InnoFund $2.5m guarantee confirmed as paid
A $2.5 million government guarantee to support technology start-ups and digitalise public services has been paid, senators heard this week.
The assurance related to a loan made available to InnoFund, which said yesterday that it appeared the Government had settled in full and covered associated legal costs.
Operations at the InnoFund Innovation Incubator were suspended last year amid a dispute with the Government about its support for the project.
The guarantee was among others recorded in the 2022-23 Budget book but did not appear in a list of such commitments in the 2023-24 estimates of revenue and expenditure, nor was InnoFund mentioned in David Burt’s Budget statement in February.
Doug DeCouto, a One Bermuda Alliance senator, said in the Upper House on Wednesday: “I would like to understand what happened to that guarantee, why it’s gone away.”
Arianna Hodgson, the junior finance minister, replied: “The short answer is that guarantee had been repaid and so that’s why it is no longer included.”
A spokesman for InnoFund said yesterday: “InnoFund has had no direct contact with the Government in respect of the guarantee but it appears from our banking records that the Government has paid the guarantee in full and the legal costs associated with that process.
“We continue to have an open door with Government for seeking ways to resolve the dispute around the established funding mechanism for the technology incubator and the related software platform, but have been unsuccessful with any government responses for several months now.”
The Royal Gazette asked the Government earlier this month why the guarantee was not included in a table of financial commitments published in the latest Budget book.
A spokeswoman for the Ministry of Finance referenced a comment provided for an earlier article about InnoFund and its related organisations — BPMS and the InnoFund Innovation Incubator, or i3.
It was reported in December that operations at i3 — a by-membership company — were suspended until “some resolution” was found in its dispute with the Government.
The incubator was linked to a leading accelerator based in Toronto and was designed to act as a one-stop shop to help founders to build and develop cutting-edge technology while scaling their start-up growth.
A writ filed by lawyers for the three organisations in the Supreme Court’s civil jurisdiction claimed for loss and damage and alleged that the Government failed to pay for services and products provided after agreements were made.
It is understood that the dispute related to a number of invoices resulting from work done by BPMS — a mobile software company that would fund the not-for-profit incubator — that were allegedly unpaid.
The finance ministry spokeswoman said in December: “A report to the House of Assembly was tabled on July 23, 2021.
“In accordance with Section 2AA (3) of the Government Loans Act 1978, then finance minister Curtis Dickinson informed the House of the issuance of three new government guarantees.
“One of these guarantees was a $2.5 million loan on behalf of InnoFund.
“Given the legal action mentioned, the Government cannot comment but will continue to work to meet the Government’s objective of creating an environment for tech companies to develop and grow in Bermuda.”
She added this month: “The legal action has not been resolved, so the Government cannot comment.”
Dr DeCouto said in the Senate earlier yesterday: “I noted that the InnoFund guarantee seems to have gone away and I understand there is a court case with Government.
“It is hard to understand how innovators are going to be attracted to work with this Government when it allegedly can’t seem to honour its agreements with them.”
InnoFund told the Gazette on December 16, 2022 that the debt, which was to Clarien Bank, then remained the company’s responsibility.
Heather Thomas, the Auditor-General, said this week that when a government guarantee is likely to be called owing to a default, the loss “should be recorded in the Government’s accounts immediately”.
She added that the recording of payments by any other parties in respect of a government-guaranteed loan would be dependent on the circumstances.
Mr Dickinson’s report to the House in July 2021 said that the guarantee related to a “$2.5 million loan on behalf of InnoFund for the establishment of a venture capital programme for technology start-ups and for the creation of a mobile portal for the Government”.
Notes to financial statements of the Consolidated Fund for fiscal year end 2022 included information about the InnoFund guarantee under contingent liabilities — guarantees.
It said: “On June 18, 2021, the Government provided a letter of comfort to Clarien Bank on behalf of InnoFund supporting a $2.5 million term loan facility.
“The loan is to fund a private-public partnership with the Government of Bermuda to enable the Government to digitalise their various services and attract and support start-ups as they test their products on island.
“The Ministry of Finance guaranteed to make good any default on the part of InnoFund in the payment of the loan to Clarien Bank and all related interest fees and charges due as a result of default by the InnoFund until all indebtedness to Clarien Bank has been fully discharged.”
A spokesman for Clarien said this week that he could not comment on private bank matters.
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