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CCWIPP Trustees' Bahamas Resort Deal in the Toilet

Written by Wanda Pasz Sunday, 06 December 2009

More bad news for the trustees of the troubled Canadian Commercial Workers Industry Pension plan. Since 2005, when the Financial Services Commission of Ontario started breathing down their necks about a $50 million investment in a mothballed Bahamas resort, the trustees have been working hard to offload the South Ocean Golf and Beach Resort - or at least, trying to make it look that way.

Year after year announcements have appeared in the business media indicating that a sale was imminent and that a redevelopment of the property (a $1 billion casino-resort project) would recoup their investment and then some.

Finally, in 2008, the CCWIPP Annual Report announced that the resort was sold and that the CCWIPP "received total consideration of US$106,400,000 less debt and closing costs of US$17,400,000, US$16,500,000 in cash and US$72,500,000 in vendor take-back mortgages."

Seasoned CCWIPP-watchers were skeptical. $106 million seemed a lot to pay for a patch of earth with some decrepit buildings. And so it was that the CCWIPP financial statement for 2008 (filed with the FSCO in June 2009) contained this disappointing news: "In February 2008, a real estate investment in the Bahamas was sold and the Fund received total consideration of US$106,000,000 in cash and US$72,500,000 in mortgages. The mortgage was in default at year-end; however, the Fund has first and second scurity on the loan and has proceeded with foreclosure on the property." Well, that didn't take long.

Would the foreclosure would actually net CCWIPP members anything enquiring minds wanted to know? Was the property worth the value of the mortgages? It seems to be a moot point now. Even more bad news has arrived from the Bahamas about the trustees' most moribund investment. According to a recent article in the Bahamas Tribune, the foreclosure bid has been dismissed by a Bahamas Court based on non-compliance with regulations about foreign investment. According to the report, "Propco [the CCWIPP subsidiary that loaned all those millions) is understood to have been paying staffing costs, and financing the property's upkeep, infrastructure and utilities while the battle rages, but this week's ruling likely puts a stop to that. Effectively, South Ocean's redevelopment has been placed even further on to the back burner, with the resort firmly mired in 'limbo'."

Our predecessor web site, Members for Democracy first exposed the South Ocean investment when we posted a confidential report authored by the President of another CCWIPP subsidiary in 2003.

More stories about the CCWIPP debacle.

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