The Cayman Islands government paid construction company GLF almost $2.1 million in settlement for terminating its contract to build cruise ship berthing facilities in George Town.
Premier McKeeva Bush, when questioned by Leader of the Opposition Alden McLaughlin, acknowledged that $2,093,750 listed as compensation under “other executive expenses” for Mr. Bush’s Ministry of Finance, Tourism and Development in a supplementary budget presented to the Finance Committee this week was an amount paid in settlement to the Italy-based company.
Mr. Bush said the government thought if the case had gone to court it would have cost the Cayman Islands between $5 million and $7 million.
“We felt it would cost us more to go to court, even with a chance to win. I took the decision to settle the matter,” the premier told legislators.
Mr. Bush had previously acknowledged the government had reached a settlement with GLF, but did not reveal the amount, merely saying it was “less than $3 million”.
He said the government would be compensated for the $2.1 million settlement with the future sale of “intellectual property” relating to the project.
“The $2 million will be a balance position as we will receive the same amount by the sale of the intellectual property, such as framework agreement between the government and GLF. We are receiving that money back. It’s a matter that our lawyers are dealing with and when that agreement is completed, it will be made public as to the purchaser. It is not appropriate to do so at this time,” the premier told the Finance Committee, which on Tuesday approved the additional $2.1 million amount as part of an overall $49.1 million in extra public spending.
The extra $2.1 million brings the total amount of compensation under executive expenses from the original $605,000 approved in June’s budget to $2,698,750.
Mr. McLaughlin pointed out that Mr. Bush had previously said the contract with GLF was terminated because the company did not have the necessary funding to go ahead with the project, and he asked if the settlement payment was a concession to the company’s claim of wrongful termination of its contract.
“Even though we felt we could have won, it would have cost us much more to do battle in court and so we decided we weren’t going that route,” Mr. Bush said.
“There are other reasons why we decided to terminate GLF,” said the premier, adding the Italian company had not proposed to do certain things the government wanted, including building a jetty at Spotts, which would cost between $6 million and $8 million, and a dock at the Turtle Farm in West Bay.
Mr. Bush said the Turtle Farm was costing the government $9 million in annual subsidies and that when the tourist facility was redeveloped, it was envisioned that it would include a dock to make it easier to attract cruise ship passengers.
“We would not have built the Turtle Farm if the dock was not part of the deal,” he said. “When I consider that we had worked out a programme with China Harbour Engineering to build the Spotts Jetty and to build and redevelop a facility at the Turtle Farm, that as far as we are concerned … even though we had to pay out $2 million, that puts us way ahead. That cost pales in comparison to $2 million of settlement that we agreed on,” the premier said.
GLF was one of five companies that has entered into negotiations with the Cayman Islands government over a new cruise port project since 2003. Others included Misener Marine, Atlantic Star, Dart Enterprises Construction Company and, most recently, Beijing-based China Harbour Engineering Company.
Last April, GLF was ousted as the potential builder of the cruise port in favour of China Harbour, which proposes building a jetty at Spotts and a dock at the Turtle Farm, as well as the berthing facilities in George Town. At the moment, cruise ships cannot dock in George Town Harbour in Grand Cayman and passengers are ferried to shore on tender boats.
The government and China Harbour Engineering are continuing to negotiate details of the proposed cruise port and a deadline on those talks has been set for 31 March.