What follows is the full text of Curtis Dickinson’s statement to the House of Assembly on Friday, March 25, 2022 outlining his reasons for resigning as Minister of Finance

Mr Speaker, on the 14th of February 2022, after having served for almost three years and three months as Bermuda’s Minister of Finance, I resigned. Mr Speaker, I did appreciate that my resignation would be received with surprise by many, and I understood that at some point in time I would be duty-bound to provide an explanation to the people of Bermuda on the reasoning for my decision. Today I will do so within the structure set out below.

Cabinet confidentiality

I fully support the principle of Cabinet confidentiality. Members of Cabinet must be able to have full and frank discussion with colleagues so as to provide challenge and insight into the government policies of the day. In my remarks, I will remain within the confines of that confidentiality, and I take inspiration from the following guidelines:

1, Ministers are expected to behave according to the highest standards of constitutional and personal conduct in the performance of their duties. In particular, they must observe the following general principles of ministerial conduct:

Every minister is expected to support the Government’s policy, and should resign if he finds himself unable to do so.

4.2 “Collective responsibility requires that ministers should be able to express their views frankly in the expectation that they can debate freely in private while maintaining a united front when decisions have been reached. This in turn requires that the privacy and confidentiality of opinions expressed in Cabinet and Cabinet committees should be maintained…”

Mr Speaker, over the last several weeks I have sought to maintain a dignified silence on this subject. I declined requests from the press and others to publicly comment on the reasons for my resignation, with a view of only doing so once sufficient time has passed for a new Minister of Finance to manage through major time-sensitive issues without contributing to additional distraction. My intention was that in due course, I would provide a statement speaking to the generalities of my reasons. Those reasons being:

Mr Speaker, my original plan did not provide for me giving any further detail other than the reasons provided above but did anticipate that I would release the content of my resignation letter, which I will now share with this Honourable House:

“Dear Premier,

It has been an honour to serve as Bermuda’s Minister of Finance for the last 39 months.

The opportunity to perform this important role in Bermuda’s government 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. Notwithstanding the challenges, meaningful progress has been made on key initiatives.

My obligations as Minister of Finance require me to act as a fiduciary and to put the interests of the people of Bermuda first. For the majority of my tenure, 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 on a number of key issues.

Our country deserves a Minister of Finance who can work seamlessly with the Premier to advance its economic and fiscal interests; a Minister of Finance who can fully support the policy agenda that has been set. Regretfully, I no longer find myself able to fulfil that role. I hereby resign from my position as Minister of Finance.

Thank you for the opportunity to serve. I now look forward to spending more time with my family and continuing to serve the people of Bermuda through Constituency 21.

Yours sincerely,

Curtis L Dickinson”

The letter was intentionally general in its nature; my preference being to share the specific reasons for my decision directly with the Premier in our face-to-face meeting. Mr Speaker, I do not intend to disclose the full content of those discussions as it would not be appropriate to do so. However, I do believe that it is appropriate to respond to several statements that have been made, with clarifying facts.

My family

Mr Speaker, it is no secret that the demands of work in the public sector can be incredibly taxing not only on the individual serving in the role, but also on their families. I would like to thank the Premier for acknowledging my family in his statement announcing my resignation. I would like to take this opportunity to address any suggestion in the community that matters with my family were among the reasons for my resignation. This suggestion is untrue. The decisions to run as a candidate in the 2018 by-elections and the subsequent 2020 General Election were not mine alone, as I sought and received the full support of my wife and our three children before any announcement of my candidacy. I undertook similar discussions on being invited to join the Cabinet and again received my family’s support. The decision to resign on a matter of principle, however, was my decision; a decision that enjoys the undiluted support of my family.

The redevelopment of the Fairmont Southampton

Mr Speaker, the quantum of and form of the Government’s support of the redevelopment of the Fairmont Southampton were the primary reasons behind my resignation.

Mr Speaker, first and foremost, I want to make it absolutely clear that I was, and still am, supportive of a level of financial support for this project. There truly are numerous potential benefits of renovating and reopening a large, iconic hotel of this nature, especially at this time where economic recovery is vital. These include immediate and significant stimulus, construction and related economic activity, a large number of future hotel jobs, and a large increase in hotel room inventory, which could help support more visitor demand and airlift capacity over time.

However, Mr Speaker, I was and continue to be unable to ignore the principles and judgment gained through my over 30 years of experience in investment and commercial banking. Mr Speaker, I believe I am more than qualified to understand the numbers and negotiate in the best interests of Bermuda considering all of the factors, particularly in circumstances where the Bermuda Government was ably assisted by professional advisers.

The 2019 Letter of Intent

There has been significant confusion recently created in the public around whether the Government had entered into a guarantee commitment with the developers. It has been suggested that in 2019 the Government entered into a $50 million guarantee with Westend Properties Limited/Gencom for the redevelopment of the Fairmont Southampton hotel. That is incorrect.

In December 2019, as part of the acquisition of the Fairmont Southampton, the Government entered into a Letter of Intent with the developers which set out a number of conditions precedent that the developers would need to satisfy before the grant of any Government of Bermuda guarantee. An LOI is not a commitment. It is a non-binding agreement that sets out a series of terms from which the parties intend to negotiate into a more substantive and binding agreement. The LOI that I signed in December 2019 contained a number of terms that the developers would need to meet or agree with in advance of the provision of support from the Bermuda Government in the form of a guarantee on a portion of their contemplated financing.

As part of the negotiation of any final agreement, we would also require sufficient rights in the event of default. In any event, the developers did not meet the LOI conditions precedent, and the Letter of Intent expired on 31 December 2020.

How to think about a deal

Since I resigned from the position of Minister of Finance, I have not been involved in the negotiation of the transaction with the developers and so, with the rest of this Honourable House, I will learn about what has been proposed or agreed as it is released to the public. There are a few thoughts about agreements of this nature, however, that I think it helpful to share as the Government considers this course of action.

It has been reported in the press that the Government may extend the period of concessions for hotel developments/redevelopments from beyond the maximum current term of ten years. As a general matter, I do not support such extensions, as concessions are essentially the forfeiture of future government revenue. I believe the existing legislation which grants up to ten years of relief is more than sufficient. Comparisons are commonly made to other jurisdictions in an effort to justify an expansion of the duration of concessions. However, these comparisons are usually incomplete and fail to capture the entirety of the dynamics of the Bermuda economic model or the specific financial returns profiles of the hotel owner/developer.

As contemplated in the 2019 Letter of Intent, the developers would have benefited from a reduced rate of interest on the debt that the Government was contemplating providing a guarantee on. The combination of interest cost savings and tax concessions could deliver the developers significant savings in the millions of dollars. These projected savings should be quantified for the benefit of the public. Any increase in the concession period would result in even greater cash savings and benefits to the developers. Additionally, the precedent would be set for similar grants of concessions for other hotel developments. This adds significantly to the true cost of the extension and should be fully understood.

Given the Government’s current fiscal position, is it prudent to give future tax revenues to developers who by virtue of their own financial returns projections would already be projected to earn multiples of their invested capital? Even if changes to existing tourism incentives are warranted, perhaps the analysis should be completed first for the industry at large rather than predicated on a single request. Otherwise, the overall cost could be astounding, and without the analysis I am unsure if it will be worth the rush.

It should also be fully understood that the Bermuda Government carries the risk of the downside if the guarantees are called. It is an appropriate question to ask what direct upside the Government is due to receive. Certainly, the other capital providers — senior lenders, mezzanine lenders and equity providers (the developers) — will have clear expectations on their risk/return expectations. As the entity that bears ultimate responsibility on a significant amount of the capital at risk, the Government should have the same.

Each of the other capital providers will be able to point to some collateral which provides an added layer of security for their risk. It is no different where homeowners buy a house. A bank will extend a mortgage but will secure its loan against the building in the event the mortgage payer defaults on their payments. Where the Bermuda Government assumes an exposure of this size, it should be clear what that collateral is and what rights, in the event of default, the people of Bermuda have to exercise.

There are a number of key similarities between the Morgan’s Point development and the planned redevelopment of the Fairmont Southampton. Both projects share the backing of an enthusiastic developer with a grand vision of the finished development. Both projects, while long on vision, were/are short on the capital required to complete their construction. In other words, both projects lack or lacked a fully funded capital structure which has necessitated the introduction of Bermuda Government-guaranteed capital. If the government support is not structured correctly and the developers are unsuccessful, we could see the Government having to assume the responsibility for the repayment of any guaranteed debt. Of course, it has always been an option to reduce the size and scope of the development or for the developer to 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. Funds paid in, however, should not be paid back out as fees to related parties, as that does not maintain the appropriate level of financial exposure for the developers. In deal parlance, that is called having “skin in the game”.

Consequently, I would suggest that a full breakdown, including total proposed foreign and domestic debt, be provided to this Honourable House.

The best partnerships are built on a foundation of mutual trust and respect, and a commitment to collaboration in the pursuit of a mutually satisfactory outcome. Relationships are bilateral arrangements with give-and-take from both sides. The decision to delay fulfilment of the obligation to Fairmont employees made redundant because of the hotel’s closure will remain a point of concern for me on the developers’ willingness to honour their obligations. It is a matter of public record that the employees were paid only after the Bermuda Government stepped in to provide direct financial support to the employees and then supported the pursuit of a statutory demand to recoup those funds. This should be a cause for concern and result in an increased focus on ensuring that the necessary protections are put in place to protect the Government’s and the people of Bermuda’s interest.

As I have mentioned previously, the redevelopment of the Fairmont Southampton, in my view, is a national strategic initiative; one that requires that the Government be pragmatic in its approach to any support. However, the national strategic importance does not give justification to the abandonment of best principles. To be clear, I want to see the successful redevelopment and reopening of the Fairmont Southampton hotel. A redeveloped hotel will see investment in Bermuda’s economy, the creation of construction jobs, the re-employment of many hospitality workers, and the return of paying guests; all told a potentially positive impact on Bermuda’s economy.

While as a general matter I am not supportive of the provision of government guarantees to private-sector participants, in the case of this project, I can support the issuance of a government guarantee, so long as it is necessary and the interests of the people of Bermuda are appropriately protected. The risks are so high and the record with guarantees to external projects so real that only a full and transparent examination of the protections by this Honourable House are warranted.

Mr Speaker, I am hopeful that the points that I have just articulated are helpful to not only those now responsible for leading the negotiations on this project, but also to those who share the concerns about the Government’s fiscal situation. It is my desire, as I am sure it is for all of the people of Bermuda, to see a project that is successful, not only for the developers, but also for the hotel’s guests, employees, the Bermuda Government and, most importantly, the people of Bermuda.

Thank you

Mr Speaker, it has truly been an honour to serve as Minister of Finance for the last three-plus years. The opportunity to be of service to my country and be able to use the skills and experiences gained over my career in the private sector has been fulfilling. I would like to thank my family for their unstinting love and support. I would also like to express my profound thanks to the team in the Ministry of Finance; they have been first-class in the advice and counsel that they have provided me. This team continue to serve the country well.

I would like to thank my former Cabinet colleagues and wish them well in their stewardship of our country.

Many thanks to those who have reached out to offer support to me directly, or indirectly through family and friends. This has included, among others, members of the Progressive Labour Party, members of the broader Public Service, members of Bermuda’s unions, and the domestic and international business communities. I appreciate your well wishes and your outreach has been a source of comfort following a very difficult decision.

And finally, Mr Speaker, I would like to thank the constituents of C21 (Pembroke South East) and C25 (Warwick North East) for their ongoing support and trust in me to serve as their representative in this Honourable House.

Conclusion

Mr Speaker, in my almost four years of service in this Honourable House, I have yet to participate in the motion to adjourn. It is a reasonable assumption that I will not participate in that portion of the Order Paper this evening. I would, however, as I conclude this statement, like to make some observations on where we are as a country and how we move forward.

Mr Speaker, Bermuda is facing a number of serious challenges. We as a community need to be working together to finds ways to overcome these challenges. Over the course of the last four weeks, we have been engaged in a series of budget debates. Having now sat through four annual budget sessions, they have taken on a sameness; a Budget Statement is delivered, followed by a Budget Reply and then a series of debates that seemingly focus on what the other side has done wrong. If only these efforts were focused on solving Bermuda’s problems rather than blaming the other side or the former administration(s), we could possibly make real progress with our challenges. Some would say the system is broken or it’s just politics. I would ask however, how is it helping the cause of the people of Bermuda? I am not so quick to accept that the system is broken, but instead ask, can we not do our jobs as leaders better? Many people are counting on us to do so in their best interest. There is no monopoly on good ideas on either side of the aisle.

It would be wonderful to see us working together for the benefit of the people that we serve.

Thank you.