Colonial realities: George Ferguson, Governor of Bermuda, presides over the ceremony marking the start of Bermuda’s new legislative session. Directly in front of him is Premier Michael Dunkley.

Bermuda’s government is heading for a showdown with Whitehall over its plans to contract a Canadian Government owned company to redevelop its only airport.

Government says a “Letter of Entrustment” from the UK Government giving permission for the initiative is not a legal requirement.

The UK begs to differ.

“The legal advice received by the UK Government is that a letter of entrustment is required for Bermuda to sign a contract with a Crown Corporation of the Government of Canada,” Deputy Governor Ginny Ferson told Politica.

UK Foreign Secretary Philip Hammond issued the entrustment letter to the Governor on November 10, the same date Bermuda, a colony of the UK, signed a non-binding MOU signalling its intention to contract with Canadian Commercial Corporation, a Canadian Government-owned company.

Ferson said that the Bermuda Government requested the letter of entrustment on July 30.

“It had to be carefully considered.”

She declined to say what would happen if Government did not agree to the terms of the entrustment letter, saying the question was “hypothetical”.

Bermuda’s Finance Minister Bob Richards tabled the letter of entrustment in the House of Assembly on Friday, repeating Government’s position that the formality was not legally required.

Richards’ view is that the agreement does not concern foreign affairs per se but a commercial relationship concerning the construction of a terminal building.

He did not respond to our queries seeking an update on the matter.

Opposition Leader Marc Bean is not surprised at the UK’s position.

“There is no question that the letter of entrustment is (legally) required,” he told Politica. “CCC is an arm of the Canadian Government. And anyone in the OBA who thinks that it is not required is attempting to fool people. And the fact of the matter is that the legal opinion came from a law firm that is also the law firm of CCC – which is the biggest and most blatant conflict of interest that you can imagine.”

Under the present constitutional arrangement, Bermuda is largely self-governing but the UK is responsible for defence, internal security and foreign affairs.

Under questioning from members of the Opposition Progressive Labour Party on Friday Richards revealed that he was relying on a legal opinion provided by Canadian law firm Bennett Jones.

He agreed that Bennett Jones had set up a branch in Bermuda and had “experience” with CCC, but denied that the law firm was conflicted.

“They have not recused themselves and the rules that govern lawyers are that if they feel there’s a conflict they recuse themselves,” Richards said.

Last year, Bennett Jones provided third party advice to CCC in a management review of engineering firm SNC-Lavalin.

Government has not yet accepted the terms of the entrustment letter but is “in discussions” with Government House to agree “conditions that would work for us”, he told lawmakers.

Richards would not say which of the UK’s conditions were deemed unacceptable.

“But we would not be committing ourselves to anything that is harmful to the interests of Bermuda.”

The UK’s seven-point entrustment letter specifies that the airport project “meet value for money tests in accordance with best practice set out in Her Majesty’s Treasury Green Book” and that an independent accounting firm must verify compliance before any deal is finalized.

The “value for money tests” in the UK Treasury’s Green Book do not contemplate a sole sourced contract with CCC as envisioned by the Bermuda Government.

Whitehall is also insisting that it preapprove any proposed contract between Bermuda and CCC.

Richards insisted that the airport project would not be jeopardized if the UK and Bermuda do not agree on the terms of the letter of entrustment.

“We would like to have all parties on board, but it is not necessary,” he told the House of Assembly.

Government is keen on moving ahead with the $200 million redevelopment project under a private public partnership structure with CCC which will ensure completion with no upfront financing required from Bermuda. The plan is for CCC to recoup its investment from future revenue streams from the airport itself before handing over the facility in 30 years.

The proposed deal was criticized by the Opposition Progressive Labour Party as “privatization through the back door without a tendering process” that would cost the island $1 billion in foregone revenue.

Richards has defended the proposal saying a new airport is badly needed, cannot be paid for under conventional procurement methods due to the island’s debt position and that the project would be a boost to the economy.

A 2011 MOU with CCC for the redevelopment of the Cayman Island’s airport was nixed after the UK raised objections about the procurement process.

The territory then opted for a more modest project procured under conventional methods.

This article belongs to Politica ! The original article can be found here: Bermuda set to clash with UK over airport deal

Politica © 2024 - All Rights Reserved