Cayman Islands Premier McKeeva Bush announced Wednesday that a settlement has been reached with the construction firm that was previously in negotiations to build a new cruise berthing facility in George Town.
Mr. Bush also announced that government was looking into the possibility of building cruise facilities in Cayman Brac with its new partner in port development, China Harbour Engineering. His comments came during a speech on the port project negotiations given to the Legislative Assembly.
The premier said his government had “good reason” to end the memorandum of understanding with Italy-based GLF earlier this year.
“The risks of non-performance were simply too high,” Mr. Bush said of the previous negotiating agreement. “I wish to inform the public that a settlement agreement has now been reached with GLF; and not even remotely close to the astronomical sums of $35 million that have been bandied about.”
The final settlement amount was thought to be less than $3 million.
“Not only have we agreed [to a settlement], but these sums will not be coming out of government’s coffers,” Mr. Bush said.
The Caymanian Compass sought clarification Thursday as to where the sums for the settlement would come from. The newspaper received no comment from the Premier’s office by press time and a representative of Governor Duncan Taylor’s office declined to comment, referring questions to the Premier.
“What we are dealing with here is a project of unquestionable national importance,” Mr. Bush told lawmakers.
Since 2003, the Cayman Islands government has been in talks with a number of different companies regarding the potential construction of a port berthing facility in George Town. Talks with Misener Marine, Atlantic Star, Dart Enterprises Construction Company, GLF and now China Harbour have been in various stages of negotiations, but no final deal has ever been agreed. Right now, cruise ships that come into George Town must anchor off shore and ferry passengers in by tender boat.
Mr. Bush said an independent business case analysis is now being conducted on the China Harbour proposal by the KPMG accounting firm, something that was not done as part of the GLF negotiations. He set out a number of reasons for why Cayman’s government decided not to go with the Italy-based firm to build the port facility. Those included: No evidence that GLF would have the funds available to do the work, requirements for GLF to bring in construction equipment – adding more cost, as well as greater cost of capital.
The Premier also said GLF’s local construction partners – Royal Construction – started private talks with a jewellery store company to own and operate the upland development portion of the port project without government’s knowledge.
“[It was] certainly unbeknownst to me,” he said.
Attempts to obtain comment on Mr. Bush’s statement from GLF’s local subcontractor, Royal Construction, were not successful by press time.
Previous statements from West Bay MLA Cline Glidden – who is one of Mr. Bush’s party members and who managed the talks with GLF – indicated that Mr. Glidden did not share the Premier’s view about the Italian company not being able to perform its obligations.
Mr. Glidden sent an email to all elected members of the United Democratic Party in April, outlining his views on the GLF port proposal.
The email explained that GLF had laid out two options for financing, including one with “traditional financing provided by a reputable institution, Citi Group”. That option would have required commitments from the cruise lines.
“They have also provided an alternative, which shows their ability to acquire financing without the cruise ship guarantees. They also included a commitment from the company in the amount of the $39 million dollars of equity required.”
Mr. Glidden went on to praise GLF for its efforts.
“They have again reasonably, in my opinion, requested that they have gone as far as can be expected without the existence of a formal commitment from the government by the way of the main agreement, which is what was expected and anticipated from the very beginning,” he wrote. “I think that it is obvious that GLF has stepped in and in a very short four-month period has taken the project to the required stage where there is now an acceptable plan to the cruise lines and an acceptable plan to the financial institutions, which are willing to finance the project.
“My recommendation is that we approve the main agreement which allows the project to be started as soon as possible.”
Mr. Bush said recently that he had not seen the email sent from Mr. Glidden. The same day Mr. Glidden’s email went out, Mr. Bush wrote to GLF President Francesco Senis terminating the memorandum of understanding between the company and the government.
“GLF has not demonstrated any positive proof that it is able to finance the port expansion project at the George Town port,” Mr. Bush’s April letter read.
Cruising the Brac
Mr. Bush said the China Harbour agreement, which is still being negotiated, will provide not only local jobs by would allow local business owners to have equity and invest in the port project.
He also noted the project proposal – as it now stands – will do more than just build a cruise berthing facility in George Town.
“They have agreed to develop Spotts, which is the alternative for cruise ships in bad weather,” Mr. Bush said. “They have agreed to develop pier facilities at Cayman Turtle Farm. They have agreed to cruise facilities in Cayman Brac with Mr. Dervyn Tibbetts.
“This is what I call leveraging our national assets. They would like to just develop the George Town facility, but the country needs much more than George Town developed.”
Mr. Bush said China Harbour has “access to funding….at 1 per cent to 3 per cent for their capital investment”.
“Government will not have to find the capital,” Mr. Bush said. “Government will not have to guarantee any loan – so there will be no addition to our debt.”