'There is no need to light a candle in sunshine' – Another Chinese proverb

Let me be clear from the outset once again, Mr. Editor. This week's column is not about John Jefferis. It is about the Progressive Labour Party Government and the Coco Reef lease and connecting more dots. There is no need to make it complicated. It isn't, really. Read on.

Dot 1

News of a new lease first came to light in the 2008/2009 Annual Report of the Bermuda College, tabled in the House on the Hill last February 12th. It was buried in the fourth paragraph of the report of Board Chairman, Senator Walton Brown of the PLP. He reported successful resolution to "protracted negotiations with the Government over the Coco Reef Hotel property lease".

That was the extent of the disclosure. Who knew?

Dot 2

We didn't. So we asked parliamentary questions: (1) Why had the lease been renegotiated, (2) what were its new terms and (3) would the Minister responsible table a copy for all to see? We didn't get any answers. Instead we learned that the Ministry of Education took the view that what the College does with the property is no business of Parliament. I kid you not.

Dot 3

Meanwhile, and on the other hand, the Bermuda College was voted a $19.869 million grant for the current financial year, down slightly from the $20-million-plus worth of taxpayers' money plus it received in each of the preceding two years. The funding was actually taken up in the annual parliamentary debate on the Estimates of Revenue and Expenditure but the Minister of Education never mentioned anything about a new Coco Reef lease.

Dot 4

The prior approval of the Minister of Education happens to be required under the Bermuda College Act 1974 for any lease, although it has to be questionable whether it was ever envisaged that this power would include the right to lease any of the College property, particularly the hotel, for 120 years. The Board's powers are carefully defined by the Act so as to further the interests of the College, and education, not private enterprise. The governors are appointed by the Minister. They are responsible to the Minister. The Minister is responsible to the people of this country through Parliament.

The Minister is also required by law to table an annual report on the activities of the College no later than four months after the close of their accounting year.

Dot 5

Accounts?

Proper financial accounts must be maintained by law and audited annually by the Auditor General's Office. They were last reported on in the most recent report of the Auditor General for the financial year 2007/2008, also tabled earlier this year in the House.

It was not a pretty picture.

We learned that the annual financial reporting of the College is "still seriously in arrears". The audited financial statements for the year ended March 2004 were only just issued in March 2009.

"The 2004 audit was delayed by uncertainties about the financial impacts of an agreement under which the College leased the former Stonington Beach hotel property to a private company in May 2003", wrote the Auditor General. Staff turnover and poor accounting records were also listed as responsible, and a qualified opinion was issued "because several of the assets, liabilities, revenues and expenses in the statements were not susceptible of satisfactory audit verification".

The "uncertainties" to which the Auditor General referred were the subject of a Special Report to the House on the Hill six years ago.

Dot 6

For those who can remember – I do, and you should, dear reader – the 2004 Report was about more than just uncertainties. It was scathing indictment on the tendering process that had been employed and on the eventual terms of the lease.

"[T]he lease that was eventually executed was so materially different from the Heads of Terms that were the basis for proposals requested form short-listed bidders, the tendering process was effectively compromised," wrote the Auditor General. "Furthermore, lack of definitions and apparent omissions in the lease document are causing, and may well cause in the future, problems with the administration of the lease."

Among those items which the Auditor General zeroed in on were:

¦ The extension of the lease from the original 21 years, which had been offered, to 50 years with "an assurance in writing that an extension beyond 50 years will be considered".

¦ A scheme of rents and rent reviews that "look to be favourable to the tenant".

¦ Provision for the development and freehold sale of condominiums, which made no sense as the entire property was subject to return at the end of the 50 years.

¦ The inclusion of 1.9 acres of oceanfront land with two cottages plus approximately two acres of woodland reserve which were never part of the proposal put out for tender in the first place.

Dot 7

About that woodland reserve: The Auditor General said that he had been told it was not for development. The people of Bermuda were given the same assurance from then Minister for Tourism Renee Webb. "As for the agreement to include the use of the woodland reserve", she told Parliament in a formal statement, "this preserved the separation between the College and the Hotel, and was added to the lease to ensure security and safety for hotel guests occupying rooms on the northern side of the hotel. This land is not intended for Coco Reef to develop."

That was then, I suppose.

Dot 8

The original lease also included a provision for Bermuda's hospitality students to work and receive training in the hotel. There was even a reported undertaking to train some of the College's students in its associated hotel in Tobago which, the Auditor General said apparently "clinched" the deal.

We asked how that was working out in those parliamentary questions we put down back in February – the same questions which they have not answered. The question was pretty straightforward: How many hospitality students have been trained each year under the "practical training component" of the original lease?

Dot 9

Incidentally, you should know people that the original lease boldly declared that it had been signed by "The Board of Governors for the Bermuda College (acting for and on behalf of the Government of Bermuda." Really?

I don't know, Mr. Editor, and we won't know, until they make full disclosure, just how good a deal this was and for whom. For now, I am reminded of the choice description given one of those Goldman Sachs' products at recent US Senate hearings into goings-on there.

The word rhymes with pity.

Share your views. Write jbarritt@ibl.bm.