By Davion Smith, BVI News Staff
Premier Dr D Orlando Smith has said Opposition Leader Andrew Fahie is partly to blame why his government rushed to dump the full $7 million into BVI Airways, whose operators accepted the funds but never commenced the agreed flights between BVI and Miami in the United States.
Under a 2015 signed agreement between BVI Airways and the Premier Smith Administration, government was expected to secure what is known as a ‘letter of credit’ from an international bank.
That letter of credit was to be used to pay BVI Airways the $7 million in intervals, over six separate payments. Each payment would be made as the airline met agreed targets.
One such target required BVI Airways to commence its promised flights no later than December 31, 2016. And, according to the 2015 agreement, if BVI Airways did not commence by then, government was to withhold the final two payments that would have been owed to the airline. The contract said payments were to be suspended until the airline commenced its flights.
But, when that December 31 date rolled around and BVI Airways had not commenced operations, government still opted to give the airline the full $7 million sum.
When questioned in parliament yesterday on why his government deviated from the contract and made unscheduled payments to BVI Airways, Premier Smith said the international bank that was approached to grant the BVI government a letter of credit declined the request.
“At the time, because we were still convinced of the importance and the viability of this project (BVI-Miami flights), we agreed to move forward with the other payments so that the airline could have a chance of getting airborne,” he explained.
Premier Smith said government made the payments by creating a separate ‘account’ specifically to fund BVI Airways.
Fahie’s ‘negative noise’ flops deal, says Premier
He then told the House of Assembly Fahie’s “negative noise” about BVI Airways, at the time, was what discouraged the international bank from approving the letter of credit.
Dr Smith then implicitly said Fahie’s so-called negativity set in motion a series of events which led to the BVI Airways deal failing.
“He (Fahie), in fact, was making statements that did not encourage the continuation of the airline. That’s putting it mildly,” Dr Smith told the House of Assembly.
His comment seemingly vexed Fahie who retorted: “I object to what the premier is saying because, if his airline was above board, it makes no difference who says what. They (government) could go and get the line of credit. I never hear a bank stop a line of credit on gossip.”
What the agreement says about breaching contract
Meanwhile, the 2015 agreement also catered for potential incidents such as the ongoing dispute between the airline and the Smith government, which is being pressured to recoup the seven million of taxpayer dollars.
That section of the agreement states: “Any claim, controversy, or dispute arising out of or relating to this agreement, the breach thereof or the project, will be settled by arbitration administered by the American Arbitration Association under its commercial arbitration rules then in force.”
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