That’s what friends are for…

When news broke in October last year that the Deluxe Cinema was among properties up for foreclosure it was quickly followed by murmurs that the Antigua & Barbuda Labour Party (ABLP) was planning a swift bailout. It was to be expected. No one, and certainly not the opposition, expected that the ABLP would allow Comrade Charles “Max” Fernandez and his family to suffer from a failed business.  “Just look at Lee Wind Paints,” many proclaimed.
At the time, as a responsible news organisation, we asked the pertinent questions and took our government ministers at their word when they dismissed the very idea. After all, it would be hard to make a case of Deluxe Cinema being too important or even “too big to fail”. That excuse had been used up with Lee Wind Paints, or so we thought.
Recently, Information Minister Melford Nicholas explained the Cabinet decision regarding a possible buyout of the building, noting, “In the case here, there is a genuine and purposeful need” to acquire the building and that “this by no means presents itself as any attempt to bailout”.  “The Ministry of Culture has an objective of finding a home for the performing arts … and it’s easier to transform a theatre cinema,” Nicholas said. Apparently, the House of Culture (our former Parliament Building) and the Multipurpose Cultural Centre have been eliminated from the list of options.
We’re pleased to hear Nicholas’ assurance that Fernandez recused himself from Cabinet when the matter was raised. But even if that is the case, questions remain as to whether this is the best use of taxpayers’ money. After all, why not wait until the bank puts it on the auction block? Are there many others that are jostling to buy the building?
It is no secret that the company had been struggling for years. Under the admission of former manager, Max Fernandez, competition from the larger Caribbean Cinemas made it a near impossible game. In September 2011, 15 months after Caribbean Cinemas entered the market, the minister spoke of the challenges. He said, “It is very tough. As a matter of fact, they have predicted that we would only last a few months once they came into the market. They are very aggressive; they are very strong; they are multi-national; they are very powerful. We just have to try and adjust to see how we could stay in the competition.”
We support open, fair competition but at the same time, we backed Deluxe as an indigenous business and hoped for its continued success. However, it would appear that business did not improve.  In 2012, it wasn’t until August and under the pressure of protests that the company was able to stump up severance for workers laid off in a downsizing in January.
We say this not to take any delight in the struggles of an indigenous and historic business, but to provide context. Deluxe is a good example of how small businesses can fall to the might of larger, foreign owned entities with deep pockets.
Be that as it may, we remember the words of Capri Co-Executive Director, Damian King who in a terse exchange of words with PM Browne over National Asset Management Company (NAMCo) on our own Big Issues programme, reminded the PM that in any successful economy some businesses must be allowed to fail.
As much as we can all agree that it is a sad day to see the closure of an institution like Deluxe, a cinema, for all its merits, cannot argue that it is too important to fail. In any case, that would be besides the point, as this is a buyout and not a bailout. Let us be clear on those facts.
To the point, Max Fernandez is not seen as a struggling man. He is a successful Cabinet minister with an enviable portfolio. His family, with whom he shares the company, also shows no signs of struggling with each of the Hosam brothers counting among their businesses, a successful Citizenship by Investment (CIP) agent business.
Therefore, the only argument for this acquisition can only be, and must only be that it’s the best value for the people. The problem is, that case remains far from proved. Making matters worse is, this performance centre at Deluxe was not part of any strategic plan laid out by the ABLP at any time before the foreclosure became public knowledge.
As well, many people cannot understand how the government took the decision to establish a cultural centre in the heart of St John’s, considering that one of the problems that Deluxe faced was that it was downtown.
The Gaston Browne administration has come to the aid of failing local businesses before and, coincidentally or not, some being owned by comrades and friends of the ABLP. Whether Chairman of the Board of Lee Wind Paints Hugh Marshall Senior’s close relationship with the party had anything to do with the help the company received from the government, we do not know; but it does raise questions. Questions equally can rightfully be asked of whether the personal and political relationships with some Caribbean Union Bank (CUB) shareholders — Brian Stuart Young, the Hill family and the Hadeed family — had anything to do with the government buying CUB, which had consistently been losing millions before the government stepped in.
We recognise that Antigua & Barbuda is a small country and it can be near impossible for the government to completely avoid deals with familiar faces. However, when they do arise there is need to go above and beyond in ensuring transparency, otherwise the public may be left to believe the state’s resources are being divvied up with friends first; but then again maybe some of our leaders think that’s what friends are for.