The Emperor Has No Clothes

 The Emperor Has No Clothes
The Handling of Fairmont Redevelopment was Key Reason for Dickinson’s Resignation
In the House of Assembly this morning, former Minister of Finance Curtis Dickinson, JP, MP, provided an explanation as to why he resigned as Minister on February 14 of this year.
He began by emphasizing that he has maintained a dignified silence on his resignation and has declined to offer any comment to the press on his reasoning.
“ My intention was that, in due course, I would speak to the generalities of my reasons [for my resignation], those reasons being one, not compromising my principles in the execution of my duties as Minister, and two, in our current system of government [the Westminster system], a Minister who cannot support the direct decisions of the Cabinet is to be bound to resign,” Mr. Dickinson said.
He then proceeded to share his resignation letter to Premier Burt with the House of Assembly and the listening public island-wide.
“ The opportunity to serve as Minister of Finance during a time of economic uncertainty, compounded by the challenges of a global pandemic, has been one of the high points of my professional career,” the letter read. “ For the majority of my tenure as Minister, we have worked together to deliver great value. Over the course of the last year, however, there has been a growing gap in our respective approaches in a number of key issues.”
According to Mr. Dickinson, Bermuda deserves a Finance Minister who can work seamlessly with the Premier to advance its economic agenda and interests and who can fully support the fiscal agenda that has been set. He no longer saw himself able to fulfill that role and therefore resigned from his Ministerial position. He looks forward to spending more time with his family and serving the constituents of Constituency #21.
“ The decision to resign on a matter of principle was mine and a decision which enjoys the undiluted support of my family,” Mr. Dickinson emphasized. “ The quantum and form of the government’s support of the redevelopment of Fairmont Southampton were the primary reasons behind my resignation.”
Despite him supporting redevelopment of the hotel, particularly in these difficult economic times, he has and continues to be unable to ignore the principles and judgements that he gained through his over 30-year experience in investment and commercial banking.
“ There has been recent confusion in the public around whether the Government had entered into a guarantee commitment with the developers and has been suggested that in 2019, they entered into a $50 million guarantee with West End Properties Ltd and Gencom for the redevelopment of the Fairmont Southampton hotel,” Mr. Dickinson said.
He then made it clear that the above information is factually incorrect and that the Government entered into a letter of intent with the hotel developers, which set out several conditions precedent which the developers would need to satisfy before the Government would give them a guaranteed grant.
“ A Letter of Intent is not a commitment; it is a non-binding agreement that sets out a series of terms that the parties intend to negotiate into a more substantive and binding agreement,” Mr. Dickinson explained. “ The LOI that I signed in 2019 contained a number of terms that developers would need to meet or agree with in advance of the provision of support of the Bermuda Government in the form of a guarantee by a portion of their contemplative financing.”
According to the former Minister, the hotel developers did not meet the precedents highlighted within the LOI and the letter expired on New Years Eve of 2020.
According to some press outlets, the Government may extend the concession of hotel developments and redevelopments beyond the maximum ten-year term. Because concessions are essentially a picture of possible future government revenue, Mr. Dickinson does not support the proposed extensions.
“ The combination of interest-cost savings and test concessions proved the developers significant savings in millions of dollars. This should be quantified for the benefit of the public and any increase in the concessions period would result in even greater savings and benefits to developers,” he said. “ The precedent will also be set for similar grounds of concessions for other hotel developments. This adds to the true cost of the extension significantly and should be fully understood.”
“ It should also be fully understood that the Government carries the risk of a downside if the guarantees are called,” he continued. “ It’s an appropriate question to ask what direct upside the Government would receive. There other capital providers, senior lenders and the equity providers (who in this case are the developers) will have a clear expectation on their risk-return expectations.”
During his speech, Mr. Dickinson highlighted some key similarities between the Caroline Bay development and the Fairmont Southampton redevelopment projects; as both shared backing of enthusiastic developers with grand visions of the finished products and both are short of the necessary funds required to finish their projects.
“ Government support [of these projects] are not structured correctly and if the developers are unsuccessful, we can see the Government go even more in debt,” he said. “ There is always an option to reduce the size and scope of the development or have the developers put additional capital into the project. Both are acceptable ways to address funding gaps and some indication of both or either would lend further support to the transaction.”
Despite wanting to see a redeveloped Fairmont hotel succeed, Mr. Dickinson cannot generally support Government guarantees to private-sector participants, but can support a government guarantee as long as it is necessary and it protects the interests and well-being of Bermudians. “ The risk is [currently] so high and the record of guarantees to this project so real that only a full and transparent examination and protections by this honorable house are warranted,” he implored.
Mr. Dickinson ended his speech in the House of Assembly by expressing his gratitude for the opportunity to serve as Minister of Finance within the last three years. He also thanked his family and all the staff at the Ministry, who continue to serve the country and its people well.
“ I would finally like to thank the voters in Constituencies 21 and 25 for their ongoing support and trust in me to serve as their representative in this honorable house,” he concluded.

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Trevor Lindsay

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