Vexed Bermoothes

The Premier has just announced that Government will not pursue collection of the $6.8 million bond owed to it by a subsidiary of the BIU related to the troubled Berkeley Institute redevelopment.

As normal, he’s spinning the number. The sum actually due to Government was in excess of $15 million when interest was counted.  Plus, Government paid $700,000 for the bond, and then later apparently spent several million dollars on legal advice when the Berkeley project went off the rails.

The Premier also revealed that, in addition to the bond, the BIU subsidiary had loaned $9 million to Proactive, which was never repaid.

So, you can chock this up as another governance failure and huge cost related to the Berkeley Institute redevelopment, which was completed more than $50 million overbudget and two years late.

The move is no surprise as pursuing the bond would effectively kill the Union, which would not be a positive outcome for Bermuda … and an unthinkable action for the so-called Labour party.

I don’t think anyone actually ever believed Government would attempt to collect the bond.  It was a farce from the very first day.  The sole question was how long would it take for Government to confess.

That being said:  this must not pass without repercussions.

• Government continues to play loose with performance bonds and politically-tinged contractual arrangements, such as alleged at the current courthouse project.  (Remember that Derrick Burgess, head of the BIU at the time of the bond, is now the Minister for W&E).  This must end.  Now.  The public has been remarkably tolerant of the silly games, we just pay and pay and pay, but the chickens will come home to roost one day.
• What was the BIU doing, playing with money that “belonged” to its rank and file members in such a risky way?  If the Union was so flush, that money should have gone into programmes that benefitted members, such as certification training, scholarships, assistance funds, and the like.  The BIU is far behind in its legally-mandated reporting.  They owe their members more transparency and better management.

Let’s just say that, by wiping clean this liability, Dr. Brown now owns the BIU.  Good luck with those industrial disputes, workers.

Can you imagine what could be accomplished today with the $50-70 million that was pissed away on the Berkeley project?  And the PLP dares talk about prudent financial management?!

Also, the Premier compares this absolution with Government’s guarantee of the Bank of Butterfield’s $200 million preference share issue, which was much needed.  The critical difference is that Government will get well paid for that support.  It is not an apt comparison with this mismanaged affair.

Note also that the Union’s “gift” of 48-72 hours notice before taking strike action is a bit of a joke.  At least for essential services, the law already defines they must give 21 days.

See below the line for the Premier’s full announcement.

EWART BROWN:  I am here with President Chris Furbert to explain an important decision reached jointly between the Bermuda Government and the Bermuda Industrial Union.

It is a complex decision not only because it involves a $6.8 million performance bond, but because its implications involve the entire country.

First a brief synopsis of the history on this subject:

The Government of Bermuda terminated Proactive Management Systems after it mismanaged the Berkeley Institute construction project. Proactive sued for wrongful termination and ultimately the issue went before an arbitration tribunal.

The tribunal ruled in favor of the Government – five years after the original performance bond was enacted. By that time Proactive was defunct and could not pay its $6.8 million performance bond obligation.

In October of 2008, Cabinet agreed that our next legal recourse was to pursue Union Asset Holdings – a subsidiary of the BIU. We pursued aggressively through legal channels in an effort to recoup the performance bond.

Over several months and through numerous meetings both formal and informal, I personally, along with some of my colleagues, devoted considerable energy to the recovery of the sums owed by Union Asset Holdings. Cabinet regularly discussed this matter of enforcement; the Attorney General led the handing of the Government’s position. She is away on Government business today, but I want to make clear in her absence that her work and advice should be valued and appreciated by us all.

Faced with the prospect of another lengthy legal battle the costs of which could easily have reached hundreds of thousands of dollars, Cabinet determined that the taxpayers of this country could not afford the dogged pursuit of this debt in what would have become a fight of pure legal principle and not good economic sense.

Ultimately, Cabinet has decided it is in the best national interest of Bermuda to release Union Asset Holding, and by extension the Bermuda Industrial Union, of its burden in the $6.8 million dollar performance bond.

Allow me to succinctly outline the four main reasons we came to this decision:

• To continue legal pursuit of the performance bond could mean a new multimillion dollar, multiyear legal challenge with no guaranteed result for either side; we had already spent millions on the Proactive legal fight

• UAH contributed $9 million to Proactive during the Berkeley project when the contractor was short on cash; UAH can never recoup that money

• Even if the Government won its case, the BIU and its 4,000 workers would be a damaged organization, unable to standup for workers’ rights as it has done since 1947. In essence we could win the case, but lose the country’s largest union

• And finally we believe we can use this agreement to turn a page and further strengthen our relationship with organized labour as it relates to work performance and labour action; there is certainly room for improvement in that area

You will recall that not long ago, Cabinet made the unprecedented decision to guarantee $200 million in preferred shares for Butterfield Bank. The message in that instance was clear and concise – it is critically important to ensure our banks are strong and can withstand the stress of a further worsening of the economic climate. Banks are the lifeblood of our economy.

Similarly, we believe unions are the lifeblood of our community. They too must be strong and stable. I am firmly confident that this decision reinforces the strength and stability of the BIU and protects our economy from a further threat.

This Government is a Government elected by the people to make decisions. There may be some who do not like this decision but a decimated and weak Union does not benefit any country. Bermuda has vital organizations of all kinds and just because one is grassroots does not make it any less worthy of preserving.

The blue collar is as much a badge of honour as the white collar. What we do today says that Court Street and Front Street are connected by more than just a pedestrian crossing.

Now a word to the members of the union and my friend Chris Furbert… Today’s announcement ends a long and arduous process both for the Bermuda Industrial Union and the Government of Bermuda. As I said earlier, the performance bond resolution is mutually beneficial and in the best interest of the country.

However, the taxpayers of Bermuda have a very simple demand in all of this. They want to know that they can rely on the members of the BIU to deliver the services they have been hired to carry out. They want to know that bus drivers will pick up their children, that garbage crews will haul their waste and that engineering crews will fix their streets. That is all taxpayers want – confidence in Government services.

If our two organizations can come to a joint resolution on this matter, one of the most complex we have ever contemplated… then surely we can fix whatever issue has upset you in your workplace. If you have a problem let’s talk like grown ups before downing tools like something less than adults. Why not come to the table before rushing to a picket line? Whatever the problem in your workplace let’s find a resolution together before we inconvenience the public. That is what taxpayers want. And I hasten to add, it is at least what taxpayers deserve.

Thank you.