An investigation is under way to locate a missing $18 million loan now prime Hamilton real estate Par-la-Ville Car Park is officially in the hands of receivers, Home Affairs Minister Michael Fahy said.

The site was used as collateral for the loan, of which the Corporation of Hamilton were guarantors, provided by Mexico Infrastructure Finance LLC to Par-la-Ville Hotel and Residences Ltd.

“Sadly, that loan has not been repaid by Par-la-Ville Hotel and Residences Ltd. to Mexico Infrastructure Finance LLC in accordance with the terms of the various agreements,” Minister Fahy said at a press conference yesterday, “and as such Mexico Infrastructure Finance LLC has exercised their rights under the various agreements to appoint Joint Receivers over the Par-la-Ville car park to begin recouping the $18 million debt.”

He added: “It appears that a substantial sum of the bridging loan was at some point paid to a company registered in Gibraltar called Argyle Limited as a fee to get access to a large line of credit to develop the financing for the hotel and residences development.

“Both the Corporation of Hamilton, me as steward and the mortgage holder are doing everything possible to obtain further details as to the whereabouts of the bridging loan money.”

The funds were due to be repaid at the end of December 2014, and on March 31 the lenders appointed Mr Mike Morrison and Mr Charles Thresh as receivers.

A KPMG statement read: “The mortgage was issued by the Corporation of Hamilton to secure its guarantee of a debt incurred by Par-la-Ville Hotel and Residences Ltd.” KPMG and Sen Fahy said that, along with the Corporation of Hamilton, they are working to ensure that there will be no interference with the car park’s use and that motorists should continue to use the usual payment options.

Sen Fahy also addressed municipal reform in the press conference and said Government was only part way through the process, and that is why the Municipalities Amendment (No 2) Act 2015, was tabled in the Senate at the end of the last session.

“There are a number of major items which still need to be addressed. The tabled Municipalities Amendment Act is an important part of this.”

He said the Bill strengthens oversight by Government of the affairs of the Corporations by allowing the Minister to provide binding directions to the Corporations, and permit the Minister to appoint a public officer as his delegated representative to, among other things, attend meetings of a Corporation.

“The appointment would facilitate communications between the Corporations and the Ministry. The Bill would also allow the Minister to delegate functions to any employee or officer of a Corporation which is under the Minister’s control or stewardship in order to oversee the efficient execution of its day-to-day affairs.”

He added: “The Minister would be required to support any resolution or ordinance passed by a Corporation either personally or by way of his ex officio appointment.”

He said it would bring greater clarity on the law on temporary stewardship. “What I’ve detailed already clearly demonstrates that these reforms are essential to ensure we have properly functioning municipalities in Bermuda,” he said, adding: “Let me be absolutely clear — I do not want to play an active role in the affairs of the Corporation. I am plenty busy given the other responsibilities.”

He said there had been “significant challenges” posed by the municipal corporations in recent years.

“Reform of local governance has become acutely necessary in Bermuda as a result of failures of administration that have caused disarray in governance. However, let me make absolutely clear — the failures are entirely because of actions of the Corporation of Hamilton, and not St George’s.” Sen Fahy said further governance reform is “acutely necessary” because of:

• failures of accountability in awarding of the contract for the Hamilton waterfront development, resulting in a highly critical report by the Bermuda Ombudsman, legislative intervention by the Government of Bermuda, the assumption of temporary stewardship, and an arbitration that may cost many millions;

• concerns about the viability of a co-operative relationship between the two levels of Government during the America’s Cup;

• a multiplicity of legal actions, such as the ‘clamping litigation’ and a myriad of constitutional actions;

• disorder and dissension at the Council level that have been reported in the media which led to the implementation of the current stewardship order;

• inadequate resources to undertake important public infrastructure projects such as the needed upgrade to the sewage system; and

• the Corporation-backed loan of $18 million that had potentially gone sour and which has led to legal difficulties.

• For the senator’s full statement, click on the PDF file under “Related Media”.