McAlpine, which built the centre, is still owed more than $1 million.

Former Sandys 360 staff also claimed they were not paid all they were owed before the centre became insolvent and closed its doors in late 2013.

Craig Cannonier, a former premier, said in the House of Assembly there was “no argument” from the One Bermuda Alliance about the purchase of the property by the Government.

He added that the trustees had “great intent” and some people “mortgaged their homes and the likes”.

Mr Cannonier, a One Bermuda Alliance backbencher, said when he was public works minister in 2016 and the OBA government proposed buying the centre for $1 million, one of the “stumbling blocks” was that “the bank was looking for the Government to pretty much finance the debt”.

He added: “People have tried to, in the past, bring up all kinds of things, double payments and the like.

“You know what, we don’t even need to get into all of that stuff. This is Sandys 360, who started out trying to do a good job and found themselves in trouble.

“People were coming to me at the time saying ‘they are not giving up their financials’ and the likes. Completely unnecessary for people to carry on in that manner when we were seeking out an opportunity to save that area.”

Colonel Burch asked the House of Assembly on March 2 to approve the move to buy the centre.

He said the original mission for Sandys 360, which has a 25-metre indoor pool, a basketball court, a gymnasium and gym classrooms, was to help develop “healthy and positive young people” and provide the area with a social centre.

But he added the operating costs of the centre “exceeded the revenue and donations received to support it”.

Colonel Burch said successive governments provided grants and other financial contributions to try to keep the centre open until it was forced to shut its doors five years ago.

He added: “At that time, the trustees took advice and it was determined that to keep the facility open and operating would incur an annual shortfall of between $500,000 to $1 million.

“Funding was not available to meet this shortfall going forward.”

Colonel Burch said the trustees owed $9.24 million to HSBC Bermuda but were “unable to service the debt”.

He added: “The bank had initially offered the debt to Government, extension of the memorandum of a capital grant to the trustees, and the offer of the bank to sell the debt secured against the land for $6 million. All were declined.

“The Government considered options in relation to the property and are of the view that the property is of such operational significance to the school that Government should purchase it from the trustees.

“The land used to secure the original $9.5 million loan from HSBC Bank of Bermuda to build the centre includes part of the school playing field and some school buildings.

“At present, Government owns the land on which the majority of the school sits and the Government will be acquiring the remainder through this purchase.”

Colonel Burch said the 2.56 acres of land occupied by the centre and school buildings would be conveyed to Government and the first priority would be to give Sandys Secondary Middle School pupils access to it, followed by the community.

But he added there was no guarantee the pool would be retained due to “significant” running costs.

An HSBC spokeswoman said: “HSBC takes the issue of customer confidentiality very seriously and as such is not able to discuss any matters with respect of customers or purported customers.”

Gitanjali Gutierrez, the Information Commissioner, confirmed last night that the Government’s denial of access to the Sandys 360 financial report, as well as “decisions by the Ministry of Finance concerning additional records related to Sandys 360’s finances”, were still under review.