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                         Press Conference – Baha Mar Project
                     Prime Minister the Rt. Hon. Hubert Ingraham
                          House of Assembly Majority Room
                           Wednesday, September 29, 2010

PM: Much is written in the newspaper about this project. All sorts of motives are
ascribed to myself, and no one has ever asked me any questions. And I thought it
opportune this morning, to make myself available so that you can ask me any questions
you wish and at the same time, provide you with any additional information that I can so
that we are not proceeding along every other day saying ‘this will happen tomorrow, that
will happen tomorrow.’ You can take what I tell you and rely upon it.

Media: Is there any concern about whether Baha Mar is financially sound because of the
delay in reaching an agreement with Scotia Bank?

PM: Well, you can draw your own conclusion as I will draw mine. I will keep mine to
myself and you would make yours known to the public. Baha Mar has a mortgage with
Scotia Bank and a condition of the loan from the China Eximbank is that the Scotia loan
must be satisfied - must be paid – before the Eximbank loan can kick in. There are some
additional conditions, but one of the principal conditions is [Baha Mar] must pay Scotia
off so that they have title to the property to be able to give to [the Bank] to hold as a
lender. That is what is taking place now, discussions over that.

Media: Is it surprising that it is taking so long?

PM: Well, I am surprised in the sense that last week Wednesday while we were in the
House, I had very good reason to believe that the parties had arrived at an agreed
position, or would have arrived at an agreed position certainly by Friday of last week. We
thought that had been the case, but they have not yet agreed. The issue relates to, very
frankly, that Baha Mar does not believe that it ought to pay Scotia all the monies that
Scotia says is owed to it. They believe they ought to get less money, and Scotia believes
it ought to get as much of the money owed to it as possible and that is what the argument
is about.

Media: Have you had any discussions with the Chinese partners?

PM: There are a number of things that must be done before China Eximbank comes in.
First of all, Scotia’s loan must be satisfied, the Agreement with the Government must be
had. There are a number of conditions in the Government Agreement that Baha Mar
would have to satisfy and there are some additional conditions that are required to be
satisfied by Baha Mar before the loan kicks in. At the moment, what the Government has
before it is an arrangement made between Baha Mar and two Chinese companies. Once
Baha Mar is in a position to fulfil its side of the bargain in terms of having its property
free and clear, then the Government has for consideration what has been agreed Baha
Mar and the China Eximbank and the China Construction Company. And the extent to
which we will engage in exchanges with them will be subsequent to the satisfaction of
Scotia’s mortgage. At the moment, there is no basis upon which we can speak to them

Media: What is your response to the Opposition Leader’s earlier criticism about your
tone in Parliament with respect to the project. Do you have faith in the Baha Mar deal?

PM: I wish you could have heard the Leader of the Opposition speak to me privately just
about 15 minutes ago in the presence of the Member for Mt. Moriah and see the
difference between that position which he had taken publicly, and the private position
which he has in relation to this project. But as for your question, I am hopeful for the
project. Certainly on our side, there is no one who is opposed to the project. There are
concerns which would need to be satisfied. There are concerns that first of all, we are
going to be embarking on a course with respect to foreign labour that has never happened
in The Bahamas before; you would be building the largest single resort project in the
country with exclusively foreign labour – foreign labour where there is no transfer of any
knowledge to locals. You would, at the same time, be producing a number of rooms that
is larger than anything we’ve got in the country without any major hotelier being
involved to-date so that you can determine the extent to which you are likely to have a
successful project down the road. You have the experience of what has happened in
Grand Bahama at Our Lucaya – a wonderful resort that is nearly empty most of the time.
So the branding of such a facility would be critical from the Bahamas Government’s
point of view. Apart from that, you have persons who are of the view that the project
should be done in phases; that we cannot put on the market in The Bahamas 3,500 hotel
rooms at one time; that we don’t have the capacity to attract the visitors to make such a
thing successful; and that we will put ourselves in a position where either there will be
competition down to the bottom in terms of rates where we can end up negatively
affecting Paradise Island and Cable Beach; that it is critical for there to be substantial
training of workers to work in these hotels when it is completed and that if you build
them all and open them all at the same time, it is not likely to produce an acceptable
result. So there are a number of issues that would need to be resolved before we move on.
At the moment, all we’ve got is a deal between Baha Mar and the China Company, and
the Bahamas Government cannot be in a position where it is ‘take it or leave it’
proposition. We have to be able to take account of the interests which The Bahamas has
and seek to have a project that takes account of our interest.

Media: Who will hold as collateral the Cable Beach property once the move beyond this
step with Scotia Bank?

PM: You know, I am fascinated by that question because there has been some
suggestion that if the property is mortgaged, then the Chinese can end up owning it. Well
the Canadians mortgaged it, does it mean the Canadians owned it? If you got the loan
from an American bank it would be the Americans owning it. Secondly as Minister
Tommy Turnquest said yesterday, when you go to the bank to borrow money to buy a
house, you don’t concern yourself with whether the bank is going to take the house
because you intend to pay the bank back, and once you pay the bank back, you get your
papers. So if it is a relevant question as to if this project does not go, will the Chinese end
up owning it, it means there is some doubt as to whether it is going to be successful. If
such a doubt exists, then we ought to put it on the table and discuss it now up front and
not put The Bahamas in any difficult position. The other point that is of fundamental
importance is, the Bahamas Government committed itself in the Agreement with Kerzer
International that no one will get a better deal for a development than they got. That was
in 1997. In 2003, that was strengthened by the Government when [Kerzner] did Phase 3;
it is called a Most Favoured Nation clause. If therefore, the Bahamas Government agrees
to 5,000 Chinese workers building the resort on Cable Beach, at some subsequent time in
The Bahamas, Kerzner will have the entitlement to come and ask for the same deal and
the Government would be bound to give him the same deal. So these are all matters that
need to be considered up front.

Media: Can Baha Mar and Kerzner co-exist?

PM: Yes, over a phased period of time. In other words, if Baha Mar brought in 1,000
hotel rooms first as Kerzner did, and then later on some additional rooms, etc, it can work
– but not to just dump in the market at one time, these numbers of rooms. We also have
to take account of reality. We have operating now at Cable Beach, a number of hotel
rooms, many of them are closed now including the casino. If I have difficulty in dealing
with less than 1700 rooms, what is likely to be the case if I put 3,500 there? What makes
me feel and what gives me the level of confidence that all of a sudden, I’ve become a
magician in terms of the management of a hotel, and how have a very successful
operation with high levels of occupancy and good revenue to be able to pay the loan of
$2.4 billion? And if I am having discussions on the question of repaying a loan of $200
million that is dragging on and on, does that raise questions that I ought to be concerned
with. These are all matters that the Government has to be concerned with, so it does not
matter {named persons} go to the Tribune to tell me what I ought to do. My duty is to do
what I think is best for the Bahamian people, and we are considering and pondering all
these matters before we give formal consideration. We came to Parliament, not to ask
Parliament to tell us how to do our job, but I want the Members of the House of
Assembly to express to their constituents and to the Government what their views are – I
don’t want anyone hiding. Whatever your concerns are, whatever your views are, say it
there – we will take those into account when the Government is considering the matter.
And so there are two questions being asked of the Parliament in the Resolution – one is
Do you approve this project, and Do you approve 8,150 Chinese coming to The Bahamas
to work on this project over the next three or four years. They are the two questions to be
answered, and we expect them to be answered. The Opposition have said that they could
not support up to 200 Chinese coming to The Bahamas for the Airport Gateway Project
and now we’ve got 8,150 coming. Let’s see what the deal is.

Media: You had indicated that this was a ‘PLP baby” and that if the PLP voted no on the
Resolution there would be no project. Has that position changed?
PM: Not yet; we will see when the vote comes. I expect the Resolution to pass, but that
has nothing to do with the project – the Government still has to approve the project.

Media: Have you had discussions with Baha Mar on the specific issues you have raised
this morning?

PM: Well, the Agreement with Baha Mar that the Christie government did said that they
were to have a major hotel chain or group as an equity partner in the deal and they were
to have a major casino operator. At that time, they had Harrah’s and Starwood. We do not
yet know who will replace them, because the deal was never intended to be a straight deal
between the Government and Baha Mar. From the Government’s point of view, and I am
speaking about the Christie government, the Government was not satisfied that it would
be willing to give an individual such an arrangement unless it was also connected to a
major hotel grouping.

Media: Is that your position?

PM: Well, do not expect for me to ask less than the Christie government did. Indeed, if
there is anything, expect me to ask more.

Media: Can you speak to Baha Mar’s recent statement that contradicted your House
statement on when the transfer of lands in the deal would occur?

PM: I don’t comment on Baha Mar, I speak for the Government. Baha Mar already has
ownership of more than 150 acres of public land on Cable Beach. Additional lands are to
be transferred to Baha Mar if this deal goes. Several things that we did not agree to in our
negotiations with Baha Mar were (i) we did not agree to what the PLP had agreed with
them, which was to sell them 70 acres of public land on Gladstone Road for their Back of
the House. We said we would lease it to them and we agreed to lease them 50 acres. (ii)
We did not agree that any housing units could be built on the 99 or so acres of land
owned by the Water and Sewerage Corporation and fee simple title transferred. We
agreed that the land could be leased and if they wanted a piece for their housing, they had
to give us back another piece of land of equal size in the immediate vicinity, and that at
no time would the fee simple title of the Water and Sewerage Corporation be diluted
below the 99 percent. (iii) We did not agree that the Gaming Board and Development
Bank should be sold to Baha Mar at all, and (iv) we did not agree that we would pay $20
million to put the electricity underground between JFK and the Baha Mar project. There
are several others things we did not agree, but they are basically what we are talking
about. What has to be understood is the history of Cable Beach. The Government of the
Bahamas in the 1950s determined that Cable Beach was a significant tourism product for
The Bahamas, and that it would not sell to anyone, any fee simple land from between the
Nassau Beach to the end of the Governors Beach hotel. The Government was able to
persuade the owners of the Emerald Beach hotel to build a hotel on a lease condition. It
was able to persuade the owners of the Nassau Beach hotel to build the hotel on a lease
condition; that was when the UBP was in office. When Carnival came to build the Crystal
Palace hotel, they too wanted to buy the land. The PLP government said the land is not
for sale, and so those hotel towers were built on leased land. The Government gave them
a 50 year lease with an option to renew for a further 50 years. The Government sold the
fee simple title to the Cable Beach hotel, so Baha Mar owns it outright today. And they
agreed to sell the Nassau Beach hotel property and also the property where Carnival had
their hotel, so that they changed policy and all the title would now go to Baha Mar to be
mortgaged to whatever foreign entity. I don’t think that we ought to be so discriminatory
by saying that if it is the Chinese we find it difficult, if it’s the Americans, Canadians or
any other foreigner, its acceptable. If you do not want it to go to foreign ownership, then
the policy that existed lease-hold land would have been continued. And so, those lands
now will be transferred. Also, the Hobbyhorse Hall land south of Bay Street will have to
be transferred. So, together with the 150 + acres which has already been sold to Baha
Mar, including the golf course we now have the other side. You know, just to get the
facts straight, the Government of The Bahamas paid $120 million + to build the Cable
Beach hotel. It was sold for $30 million including the land, and I am not counting all of
the interest the Government paid on the loan over all of those years.

Media: Do you think that’s criminal?

PM: I wont make any comment. We had the election campaign and we got elected, and I
said some of these things before.

Media: [Asks follow-up question on money paid for the hotel]

PM: Well, first off, we are owed some money. Baha Mar still owes the Government
money so, a part of the deal with considering their applications will be the payment of the
Government’s money – stamp tax, gaming tax, BEC, Water and Sewerage, etc. It is quite
a few dollars.

Media: The money you spoke of for the National Stadium’s infrastructure will also be
borrowed money?

PM: It can only be borrowed money. There is no other means by which the Government
can produce the money other than by borrowing it. What we have done is that we have
conditioned it so that we would not have to borrow the money until the development
reaches a certain stage, so that we would not be putting money in for them to get started.

Media: Might there be discussions on changing the arrangement to a phased

PM: We will certainly put that to both Baha Mar and China State Construction and also
the China Eximbank. We also understand the implication of that, that if they are going to
do it in phases, it will end up costing more money, and that they would need fewer
Chinese workers in The Bahamas. And so the extent to which there can be trade off we
do not know. But at the end of the day, we will make a decision as to what we think will
be best for The Bahamas.
Media: Is there any protection for the Bahamian people should Baha Mar not be able to
meet its debt obligations?

PM: Not any more than what is in place to protect the Bahamian people who get a
mortgage from the bank for a house and do not pay the bank and the bank sells the house
to someone else. But, if we conclude in our deliberation that there is a high probability
that Baha Mar will default on the loan, then it is certainly a decision for the Government
to make as to whether it wishes to put The Bahamas in such a position.

Media: Have you had discussions with Kerzner on how this project might affect their

PM: I have discussions with major developers with great regularity, including Kerzner.
What I do not need them to tell me is what I must be able to see with my own eyes as the
Head of the Government of The Bahamas - knowing that right now in September on
Paradise Island, they are at about 30-35% occupancy, that hundreds of people are
working two days per week, that’s hundred of people are on vacation, that in Grand
Bahama at the Our Lucaya hotel they probably have occupancy of less than 20%, that on
Cable Beach, hundreds and hundreds of rooms are closed and the casino is closed. I don’t
need Kerzner or anyone to tell me what that means; I can see that.

Media: How confident are you that you can survive in the next election approving 8,150
Chinese workers?

PM: Well, I think you are asking the wrong man because I am only here for so long as
the public wants me to be here. And if the public says it does not want me to be here
today I will happily leave today, so you might ask others who want to stay, but I can go
any day. What I mean is, I will make what I think is the best decision; I will not take
account of what the political consequence of that is. I will do what I think is best for The
Bahamas. And if that means that there is a political price to pay, then I will pay it and my
Party will pay it.

Media: What quality assurance measures will be put in place with respect to the Chinese
materials to be brought in for the project?

PM: That is a very good question. We do not have the capacity in The Bahamas to
manage a project of this size. And so The Bahamas Government would have to employ a
firm engineers, quality control persons, environmental people, etc, to undertake the
supervision of the project, the monitoring of the project, to ensure the quality of the
materials – materials that are coming from outside our region that we are not accustomed
to. [They would] ensure that they meet standards that are understood in this part of the
world. To give you an example, the Government is going to build a four-lane highway
from the airport into town. We are going to engage a firm that will be our quality control
firm, being a supervisor for us, and we would have to do the same thing for this project.
Now, the cost of this would be very high to be able to properly supervise this project.
Media: With so much to consider, when do you expect the Government might have a
final determination on the project?

PM: I am going to China on October 22. I do not expect that we would decide that
before I go.

Media: The Central Bank spoke to a dimmer prospect for 2011 than previously forecast.
It also said that a major project could help to turn the situation around. What other hope is
there apart from Baha Mar?

PM: One of the things I really take exception to is seeing in a column that Baha Mar is a
saviour for The Bahamas. I find that most offensive and I would like to urge you all not
to offend me everyday by saying that about my country, as it is your country too.

Media: Its not a saviour?

PM: It is not. It is not. We are not going to die if Baha Mar doesn’t come. We’ve been
here from the time Christopher Columbus came in 1492 and we will be here 500 more
years plus. If that was the case then the Government would have nothing to consider, it
would just rubber stamp it. The Central Bank of The Bahamas is no more able to
determine what is going to happen in the future than the IMF, the World Bank, the IDB,
the US Government and everyone else – they are all just guessing. They may have
educated, informed guessing, but they have no means of knowing when the world
economy is going to turn around and what the impact is going to be. All of us are
forecasting and doing the best we can. And so, there is this theory that we all will have,
that in order for us to take care of the huge labour force in The Bahamas - much of which
is unskilled – we need a big project every so often, and we have been fortunate to have a
big project ever so often, but at some point in time The Bahamas is not going to have a
big project. Albany is a big project that is going on right now down at the west end of
New Providence, a well funded project. It would be wonderful if we had Baha Mar going
on. It would be even better if we had a scaled-down version of Kerzer’s Phase 4 going on
at the same time, but the reality is we don’t and we have prospects, but we don’t count
chickens before they hatch.

Media: Will there be any transfer-of-knowledge stipulations if the project is approved?

PM: We are concerned that there is going to be no Bahamians working on the core of the
project which is the construction of the hotels, etc. Lots of Bahamians gained additional
skills at Kerzner. They gained skills working at the Cable Beach hotel in Nassau when
the Government built that and then when Carnival’s hotel and the airport was built, etc.
And so, we are concerned that it would be a bad precedent to set to allow the construction
of 3,500 hotel rooms in The Bahamas with exclusive foreign labour. The material is
foreign, the capital is foreign, and for the labour to be foreign will be a pill that will be
very difficult for The Bahamas Government to digest. But we have come to Parliament to
see the extent to which Parliament believes this is a digestible pill. And if it is not
digestible in whole, to what extent can we make it into something that is digestible and

Media: Reference to the BCA’s request for training stipulations to be included in the

PM: They have been promoting Baha Mar and cussing me that I would not do this, that
and the other. Now they are beginning to see. Some people can only see when things are
near. Others can see when things are very far away. They have a signed Heads of
Agreement with the Christie government that people did not complain about. I will never
forget that night sitting waiting for the news - there was no ZNS news but a big thing in
the Cabinet Room announcing this Baha Mar project. Don’t forget, this project should
have been completed, this was signed off in 2005. The project has not yet started. What is
amazing is how easy it has been for the print and broadcast media in The Bahamas to be
manipulated, and promote this project without asking any questions and then blaming
people like me for standing in the way.

Media: Are there no skilled Bahamians to work on the core project?

PM: Oh no, I do not accept that. There is no question that a project this size would
require significant foreign labour – we accepted that for Kerzner, we accepted that for
Phase I of the airport that we are now doing, but that there is a significant part to be
played by Bahamians in doing those also. I don’t think there is a better example of the
difference between ourselves and the PLP than what is going on at the airport today.
When the PLP was in office and Perry Christie, Bernard Nottage and Vincent Peet was a
Minister, the Brazilians got a deal to build the US Terminal at the airport and said that
they could bring in 70 percent of their workers from outside the country. And if the
Government wanted more than 30 percent Bahamians to work there, the Government had
to pay them more money. Go to the airport now and see what we are building down there
and see what the foreign and Bahamian content is - the exact opposite. I don’t think there
is any other yardstick I can use that can better illustrate the difference between ourselves.

Media: Given all that is happening in the country, do you think that the country should
be appreciative that you are in the chair?

PM: No, no. I will tell you this though: I believe that the broad base of people in The
Bahamas believe that I am thoughtful, that I am not indecisive, and that I will do the best
I can.

Media: Do you plan to go into the various constituencies and get a pulse of the people on
the project?

PM: No, we are not going to seek to abdicate our responsibility. It is our responsibility to
hear what people say and to make decisions and we don’t do that by having public
meetings constituency to constituency.
Media: Is the $45 million that you said the Government would need provide for the Baha
Mar project a part of previously approved borrowing sums?

PM: No money has been borrowed for Baha Mar. Fifteen million or more of the National
Stadium money is in the budget and included in the monies we got approval to borrow,
just like the money that we need to fix the courts is in the budget, the money to build the
port at Arawak Cay is in the budget.

Media: Are we still borrowing to pay salaries, etc?

PM: There is no other way. There is no other way for The Bahamas unless we dismiss
thousands of people, than to run an overdraft at the Royal Bank of Canada which would
fluctuate between $75 million and $120 million. And every time I hear people talk about
borrowing, I wonder what they expect us to do, not borrow? Yes, we could not borrow
and shut down.

Media: How much longer can we go on like this?

PM: It is not as bad today as it was last year, so we are making some progress. But as to
the question of how much longer we can go, we can go forever; we would just have
reduced standards of living, infrastructure would be run down, etc. The reality is that at
the same time, the Government is also improving the infrastructure in this country. We
are putting down the pipes in the ground for the water, electrical lines and telephones, to
be able to accommodate us and supply us with our needs and to accommodate growth in
the economy.

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