Dickinson: I resigned on principle
Former finance minister Curtis Dickinson has confirmed a major Cabinet bust-up with David Burt, the Premier, over the Fairmont Southampton redevelopment, and extending tax concessions to hoteliers, were key triggers for his shock resignation.
In a personal statement to the House of Assembly, Mr Dickinson insisted the Premier was wrong to claim a $50 million guarantee to the developers of the island’s biggest resort, Gencom, had been agreed in 2019.
Mr Dickinson, who said he and the Premier had seen a “growing gap” in their outlooks over the past year, also indicated Mr Burt was helping spread “confusion” on the guarantee issue.
In a parting shot at the Premier, who has floated the idea of extending tax concessions for the tourism industry citing jurisdictions such as Turks and Caicos, Mr Dickinson warned that such a move could have “astounding” financial implications, and comparisons with other territories were not valid.
Mr Dickinson said he could support a guarantee for the Fairmont Southampton, but it would need to be watertight and heavily scrutinised by MPs.
Insisting he had maintained a “dignified silence” since his surprise Cabinet exit on February 14 – just over a week before the Budget – Mr Dickinson released his letter of resignation to the Premier.
He said the reasons for his decision to leave Government included him not being prepared to “compromise my principles” as finance minister.
His resignation letter to the Premier stated: “For the majority of my tenure, we have worked together to deliver great value.
“Over the course of the last year, however, there has been a growing gap in our respective approaches on a number of key issues.
“Our country deserves a minister of finance who can work seamlessly with the Premier to advance its economic and fiscal interests.“
Mr Dickinson said he kept the letter deliberately general and discussed specific concerns in a face-to-face meeting with the Premier.
He told MPs: “The quantum of and form of the Government’s support of the redevelopment of the Fairmont Southampton were the primary reasons behind my resignation.
“I want to make it absolutely clear that I was, and still am, supportive of a level of financial support for this project.
“However, I was and continue to be unable to ignore the principles and judgment gained through my over 30 years of experience in investment and commercial banking.”
The Premier denied on February 16 Mr Dickinson’s resignation as finance minister was due to a bust-up over Government support for the $200 million Fairmont Southampton hotel redevelopment.
David Burt said: “I don’t believe that is accurate to say.”
Mr Dickinson left little doubt about his unhappiness with a statement from Mr Burt on March 4 that he had agreed a $50 million guarantee with Gencom when finance minister in 2019.
He said: “There has been significant confusion recently created in the public around whether the Government had entered into a guarantee commitment with the developers.
“It has been suggested that in 2019 the Government entered into a $50 million guarantee with Westend Properties Limited/Gencom for the redevelopment of the Fairmont Southampton hotel.
“That is incorrect.”
Mr Dickinson said the Government entered into a Letter of Intent (LOI) with the developers
He said: “An LOI is not a commitment. It is a non-binding agreement that sets out a series of terms from which the parties intend to negotiate into a more substantive and binding agreement.
“The LOI that I signed in December 2019 contained a number of terms that the developers would need to meet or agree with in advance of the provision of support from the Bermuda Government in the form of a guarantee on a portion of their contemplated financing.
“As part of the negotiation of any final agreement we would also require sufficient rights in the event of default. In any event, the developers did not meet the LOI conditions precedent, and the Letter of Intent expired on 31 December 2020.“
Mr Dickinson made it clear he did not support a move to extend the period of concessions for hotel developments and redevelopments from beyond the maximum current term of 10 years.
He said: “Comparisons are commonly made to other jurisdictions in an effort to justify an expansion of the duration of concessions.
“However, these comparisons are usually incomplete and fail to capture the entirety of the dynamics of the Bermuda economic model or the specific financial returns profiles of the hotel owner/developer any increase in the concession period would result in even greater cash savings and benefits to the developers.
“Given the Government’s current fiscal position, is it prudent to give future tax revenues to developers who by virtue of their own financial returns projections would already be projected to earn multiples of their invested capital?
“Even if changes to existing tourism incentives are warranted, perhaps the analysis should be completed first for the industry at large rather than predicated on a single request. Otherwise, the overall cost could be astounding, and without the analysis I am unsure if it will be worth the rush.”
He told MPs: “I would like to make some observations on where we are as a country and how we move forward.
“Over the course of the last four weeks, we have been engaged in a series of budget debates. Having now sat through four annual budget sessions, they have taken on a sameness; a Budget Statement is delivered followed by a Budget Reply and then a series of debates that seemingly focus on what the other side has done wrong.
“If only these efforts were focused on solving Bermuda’s problems rather than blaming the other side or the former administration(s) we could possibly make real progress with our challenges.
“Some would say the system is broken or its just politics. I would ask however, how is it helping the cause of the people of Bermuda? I am not so quick to accept that the system is broken, but instead ask can we not do our jobs as leaders better?
“Many people are counting on us to do so in their best interest. There is no monopoly on good ideas on either side of the aisle.
“It would be wonderful to see us working together for the benefit of the people that we serve.”
Mr Dickinson made comparisons between the Fairmont Southampton project and the Morgan’s Point one.
He said: “If the Government support is not structured correctly and the developers are unsuccessful, we could see the Government having to assume the responsibility for the repayment of any guaranteed debt.
“I would suggest that a full breakdown including total proposed foreign and domestic debt be provided to this Honourable House.”
Mr Dickinson also raised concern at past practices of developers.
He said: “The decision to delay fulfilment of the obligation to Fairmont employees made redundant because of the hotel’s closure will remain a point of concern for me on the developer’s willingness to honour their obligations.
“It is a matter of public record that the employees were only paid after the Bermuda Government stepped in to provide direct financial support to the employees and then supported the pursuit of a Statutory Demand to recoup those funds.
“This should be a cause for concern and result in an increased focus on insuring that the necessary protections are put in place to protect the Government’s and the People of Bermuda’s interest.”
It has been an honour to serve as Bermuda’s Minister of Finance for the last thirty-nine months.
The opportunity to perform this important role in Bermuda’s government during a time of economic uncertainty, compounded by the challenges of a global pandemic, has been one of the high points of my professional career. Notwithstanding the challenges, meaningful progress has been made on key initiatives.
My obligations as Minister of Finance require me to act as a fiduciary and to put the interests of the People of Bermuda first. For the majority of my tenure, we have worked together to deliver great value. Over the course of the last year, however, there has been a growing gap in our respective approaches on a number of key issues.
Our country deserves a Minister of Finance who can work seamlessly with the Premier to advance its economic and fiscal interests; a Minister of Finance who can fully support the policy agenda that has been set. Regretfully, I no longer find myself able to fulfil that role. I hereby resign from my position as Minister of Finance.
Thank you for the opportunity to serve. I now look forward to spending more time with my family and continuing to serve the People of Bermuda through Constituency 21.
Curtis L Dickinson
Mr Dickinson insisted any guarantees with Gencom must stick to strict financial norms.
He said: “The national strategic importance does not give justification to the abandonment of best principles.
“While as a general matter I am not supportive of the provision of government guarantees to private sector participants, in the case of this project, I can support the issuance of a government guarantee, so long as it is necessary and the interests of the people of Bermuda are appropriately protected.
“The risks are so high and the record with guarantees to external projects so real that only a full and transparent examination of the protections by this Honourable House are warranted.”