VZCZCXYZ0000
OO RUEHWEB

DE RUEHBH #0751/01 3521621
ZNY SSSSS ZZH
O 181621Z DEC 09
FM AMEMBASSY NASSAU
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0092
INFO EC CARICOM COLLECTIVE IMMEDIATE

S E C R E T NASSAU 000751 
 
SIPDIS 
AMEMBASSY BRIDGETOWN PASS TO AMEMBASSY GRENADA 
 
E.O. 12958: DECL: 2019/12/18 
TAGS: PREL PGOV ECON EINT EINV EPET BF
SUBJECT: PM Removes Major Port Manager for Deal with U.S. Company, 
May Prefer China Instead 
 
CLASSIFIED BY: Timothy Zuniga-Brown, Deputy Chief of Mission; REASON: 
1.4(B), (D) 
 
¶1.  (S)  SUMMARY:  In an unusual move, PM Ingraham effectively 
removed the foreign manager of one of the world's largest and 
busiest ports after learning of his role in the partial sale of the 
Grand Bahama Port Authority (GBPA)  in Freeport to a U.S.-Singapore 
Firm.  Confidential sources speculate that the PM was blindsided by 
the deal and had possibly preferred to see the Port Authority 
(comprised of a major international airport, major transshipment 
container port, cruise ship terminal and harbor and major petroleum 
storage center) sold to Chinese-backed Container Port owner, 
Hutchison Whampoa.  The Chairman's removal puts into jeopardy 
ongoing negotiations with major U.S. firms to  bring Liquid Natural 
Gas (LNG) re-gassification facilities and other badly-needed 
commercial ventures to the country's second-largest city, which 
suffers from nearly 15 percent unemployment.  END SUMMARY 
 
 
 
--------------------------------------------- -- 
 
Blindsided by Port Deal; PM Retaliates 
 
--------------------------------------------- -- 
 
 
 
 ¶2. (S)  PM Ingraham announced in a December 14 press conference 
that the work permit of Hannes Babak, the Chairman of Port Group 
Limited (PGL), which owns and operates the Grand Bahama Port 
Authority,  was due to expire on December 31, 2009 and that it 
would not be renewed.  The news came as a surprise to Babak, who 
had served as PGL Chairman from 2006 until present and is a 
permanent resident of The Bahamas and was granted a license and 
work permit from Ingraham's government to carry out his duties.  A 
source associated with the incident told the Embassy that this move 
is likely retaliation for Babak's involvement in the sale of Sir 
Jack Hayward's ownership stake in the GBPA to Mid-Atlantic 
projects, LLC and its Singaporean partners, International 
Enterprise Singapore and Temasek.  Sir Jack Hayward and the estate 
of late Edward St. George had co-owned the GBPA since its creation 
in 1955 and had been embroiled in a long-standing dispute over 
what percentage of the GBPA each actually owned.   The Prime 
Minister had allegedly learned as recently as December 12 that 
Hayward's 50 percent stake had been sold; Ingraham had previously 
believed that the only company interested in purchasing the GBPA 
was Hong Kong-based Hutchison Whampoa. 
 
 
 
¶3. (S) Babak alleged that PM Ingraham was favorable to the Chinese 
company and had, on numerous occasions, pressured Hayward and the 
trustees of St. George's estate to sell their shares to Hutchison 
Whampoa.  He described the relationship between PM Ingraham and 
Hutchison Whampoa as  "unusual and unexplainable," because many 
have criticized their management and the lack of development at the 
Port.   He cited rumors that Hutchison contributed USD 7  million 
to PM Ingraham's last campaign. 
 
 
 
----------------------------------- 
 
Four Conditions for Renewal 
 
------------------------------------ 
 
 
 
¶4. (S)  Babak was appointed as Chairman to the PGL in 2006 under 
considerable controversy, due to his previous ownership of a 
construction company with direct interests in the port's 
development and his close relationship with Sir Jack Hayward.  In 
June of 2009 when PGL had submitted Babak's permit to the Ministry 
of Immigration for renewal,  he was called to a meeting at the PM's 
office in Freeport with Minister of Immigration Branville 
McCartney, Director of Immigration Jack Thompson , and Officer In 
Charge for Freeport, Mrs. Fausteen Major-Smith.   At this meeting, 
McCartney allegedly told  Babak that the GCOB would approve the 
renewal of the work permit under four conditions.  The first 
condition was to solve the ongoing ownership dispute between 
Hayward and the St. George's estate.  The  second condition was to 
"treat Bahamians fairly."  This was interpreted as a demand to 
promote the daughter of Minister of Public Works and Transport Neko 
Grant to General Counsel of the Port Authority, which Babak had not 
done because she was reportedly not qualified for the position. 
 
 
The third condition was to "compete fairly with Bahamian 
companies."  PolCouns was told that this represented an inaccurate 
perception from the GCOB that Babak still owned shares in his 
construction company and therefore had a conflict of interest when 
granting contracts for port development.  Babak reportedly sold all 
of his shares prior to becoming chairman in 2006 and offered proof 
of this to McCartney, who was "uninterested."  The fourth condition 
was to "not stand in the way of" cruise port terminal construction 
in Williamstown.  Babak had publically advocated for the terminal 
to be located in Williamstown because no reef existed there. 
 
 
 
---------------------------- 
 
A "Legitimate" Buyer? 
 
---------------------------- 
 
 
 
¶5. (S) Two weeks after the meeting with McCartney,  sources note 
that Babak met with Sir Albert Miller, former President of the GBPA 
and close confidant of PM Ingraham, to discuss the four conditions. 
Miller told Babak that the PM wanted him to "get [Sir Jack Hayward] 
to sell his share and sort out the contract."  Miller added that 
the PM did not want the dispute to have to go through arbitration 
in London at the International Chamber of Commerce.  In a later 
conversation with the PM, Babak asked directly whether the GCOB 
preferred that Hayward's and St. George's shares  be sold entirely 
to Hutchison Whampoa.  Babak claims that the PM said that the 
shares should be sold to Hutchison Whampoa if that company was "the 
only buyer."  Babak confirmed this information once again with Sir 
Albert Miller who reiterated that "any legitimate buyer [was] fine" 
with the Prime Minister.  Babak said that he then proceeded with 
negotiations with Mid-Atlantic LLC, who had proposed a "better 
deal" for the purchase of Hayward's shares. 
 
 
 
--------------------------------------------- ---------------------- 
------------------------ 
 
Major deals with U.S. LNG, Hospital Development Companies in 
Jeopardy 
 
--------------------------------------------- ---------------------- 
----------------------- 
 
 
 
¶6. (S) Sir Jack Hayward had publically proposed that Babak continue 
as PGL's Chairman in the Cayman Islands, site of parent company 
Intercontinental Diversified Corporation (IDC) headquarters, 
although Babak told media sources that operating the Bahamian port 
from the Cayman Islands  'would not work."  One source told 
PolCouns that Babak's dismissal or relocation would put into 
jeopardy several major industrial deals with U.S. companies that 
would have immediate economic benefits for Grand Bahama, which 
suffers from an unemployment rate of 14.6 percent.  One deal still 
under negotiation involves the establishment of an offshore, 
ship-based Liquid Natural Gas (LNG) regassification plant and 
on-shore LNG storage facilities operated by Texas-based Excelerate 
Energy and Virginia-based AES.  The arrangement would enable 
electricity delivery services via underwater cable to Florida Light 
and Power as well as Bahamas Electricity Corporation (BEC).  BEC, 
Babak told one local newspaper, could save USD 250 million in 
planned capital expenditures if this project were to become 
reality.   Babak is also negotiating with PPG, an American company 
that maintains a property fund devoted to the construction of 
hospitals for medical tourism.  He said this deal, while tentative, 
is worth over USD 100 million.  The source emphasized that Babak 
had spearheaded these deals, and they were unlikely to go through 
without his daily involvement. 
 
 
 
-------------------------------------------- 
 
Babak Requests Embassy Assistance 
 
-------------------------------------------- 
 
 
 
¶7. (S) Babak has asked the Deputy Chief of Mission for assistance 
 
 
in convincing Ingraham to reverse his position and to renew the 
permit.  Babak has been a long-time supporter of U.S. commercial 
interests in The Bahamas and would continue to do so if he stayed 
in his current role.   The DCM was non-committal. 
 
 
 
------------ 
 
Comment 
 
------------ 
 
 
 
¶8. (S) Ingraham's decision not to renew Babak's permit was likely 
made out of anger at Babak's move not to obtain Ingraham's blessing 
before moving forward with the Mid-Atlantic deal as well as a 
not-so-discreet desire to increase Chinese involvement in Grand 
Bahama's development plans through Hutchison Whampoa.  Ingraham's 
public and well-reported announcement likely means that the 
government is forced now to not renew the work permit.  Babak's 
ultimate departure, including maintaining the Chairmanship position 
from the Cayman Islands, could result in further delays in Grand 
Bahama's development just as the expected sale to Mid-Atlantic had 
sought to jump-start progress. 
AVANT