Former Deputy Premier and finance minister, E. T. “Bob” Richards, has moved to set the record straight on the origin of The Bermuda Infrastructure Fund, which now faces an uncertain future.

This, as questions to government from The Royal Gazette and the Opposition One Bermuda Alliance regarding the nature of the agreement with the fund’s investment management company, Fortress Investment Group, remain unanswered.

We asked Mr Richards about the fund, the idea for which he said originated within the Ministry of Finance, and not outside government, as has been stated.

He added: “The idea of the fund was to invest in infrastructure – bridges, ports, roads. It was not meant to be a venture capital fund, which it appears to be used as now.

“The risk profile as venture capital is huge, by comparison. It is being used for something entirely different than we had in mind.”

When David Burt, the Premier and finance minister unveiled the fund in 2017, just weeks after an election swept him and a super majority into power, he told Parliament the concept was taken to the OBA government by senior executives of Bermuda’s reinsurance industry.

Mr Richards had just retired from politics and never challenged that statement, nor other assertions at the time.

But he said fiction is being referred to as fact, as some of the statements are still being repeated in the press to this day.

The idea for the fund, he said, in fact came from his office.

And as a long time owner of his own investment management business, he said the idea was never implemented by his government because the proposed terms of the deal never rose to the level useful to Bermuda.

Further, he has told The Royal Gazette that prior to that, there were significant barriers within government to the fund’s very existence – including policy, rules and regulations that would normally prohibit such a scheme.

It required intense inter-ministry discussions involving finance, immigration and other government departments to allow exclusions, including allowing exempted companies to have shareholdings in Bermuda companies.

There were other hurdles, as well.

It took a couple of years, he said, for various government officials to finally agree to the suspension of all the rules needed for the fund to be a useful conduit for foreign direct investment and benefit the island.

Mr Richards said: “You had a proposed exempt company that would potentially own shares or parts of local companies. That’s not really allowed in the Bermuda model. We had to get exceptions for all kinds of things, including owning real estate.

“There were so many exceptions and I had to go out and get them, if this was to work.”

But even after building a consensus within government, Mr Richards said, he still could not get the fund to the $250 million he saw as a target figure.

With the smaller sum of $66 million raised at that point, he could not get the proposed fund’s New York management company to agree to appropriate terms for their management fee.

Fortress Investment Group still wanted at least a million dollars – which Mr Richards said was fine for a fund of $250 million, but exorbitant for a fund of $66 million.

“And they didn’t want the fee taken out of the fund,” he said. “They wanted government to pay the fee. Upfront!

“That’s the point where I had to say no.

“I didn’t say we wouldn’t do a deal, at all. But I said that arrangement wasn’t satisfactory. They didn’t come back to me to negotiate. Maybe they thought we would lose the election and they would wait for the new guy.”

The government has not responded to repeated requests from this newspaper for an itemised list of projects and their value.

But statements have indicated an uncertain future for the fund. It does not appear to have any new capital projects for roads or ports.

But 16 months ago, the fund agreed to indirectly buy the solar farm on the Finger for $9.1 million.

It also reportedly has investments or funding in a telecommunications company and a car rental company.

Mr Richards said that apart from getting some much needed infrastructure projects on track, the Bermuda Infrastructure Fund he had in mind would have also brought money into the country.

He recalled: “The OBA was elected on a platform to control government spending and stimulate the economy at the same time. The way we would stimulate the economy, among other things, was foreign direct investment in the island.

“I had a report which showed that the assets of reinsurance companies in Bermuda was something like two-thirds of a trillion dollars.

“Why couldn’t they invest a tiny portion into Bermuda?

“We weren’t looking for a gift. But why not invest some of those foreign assets into Bermuda for infrastructure projects, with a built-in return on their investment?”

When the Premier announced the Bermuda Infrastructure Fund in November of 2017, he said these were the key features:

•The fund is being formed primarily to make investments in Bermuda-based infrastructure assets and opportunities.

•The general partner will be Fortress Bermuda Infrastructure Fund GP LLC & the manager will be Fortress Bermuda Infrastructure Fund Advisors LLC.

•The fund is seeking a minimum of $100 million in commitments from Bermuda-based insurance companies.

•Management fees are payable semi-annually in advance, in an amount equal to .75 per cent (1.5 per cent annually) of capital invested. The minimum fee is $1 million per year.

•In the event that the management fee is less than $500,000 in a semi-annual period the government must pay the difference. The amount paid by government will represent an interest in the fund.

•Government will be liable to pay the initial management fee of $500,000 and will be liable to pay some fees as long as the amount invested by the fund is below $66.7 million.

•The general partner will establish an advisory board composed of representatives of certain limited partners and a government representative.

•The fund may borrow funds to facilitate investments or otherwise in connection with the fund’s business.