The man at the centre of Bermuda’s “JetGate” scandal was also a go-between in negotiations on Bermuda’s billion dollar City of Hamilton’s waterfront redevelopment project, developer Michael MacLean has stated in court filings.
MacLean has filed suit against the Government claiming compensation of $90 million to cover loss of profits caused by Government’s voiding of his Waterfront redevelopment agreements with the City. He is also advancing an alternative argument that the agreements and his company’s 262 year lease of the City property could not have been properly voided.
Stephen DeCosta played a major role in talks involving Bermuda Government Ministers before and until the controversial deal was scuttled through legislative action by Government – even dictating a letter to be sent by MacLean to the Premier of Bermuda and the Municipalities Minister, according to MacLean’s supporting affidavit.
Throughout 2013, from January through to December, I had many conversations with the Premier and Michael Fahy, and Stephen DeCosta who was acting on their behalf, about what they wanted me to do in order to secure the Cabinet’s support for the Waterfront development,” the affidavit states.
Later, in or around September 2013, these discussions also included suggestions by them that I could sell the lease to the GoB, or surrender it to the GoB, for the payment of various sums of money. Mark Pettingill, the then Attorney General, also started to feature in these discussions around this same time.
In the affidavit, which was provided to Politica by someone with close ties to the developer, MacLean says that DeCosta made his appearance shortly after the 2012 General Election which thrust the One Bermuda Alliance into power and landed Craig Cannonier the Premiership.
These discussions were initiated by them and not by me. Although Mr DeCosta was facilitating the contact with me, on an almost daily basis, it was always on behalf of these Ministers.
The Premier himself was calling me on almost a bi-weekly basis throughout 2013. Mr Fahy also regularly called or sent messages to me, again almost on a bi-weekly basis as well, and we would meet probably every couple of weeks on average.”
MacLean’s sworn affidavit outlines meetings and contacts he had with Municipalities Minister Michael Fahy, the then-Premier Cannonier, Economic Development Minister Grant Gibbons, Tourism Minister Shawn Crockwell and Mark Pettingill who was Attorney General at the time.
Read the full affidavit below:
MacLean’s Allied Development Partners secured the rights to redevelop the City of Hamilton waterfront after a flawed bidding process shortly before the 2012 election, and was granted a 262 year lease of 20 acres of City property. He had already secured first position with Par-la-Ville Hotels and Residences which had an agreement with the Corporation of Hamilton to build a luxury hotel on City property.
DeCosta, who is not a civil servant, is Cannonier’s good friend and business manager.
MacLean’s affidavit does not mention the presence of any civil servants at the meetings. But, according to the developer, DeCosta had knowledge of Cabinet’s intentions about the waterfront project and conveyed such information to him.
Senator Fahy denied that DeCosta was involved in the talks on the waterfront when the matter was raised by Politica last year, saying only that he had “useful information”.
Cannonier told us on January 15 this year that he “never knew” of DeCosta’s involvement in the waterfront talks.
The “JetGate” scandal – detailed in our story Selling Bermuda – featured DeCosta in meetings between Government Ministers and developer Nathan Landow who had an interest in having a casino in Bermuda. It later emerged that DeCosta had enjoyed a brief consultancy on Landow’s payroll and was one of the managers of an “underground” campaign account funded by the developer and other US businessmen
From the affidavit:
In around mid January 2013 I have found out from Stephen DeCosta that the Cabinet was working on a plan to block the Allied Waterfront development. This included considering whether the lease from CoH could be cancelled.
I was told by the Premier and Mr DeCosta that, although some Ministers were supportive of the development, others, including Bob Richards, Grant Gibbons and Trevor Moniz, now the Attorney General, were against.
Soon the talks centred around negotiating the exchange of the waterfront lease for a sovereign guarantee for the Par-la-Ville hotel project.
By this time it was very clear that the GoB was going to block the Waterfront development. The Premier told me that I should accept this proposal as it was the best result I was going to get from the GoB.
In early September, DeCosta dictated a letter to MacLean, the affidavit states.
He dictated to me the language of a letter he told me Craig Cannonier and Michael Fahy wanted me to send to them at the Cabinet Office the following day.
He had with him a handwritten note of a letter, from which he dictated to me what Craig Cannonier and Michael Fahy wanted me to write to them.
The letter was intended to offer to relinquish the Waterfront agreements for a sovereign guarantee on Par-la-Ville for between $45 million and $50 million.”
DeCosta returned to MacLean’s office with the drafted letter with further suggested amendments – this time with the amounts of the sovereign guarantee increased by $10 million.
Government decided to void the Waterfront agreements through legislative action in 2014. MacLean says he was informed of this at a meeting with Fahy and Cannonier on February 20 that year.
I was told after this meeting by Stephen DeCosta that the agreements were to be voided because Craig Cannonier and Michael Fahy had not been able to get what they wanted,” the affidavit continues.
Government rejected Allied’s development agreements with the City of Hamilton in March 2014, exercising new powers under amendments to the law governing the municipalities.
MacLean’s affidavit is in support of a claim for compensation for loss of business and voiding Allied’s property rights.
He is arguing that the agreements were not properly voided and so remain valid. Alternatively, he argues that Allied’s constitutional rights have been violated by the voiding of the agreements.
MacLean estimates that the waterfront project had a development value of close to $1.8 billion, and that Allied Development Partners could have made a profit of $90 million.
The value of the property itself has been estimated at $156 million by Valuation experts agreed to by the Government.
MacLean contends in his affidavit that both estimates are conservative.
The suit was filed on February 9 this year and Government had two weeks to respond.
The matter is already in arbitration but MacLean contends that the arbitration cannot address compensation due to his company Allied Development Partners because it does not hold the Waterfront lease. A separate entity, Allied Trust is the actual leaseholder.
The action is bound to intensify pressure on Government to settle with MacLean, as it is relying on control of Hamilton’s waterfront to stage the Bermuda leg of the America’s Cup World Series in October this year.
Premier Michael Dunkley said yesterday that no monies had been allocated in the budget for any settlement over the waterfront dispute.
The question, he said, is “way too premature”.
“Its difficult to budget on speculation.”
Read MacLean’s originating summons in full below:
See our story here for further background.
Politica © 2021 - All Rights Reserved