05152023 BUSINESS

Crackdown on tax cheats ‘most co-ordinated’ ever

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net

THE Government is launching its “most co-ordinated effort” ever to crackdown on tax cheats with its success in collecting hundreds of millions in outstanding revenue critical to avoiding “increased tax rates”.

Simon Wilson, the Ministry of Finance’s financial secretary, speaking after the authorities last week warned they will exercise the “power of sale” against “extreme” real property tax delinquents, said the Government has “hit an iceberg” when it comes to enforcement and cannot - and will not - ignore blatant failures by taxpayers to meet their obligations.

Asserting that “a lot of fiscal pressures are alleviated” if all pay what is due to the Public Treasury, he told Tribune Business that the drive to collect up to $600m in outstanding real property taxes plus significant VAT and Business Licence fee liabilities is “very important” to the Davis administration’s ambitions of

• Success critical to avoid ‘increased tax rates’

• ‘Fiscal pressure alleviated’ if millions realised

• Realtors back property tax drive if ‘done right’

imposing no new and/or increased taxes on Bahamian citizens and businesses.

“We don’t want to raise tax rates,” Mr Wilson said. “We have to be more efficient in our collection process. We have to. We should collect as much as we can before we consider raising tax rates. We always have a choice from a large range of options, but by far

FTX Bahamas charges US broke ‘every single’ pledge

the most palatable option we have is improving our compliance.”

Shunda Strachan, the Department of Inland Revenue’s acting controller, last month estimated that taxpayers owe a combined $875m in unpaid VAT, real property tax and Business Licence fees that are past due. Mr Wilson told this newspaper he believes tax compliance can be “substantially” improved, and added: “I think we have hit an iceberg with respect to this thing about compliance.

“When we focus more on compliance it alleviates a lot of fiscal pressures. It’s very important. We don’t want to be in a situation where we have to use other measures to increase revenues, such as new taxes

Gov’ts support for BPL jumps $110m

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net

GOVERNMENT loans to state-owned enterprises (SOEs) and agencies neartripled during the first nine months of the current fiscal year to enable Bahamas Power & Light (BPL) to pay off its fuel bill arrears.

Simon Wilson, the Ministry of Finance’s financial secretary, yesterday confirmed the $80m increase in such “bilateral loans” during the three months to end-March 2023, which took the nine-month jump to $110m, represented financial support to the state-owned electrical utility to enable it to pay-off

past due and outstanding debts.

“You’re correct. That’s BPL,” he replied, when asked about the figures, which were contained in the Ministry of Finance’s latest quarterly public debt statistical bulletin for the

SEE PAGE B8

Ombudsman Bill ‘can’t pass and sit’

By NEIL HARTNELL Tribune Business Editor

nhartnell@tribunemedia.net

GOVERNANCE

reformers yesterday said the Attorney General’s ability to restrict the powers of the proposed ombudsman is “too vague” and should be reformed as they urged Bahamians to ensure this is not a Bill that “passes and sits”.

Matt Aubry, the Organisation for Responsible Governance’s (ORG) executive director, nevertheless told Tribune Business that the revised Ombudsman Bill “in many instances marks an improvement” on

the previous version that was brought to Parliament by the Minnis administration but never debated or passed.

Besides providing more specifics on when the

SEE PAGE B8

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net

FTX’s Bahamian liquidators have accused their US adversaries of “breaching every single” co-operation pledge in just four short months as they urged the Supreme Court to “sort it out” with Delaware.

Brian Simms KC, the Lennox Paton senior partner, and PricewaterhouseCoopers (PwC) accounting duo, Kevin Cambridge and Peter Greaves, in their May 12, 2023, court filings argued that Sir Ian Winder and Judge John Dorsey, his Delaware Bankruptcy Court counterpart, needed to take over relations between the two jurisdictions as the prospect of improved cooperation from FTX US chief, John Ray, and his team was “a dim one at best”.

Responding to Mr Ray’s objections that they gain relief from the worldwide asset freeze imposed after 134 FTX entities were placed under US

• Supreme Court must ‘sort it out’ with Delaware

• Over 45,000 creditors submit Bahamas claims

• Ray accused of blocking $243m property sale

Chapter 11 bankruptcy protection under his control, the Bahamian joint provisional liquidators warned there was “a very high risk of duplicative, neverending litigation” unless the two courts - and their

MATT AUBRY

SIMON WILSON

BRIAN SIMMS KC

KWASI THOMPSON

$5.74 $5.74 $5.74 $5.95

The history of the public service in The Bahamas can be traced back to the late 19th century when the islands were a British colony. At that time, the public service was composed of officials appointed by the British government to oversee the country’s affairs. In 1973, The Bahamas achieved full independence from the UK, and the public service was reorganised to reflect the new political reality. The Government established the Public Service Commission (PSC) to oversee the administration of the civil service, and several new ministries were created. Today, the Bahamian public service is a large and complex organisation that plays a critical role in the functioning of the Government and the provision of services. The public service employs thousands of people across a wide range of ministries and agencies, and is responsible for everything from healthcare and education to public safety and infrastructure.

According to the Public Service Establishment and Emoluments Orders report issued by the Public Service Commission, as of December 31, 2019, the total number of persons employed in the public service was 27,022. In 2021,

it was reported that the public service workforce of The Bahamas accounted for around 6.9 percent of the total employed labour force in the country. With a such a great deal of responsibility, a well-functioning public sector can help to support economic growth and development by providing a stable regulatory environment, investing in infrastructure and human capital, and promoting entrepreneurship and innovation. In this segment we will discuss the need to reform some aspects of the public service for a more progressive and sustainable Bahamas.

The need for reform

A SUSTAINABLE BAHAMAS

Reforming the public sector is essential for promoting sustainable development, improving service delivery, promoting transparency and accountability, and advancing good governance. One of the major challenges facing the public sector in The Bahamas is the need to address long-standing issues of bureaucracy and inefficiency, which can result in delays and reduced effectiveness in the delivery of key services. The Government has undertaken several initiatives to address these challenges, including the implementation of a new e-government platform aimed at streamlining processes and improving service delivery. Despite these efforts, challenges remain in the public sector, including issues related to staffing and capacity, as well as ongoing concerns around corruption and accountability. In recent years, the Auditor General has issued several reports highlighting issues of concern in the public sector. The Auditor General is responsible for auditing the financial statements and operations of government ministries, departments and agencies in The Bahamas. The reports outlined a few issues on the public sector, including:

1. Deficiencies in financial management practices. There are significant deficiencies in financial management practices within various government ministries and agencies. These deficiencies include issues such as inadequate financial record keeping, a lack of oversight of financial transactions, and insufficient controls over government assets.

2. Procurement irregularities. It was found that there were several instances where procurement processes were not followed properly, leading to the awarding of contracts without proper competition or evaluation. This can result in a waste of public funds and undermine confidence in government contracting processes.

3. Delays in public service delivery. The reports have pointed out the issue of delays in the delivery of public services, particularly in areas such as healthcare and education. These delays can negatively impact citizens and can result in a loss of trust in the Government.

4. Weaknesses in internal controls. The Auditor General has identified weaknesses in internal controls within government agencies, which can increase

the risk of fraud, waste and abuse.

5. Inadequate monitoring and evaluation. The Auditor General has identified a lack of effective monitoring and evaluation of government programmes and projects, which can result in a failure to achieve desired outcomes and can lead to a waste of public funds.

Corruption in the public sector In The Bahamas, corruption in the public sector is a pervasive issue that is causing concern among citizens, civil society groups and international partners. This problem takes various forms, such as bribery, embezzlement and abuse of power, and has far-reaching negative consequences for government operations, public service delivery and the overall welfare of the population. Transparency International publishes an annual Corruption Perceptions Index (CPI) that assesses the perceived levels of corruption in the public sector of multiple countries.

The 2020 CPI placed The Bahamas in 30th position out of 180 countries, scoring 63 out of 100. Although the country’s ranking indicates moderate levels of corruption, a score below 50 is viewed as a serious corruption issue. Despite

consistently ranking in the upper half of countries on the CPI, corruption remains a major concern in The Bahamas. The Government has implemented measures to tackle corruption, but there is still a need to improve accountability and transparency within government institutions.

In recent years, several high-profile cases and allegations have brought these issue to the forefront of public debate in The Bahamas. These cases have involved allegations of bribery, extortion, fraud and other claims. Some notable examples are:

* In early 2019, former senator Frank Smith was totally acquitted of 15 extortion and briberyrelated charges concerning his time as the Public Hospitals Authority (PHA) chairman. Chief Magistrate Joyann Ferguson-Pratt threw out the charges against him after finding there was no case to answer, ruling that the prosecution’s main witness was not credible, and highlighting discrepancies and inconsistencies in her testimony.

* Shane Gibson, a former Cabinet Minister, was acquitted and cleared in November 2019 of 15 counts of bribery. He had been accused of soliciting

SEE PAGE B4

RODERICK A.

PAST CHAMBER FAMILY ISLAND DIVISION DIRECTOR

E-MAIL: RASII@ME.COM

Fiscal year finish is ‘critical platform’ for 78% deficit cut

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net

THE MINISTRY of Finance’s top official yesterday said the Government’s financial performance over the next two months is “critical” to setting the foundation for a 2023-2024

fiscal year in which the deficit is forecast to be cut by 78 percent.

Simon Wilson, the financial secretary, told Tribune Business that hitting target for the current 2022-2023 Budget period will set “a good platform” for an upcoming 12 months in which the deficit is

presently forecast to shrink to $125.3m from this year’s $575.4m. “It comes down to our performance. We have two months left in this fiscal year, which are critical,” he said. “Our performance for the next two months will influence what happens in the next fiscal year. It will

be a good platform for us to move forward. It’s a big year.” Successive governments have typically seen deficits spike towards the end of the fiscal year when departments, agencies and ministries present bills for payment that the Ministry of Finance knew nothing of.

Mr Wilson spoke after the Government’s latest public debt statistical bulletin, covering the three months to end-March 2023, revealed that The Bahamas’ total debt had increased by $137.6m or 1.1 percent for the period to $12.517bn.

Over the prior nine months,

CROWDFUND PLATFORM SET TO ADDRESS PLEDGE DIFFERENCE

By YOURI KEMP Tribune Business Reporter ykemp@tribunemedia.net

THE ARAWAKX crowdfunding platform is upgrading its website to address the difference between what is pledged by investors and the actual amount a company raises from an offering.

D’Arcy Rahming Sr, ArawakX’s chief executive, told Tribune Business that the company’s website and entire system are presently “down for an upgrade” as they seek to make them more user friendly for

both investors and listed companies. One of the issues set to be addressed is the difference between what a company raises from a crowdfund offering as opposed to what investors pledge, or promise, to invest. ArawakX’s website presently shows the total pledges made, which are typically much higher than what a company receives when its offering closes, because often-times investor promises do not translate into actual investments or, if they do, only partial investments. Amid concerns that this can give a misleading impression of crowdfunding

PROMOTION BOARD IN 67% WEBSITE VISITOR INCREASE

By YOURI KEMP Tribune Business Reporter ykemp@tribunemedia.net

THE Nassau Paradise Island Promotion Board’s (NPIPB) chief executive says there has been a 67 percent year-over-year jump in visitor traffic to its website as it works to convert this increase into actual visitors.

Joy Jibrilu told Tribune Business that member properties are reporting a growing trend where website visitors are being transformed into actual bookings. She added: “For every 1,000 visits to the website that converts to about 170 bookings. So that’s where we are excited. It’s the conversions that are up as well, and we’re really excited about that.”

Website conversions for the Promotion Board are people that click on its website and are then transferred to a member resort in hopes that they book a vacation. This is a prime indicator for the Board in assessing the quality of its marketing

efforts and whether they are working.

Mrs Jibrilu said: “We’re trending very well. Summer looks like it’s going to be strong for our hotel partners. And for airlift, we’re having meetings with all hotels. They’re all optimistic. They all feel very, very good. May has been a strong month, and traditionally May can be soft. We know June, July, even August can be soft, but now they’re turning out to be strong months because of the family travel.

“So exciting news is good news. All the hard work is paying off. People keep saying pent-up demand and what have you, but Barbados isn’t recovering at the same rate and there are other destinations that aren’t, so it’s about putting in the hard work and yielding results.”

The Nassau/Paradise Island Promotion Board has shed its COVID-19 strategy and is back to its normal marketing plan for New Providence. “We are way beyond that, way beyond that,” Mrs Jibrilu said of COVID. “We’re into

outcomes, Mr Rahming replied: “The website is putting pledges down, and then the actual amount that is raised. So the website records pledges. Somebody says: ‘I want to buy 100 shares’, and then if they don’t pay for the 100 shares, that pledge amount is what you’re seeing on the website. You’re not seeing the actual raise amount.”

Changing this feature to reflect the raised amount, as opposed to the pledged amount, is “part of the upgrade” that will last another couple of weeks.

“What’s happening is that people, issuers as well as subscribers, do have

comments and so when you do major upgrades, you have to take those comments into effect,” Mr Rahming said.

“So we are a learning organisation, and we are a listening organisation, so what we’re doing is we’re taking everybody’s comments and then we put it into upgrades. So before we come out again with the new listings, which we expect to come out in June, we want to make sure that we’ve corrected any issues

or problems that have been noted.”

Mr Rahming said the upgrades are more than simply changing an html code or even java script, because ArawakX is a Fintech (financial technology) operation that has to calibrate the user interface as well as calculate what was pledged, paid and outstanding to corporate issuers.

“It’s with our developers now, and since we didn’t have any issues out, we thought this was an

it had risen by $386.1m or 3.2 percent since June 2022. Despite the increase, the proportion of foreign currency-denominated debt has started to slowly decline, according to the report, while the interest rates on The Bahamas’

appropriate time before we put our next issues out to review and to make changes that have been recommended to make it more easier and understandable,” he added.

The next phase for Arawak X’s website will be the introduction of “online courses and learning modules”, so that persons who do not have time to attend a seminar can access a free course where they can educate themselves on investing via the crowdfunding platform.

marketing full on to how we would have marketed and seeing the strong numbers.

“Sandals, and I laughed at them when I heard from their general manager, but from their opening they’ve been seeing occupancies 90 percent and above. This is for Sandals Royal Bahamian and Nassau, and you know, they said May could be so soft but it’s mid to high 80’s.”

“Prior to 2019 that would have been a strong month for us, but now we’re looking at that as soft, and that just speaks to where we are right now. We continue to work towards airlift, making sure that there is sufficient here and just getting the message out and telling the stories, getting our message out in front of the right people so that we are front of mind for everyone else.”

JOY JIBRILU

‘Peace of mind’ on data security

Individuals, companies and governments alike are increasingly concerned about data security and privacy as the digital landscape continues to expand. It is essential to understand that data breaches and privacy violations can have far-reaching consequences, ranging from financial loss and reputational damage to identity theft and compromised national security. However, sensitive information can be proteced through robust tools and technologies. This article explores three essential tools that can bolster data security and privacy. They offer individuals and companies peace of mind in an increasingly interconnected world.

Encryption, the shield of privacy

Encryption is one of the most important safeguards for protecting data from unauthorised access. With encryption, information is

By

Derek

Smith

converted into an unreadable format using complex algorithms. According to statistical references, encryption is widely recognised as an effective defence mechanism.

According to Entrust’s Global Encryption Trends report, customer data is the top encryption priority among enterprises. Despite this, only 42 percent of

respondents used encryption to secure their customer data in 2021.

End-to-end encryption protocols, such as those employed by secure messaging applications including Signal and WhatsApp, ensure that only the intended recipients can decipher the encrypted content. Alternatively, advanced encryption algorithms, such as Advanced Encryption Standard (AES), provide strong protection against hacking attempts, ensuring data privacy.

Multi-Factor Authentication (MFA)

Gatekeeper passwords alone cannot protect sensitive data. By requiring multiple credentials for access, multi-factor authentication (MFA) adds an extra layer of security. Unauthorised access is significantly reduced by MFA, according to statistics.

In a report by Microsoft, MFA prevents 99.9 percent

of account compromise attacks. MFA typically combines something the user knows (password), something the user possesses (smart phone or security key), and sometimes something the user is (biometrics). Using this combination, attackers will have a more challenging time gaining unauthorised access, even if a password is compromised. Biometric recognition (such as fingerprints or facial recognition) and hardware tokens are popular MFA methods.

Data Loss Prevention (DLP)

Tools that prevent data loss and leaks, and the inappropriate sharing of sensitive information, are essential to any data loss prevention programme. By monitoring data flow within a company, DLP solutions detect and mitigate potential risks in real time. DLP technologies are effective based on statistical data. According to a

study by Gartner, firms that deploy DLP tools experience a 60 percent reduction in sensitive data breaches. DLP tools use advanced techniques such as content analysis, machine learning and pre-defined policies to identify and prevent data exfiltration. Regulatory requirements and internal security policies can be met with these tools, regardless of whether the data is in motion, at rest or even in use. To prevent data loss and maintain data privacy, DLP tools identify and mitigate risks proactively. In conclusion, practical tools are essential in an era of ubiquitous data breaches and privacy violations. Multi-factor authentication enhances access control by protecting against unauthorised access with encryption. Preventing data loss incidents requires the use of data loss prevention tools. It is possible for individuals and companies to significantly enhance their defences against

evolving cyber threats by integrating these tools into their data security strategies. As digital landscapes evolve, investing in these tools is imperative for maintaining data privacy and trust.

• NB: About Derek Smith Jr Derek Smith Jr. has been a governance, risk and compliance professional for more than 20 years. He has held positions at a TerraLex member law firm, a Wolfsburg Group member bank and a ‘big four’ accounting firm. Mr Smith is a certified anti-money laundering specialist (CAMS), and the assistant vice-president, compliance and money laundering reporting officer (MLRO) for CG Atlantic’s family of companies (member of Coralisle Group) for The Bahamas and Turks & Caicos.

Public service reform key to a sustainable Bahamas

and accepting thousands of dollars from Jonathan Ash

to expedite payments the Government owed to the contractor, but was fully exonerated.

* Former Cabinet Minister Lanisha Rolle was charged in March with one count of bribery and 14 counts of conspiracy to commit fraud by false pretences concerning contracts worth over $750,000. The charges relate to her time in office from 2019 to 2021. She is presently free on bail.

The Government has taken several steps to strengthen anti-corruption measures, and promote transparency and accountability in government operations. These measures include the establishment of an anti-corruption unit within the Office of the Attorney General, the development of a code of ethics for public officials, and the introduction of new legislation aimed at strengthening anti-corruption measures. However, challenges remain in the fight against corruption in the public sector in The Bahamas.

These challenges include a lack of resources and capacity in government agencies responsible for enforcing anti-corruption measures, as well as

ongoing concerns around political interference and the effectiveness of anticorruption measures in practice. Overall, addressing corruption in the public sector is critical to building trust in government, promoting transparency and accountability, and ensuring that public resources are used effectively and for the benefit of citizens.

The National Development Plan

The National Development Plan (NDP) of The Bahamas includes several strategies for improving the public sector. By implementing these and other measures outlined in the plan, The Bahamas can work to improve the public sector and promote sustainable development. Some key takeaways that can help to improve the public sector include:

1. Strengthening accountability. The NDP emphasises the need for strong accountability mechanisms in government operations, including using performance-based management systems and regular audits. This can help to promote transparency and ensure that public resources are used effectively and efficiently.

2. Investing in human capital. The NDP recognises the importance of investing in human capital, including by providing training and professional development opportunities for public sector employees. This can help to improve the skills and expertise of public servants, leading to better service delivery and increased efficiency.

3. Promoting digitisation: The NDP highlights the need for greater use of digital technologies in government operations, including for service delivery and data management. This can help to improve the speed and quality of government services, and can also help to reduce the risk of corruption and other forms of misconduct.

4. Enhancing public-private partnerships: The NDP encourages greater collaboration between the public and private sectors, including through public-private partnerships (PPPs). This can help to leverage private sector expertise and resources to improve service delivery and promote economic growth.

5. Strengthening governance frameworks: The NDP emphasises the need for strong governance frameworks, including

anti-corruption measures and ethical standards for public officials. This can help to promote transparency, accountability and integrity in government operations, and can help to reduce the risk of corrupt practices.

Conclusion Reforming the public sector in The Bahamas is a critical task that requires the attention and support of government, civil society and citizens. The issues facing the public sector are significant and can undermine public trust in government institutions, leading to a loss of confidence in the rule of law. However, by implementing the strategies outlined in the National Development Plan and other initiatives, The Bahamas can work to improve the quality and efficiency of public services, promote transparency and accountability, support economic growth, and advance good governance. Reforming the public sector is an ongoing process that requires sustained commitment and effort, but it is essential for building a prosperous and sustainable future for The Bahamas and its citizens.

Raise the lid

By CHRIS ILLING

THE US federal government’s debt ceiling has been reached and the clock is once again ticking. A default is imminent. International Monetary Fund (IMF) spokeswoman, Julie Kozack, fears “very serious” consequences for the global economy. The stock market is already getting nervous. The markets were down for the last two trading days of the week.

Ms Kozack, speaking on Thursday last week in Washington D.C., said:

“For this reason, we urge the parties concerned to urgently find a consensus to resolve this matter as soon as possible.” The US had already reached the debt limit of just under $31.4trn

in January. Since then, the US government has been using “extraordinary measures” to prevent insolvency. However, the possibilities for this will soon be exhausted. In the US, Congress sets a debt ceiling and determines how much money the state can borrow. The debt ceiling has now been reached, and the US Treasury must tap into its capital reserves since the US is now no longer allowed to take on new debt to pay its bills. US president, Joe Biden, needs the Republicans in order to

raise this limit. However, they are opposed to an increase without significant savings in certain government spending.

The Republicans, who hold a majority in the House of Representatives, the lower Chamber of Congress, will only approve an increase in the debt ceiling in return for federal spending cuts worth billions of dollars. They want to turn back key elements of Biden’s reform policies.

The US government debt is intertwined with the entire financial system, making it truly impossible

DEBT CEILIING

to know what will happen in the event of a default. The stock market is often seen as a barometer of the overall health of the economy, and a debt default could create significant uncertainty and undermine investor confidence.

It is quite certain that such a default would likely result in a sharp decline in stock prices. Investors would be concerned about the stability of the overall financial system and the potential for a broader economic downturn. This could trigger a sell-off in the stock

market as investors look to exit their positions and minimise their losses.

In addition to the shortterm consequences, the long-term effect would be a downgrade in the country’s debt rating, which would make it more expensive for the US government to borrow money in the future. This would then lead to even higher interest rates and slower economic growth. Another long-term effect would be reduced consumer spending and a halt to new investments.

But the exact extent of the damage would depend on the severity and duration of the default, as well as the US government’s response. Yet markets would decline, and we would see a period of high volatility. This will also create opportunities for the savvy investor.

FISCAL YEAR FINISH IS ‘CRITICAL PLATFORM’ FOR 78% DEFICIT CUT

FROM PAGE B3

issued and outstanding foreign currency bonds have also stabilised at just over 7 percent. Mr Wilson said the latter development is “very important” and will “help us a lot”, as credit rating agencies such as Moody’s and Standard & Poor’s focus heavily on sovereign debt costs in the secondary market.

“Debt denominated in foreign currency, at $5.646bn, equated to 45.1 percent of the total debt, declining steadily from the peak 46.2 percent proportion held at end-June 2022,” the debt report said. “Bahamian dollar debt registered a quarterly increase of $144.1m (2.1 percent) to $6.871bn for a leading 54.9 percent of the total compared with 53.8 percent at end- June 2022.

“Quarterly variations in the debt stock were almost equally distributed between debt operations of the central government and the agencies and government business enterprises, which grew by $68.1m (0.6

percent) and $69.5m (5.2 percent), respectively, since end-December 2022.”

As for debt servicing, the report said: “Debt service costs during the review quarter were estimated at $882.9m for an aggregate $2.419bn over the nine months to March 2023. Consistent with the central government’s debt profile, approximately 70.6 percent of the recent quarterly costs represented Bahamian dollar payments, with the balance (29.4 percent) covering foreign currency liabilities.

“Of the $687.1m (78.2 percent) in principal payments, almost 80 percent was in Bahamian dollars. Meanwhile, 62.5 percent of the $190.5m (21.8 percent) in interest payments met foreign currency obligations, and the remaining 37.5 percent was incurred on Bahamian dollar debt.”

While the Government has a significant amount of debt maturing in the short-term, with $1.438bn in domestically-held securities and $109.8m of external repayments due

before end-June 2023, Mr Wilson said there was “no concern” over the appetite and willingness of investors to roll this over.

“The debt redemption profile for the balance of fiscal year 2022-2023 and first quarter of fiscal year 2023-2024 reflect reissuances of Treasury bills ($899.5m), Treasury notes ($97.1m) and Central Bank advances ($332.5m). The large increases in external payments for fiscal year 2023-2024 and fiscal year 2028-2029 are central Government’s bond maturities..... for which the Government intends to address through appropriate liability management exercise,” the report said.

“Across the maturity spectrum, the longer maturity and amortising profile of the multilateral and bilateral credits providing some smoothing to the external bond maturity patterns. Domestic redemptions reflect the preponderance of bond issuances, which are typically refinanced upon maturity.”

GUEST NATIONS AT THE G-7 REFLECT OUTREACH TO DEVELOPING COUNTRIES, WORRIES OVER CHINA, RUSSIA

By HYUNG-JIN KIM AND MARI YAMAGUCHI

Associated Press

THIS week's summit of the Group of Seven wealthy democracies in Hiroshima will include eight other guest nations, part of a complicated, high-stakes diplomatic gambit meant to settle the world's most serious crises.

Japanese Prime Minister

Fumio Kishida has invited South Korea, Australia, India, Brazil, Vietnam, Indonesia, Comoros and the Cook Islands.

Kishida hopes this mix of countries will

help efforts to stand up to China's assertiveness and Russia's invasion of Ukraine, according to analysts. He also wants stronger ties with U.S. allies and with developing nations and to make progress on working toward a nuclear-free world, something that looks increasingly difficult amid North Korean and Russian nuclear threats.

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FTX Bahamas charges US broke ‘every single’ pledge

respective judges - work out a cross-border co-operation protocol.

Asserting that the territorial battle for control risks harming the more than 45,000 creditors who have filed compensation claims with FTX Digital Markets, the Bahamian subsidiary, the trio also blasted Mr Ray and his team for “a willful breach” of their co-operation agreement by helping the US Department of Justice seize $143m they allege belongs to their liquidation estate.

And, while Mr Ray and his team have asserted that just 6 percent of FTX’s international, non-US customers were clients of FTX Digital Markets, Mr Simms and his PwC counterparts argue that there is significant evidence to contradict this. In particular, they argue that the Bahamian subsidiary is the “counterparty to 90 percent” of services provided by the imploded crypto exchange’s international platform.

The trio have also filed 11 agreements between FTX Digital Markets clients and the crypto exchange, governed by Bahamian law, in which the latter offered them credit lines ranging in size from $1m to $19.445m.

Most of these agreements were concluded in September and October 2022, just weeks before FTX collapsed, and were filed as proof that the Bahamian subsidiary had more customers than Mr Ray is letting on.

Suggesting that the FTX US chief, as well as the exchange’s official committee of unsecured creditors, are taking “the extreme position that this court should act as if the Bahamian court does not exist”, Mr Simms and the PwC duo said they “cannot abdicate their obligation” to windup the local subsidiary - and achieve the best recovery possible for creditors/ investors - by playing a secondary role to the Chapter 11 process and Delaware Bankruptcy Court.

While the Bahamian provisional liquidators had sought to avoid protracted disputes with Mr Ray and his team through the January 6, 2023, co-operation agreement signed both parties, they argued that recent events have proven the deal is not working and the two judges will now have to take over and co-ordinate FTX’s winding-up.

“Cross-border co-operation is the only sensible way forward in these cases,” the Bahamian trio argued.

“A cross-border protocol is also necessary to allow both insolvency cases to proceed expeditiously. The joint provisional liquidators were hopeful that the cooperation agreement could provide an adequate framework to allow both cases to proceed without getting bogged down in disputes.

“Unfortunately, the US debtors have made a practice of not honouring the co-operation agreement. In the four short months since executing the co-operation agreement, the US debtors have somehow managed to

breach every single commitment they made.”

Mr Simms and the PwC duo argued that their US counterparts have “actively obstructed” their efforts to recover the $143m in FTX Digital Markets assets seized by the US Justice Department, while also claiming that they - and not the Bahamian liquidators - “stand first in line” to recover these sums if they are ever released.

And, while the ‘co-operation agreement’ made the Bahamian liquidators “primarily responsible” for recovering $45m held in Tether stablecoins that were frozen in The Bahamas, Mr Ray and his team have blocked this by contesting ownership. The Bahamian trio are also asserting that their US adversaries forced them to “abandon proceedings” to start the process for recovering some $243m that was invested in highend Bahamas real estate.

Accusing Mr Ray and his team of not “acting in good faith”, Mr Simms and his colleagues alleged that their counterparts have been “actively interfering with the efforts to manage and monetise the real property in The Bahamas” and “excluding the joint provisional liquidators from discussions regarding options to restart the FTX international platform”.

The Bahamian trio also assert that they are still being denied access to key FTX Digital Markets data, including documents and employee communications, while Mr Ray and his team have refused to engage in discussions on a protocol for how the Supreme Court and Delaware Bankruptcy Court will co-operate.

“In short, the prospect of awaiting open co-operation with the US debtors is a dim one at best, leaving it to this court and the Bahamas court to sort it out,” the Bahamian provisional liquidators asserted.

“In these circumstances, the two courts with jurisdiction should co-ordinate based on a cross-border protocol. This should not be controversial. This court has recognized FTX Digital Markets’ provisional liquidation as its foreign main proceeding.

“Nor can the joint provisional liquidators simply accept the US debtors’ assumption that all customers of FTX were, at all times, customers of the US debtors, and that all assets held by the US debtors from customers belong to the US debtors as well. The debtors cannot assume those issues away; they are complicated legal questions that must be answered by a court.

“Nor can they properly refuse to engage, as the US debtors have done for months, on any form of consensual cross-border protocol. Thus the joint provisional liquidators ask that they be allowed to submit the application to the Bahamas court so that this court and the Bahamas court can work together in order to ensure an efficient and co-operative path to resolution of these questions.”

The Bahamian trio have consistently argued that key questions yet to be answered are the identities of FTX Digital Markets’ customers, and who was migrated to it from the crypto exchange’s international platform prior to the November 2022 collapse,

and whether - and which - assets belong to the company or investors/clients. They want these to be determined by Sir Ian in the Supreme Court as they involve issues of UK/Bahamian, rather than US, law.

“This court unilaterally ‘centralising’ issues key to the provisional liquidation of an entity that is not in a Chapter 11 case - without consultation with the Bahamas court in which its proceeding is actually pending - creates a very high risk of duplicative, never-ending litigation,” the Bahamian provisional liquidators argued.

“FTX Digital Markets’ provisional liquidation was filed by the Bahamian regulator, the Securities Commission of The Bahamas, and involves a host of third parties (including 45,281 creditors that have submitted claims in that proceeding). If this court bars the joint provisional liquidators from putting the Non-foreign law customer issues before the Bahamas court, and unilaterally proceeds to address them in the adversary, other parties will invariably raise those same or similar issues.

“If the two courts proceed without co-ordination, then both estates will be forced to litigate the same issues at the same time in two venues, with the risk of disparate rulings. That is not the best outcome. All of this could be avoided by the kind of cross-border cooperation that is routine in similar cases.”

The Bahamian provisional liquidators added that FTX Digital Markets’ 83-strong workforce “accounted for nearly half” the crypto exchange’s international staff, which they argued contradicted assertions that it never moved the centre of its operations to this nation.

“FTX Digital Markets was clearly a service provider for spot market services; spot margin trading services; OTC/offexchange portal services; futures market services; and volatility market services,” they added. “These services make up approximately 90 percent of the trading on the FTX.com platform.

“Therefore, FTX Digital Markets was the counterparty to 90 percent of the international platform, including those services in sections seven (order book and convert) and eight (account funding) of the 2022 Terms of Use.”

JOHN RAY

Crackdown on tax cheats ‘most co-ordinated’ ever

or increasing tax rates. We don’t want to do that.”

Prime Minister Philip Davis KC is due to unveil the 2023-2024 Budget in just over two weeks’ time in the House of Assembly on Wednesday, May 31, when he will set out plans for a 12-month period during which the Government is aiming to cut the fiscal deficit by more than 78 percent and set itself up to achieve a surplus in 2024-2025.

Mr Wilson, who acknowledged that enhanced compliance is “very, very important” to reaching a position where revenues exceed spending, said the Department of Inland Revenue’s communications on the issue have been consistent “all year long” in terms of foreshadowing the enforcement drive that was coming.

Asked if the authorities should have employed such tactics against major tax delinquents from years ago, he replied: “The Government has, over a period of time, taken certain taxpayers to court. The Government has taken strong enforcement action against certain taxpayers.

The Government has done that.

“There’s a clear history of the Government doing that. It’s not a circumstance where the Government has not done it. We’ve even once before exercised the ‘power of sale’. There’s a clear history of that. Nothing that we are proposing today has not been done before. [But] this is the most co-ordinated effort in terms of compliance.

“We have a hefty target. We have to achieve that target. We have over $600m in real property tax arrears. We have substantial arrears in respect of VAT and Business Licence, so we have to hit those targets. Our messaging has been pretty consistent in what we think is going to happen.”

While the occasional “outlier” exists, Mr Wilson said most taxpayers usually want to become compliant with their obligations.

Adding that last week’s ‘power of sale’ notice was not a threat, but a “reminder of what is in the legislation”, the financial secretary said there had nevertheless been “a significant improvement” in real property tax compliance mainly due to the commercial banks paying what was owed on behalf of mortgage holders.

PUBLIC NOTICE

The Public is hereby advised that I, DASHAE LATANYA JASMINE CURRY of P.O. Box FH-14089, Cox Street, Fox Hill, New Providence, Bahamas intend to change my name to DASHAE LATANYA JASMINE KNOWLES. If there are any objections to this change of name by Deed Poll, you may write such objections to the Chief Passport Officer, P.O.Box N-742, Nassau, New Providence, Bahamas no later than thirty (30) days after the date of publication of this notice.

NOTICE

NOTICE is hereby given that BERLINE JOACHIM Collins Avenue, New Providence, The Bahamas applying to the Minister responsible for Nationality and Citizenship, for Registration Naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 8th day of May 2023 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, New Providence, The Bahamas.

NOTICE

NOTICE is hereby given that ALEXANDER LUCAS MCPIKEZIMA , East Bay View Drive, Paradise Island, The Bahamas applying to the Minister responsible for Nationality and Citizenship, for Registration Naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/ naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 15th day of May 2023 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, New Providence, The Bahamas.

NOTICE

NOTICE is hereby given that MAKINSON GULES, Eleuthera Governors Harbour, The Bahamas applying to the Minister responsible for Nationality and Citizenship, for Registration Naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 15th day of May 2023 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, New Providence, The Bahamas.

NOTICE

NOTICE is hereby given that MARK CLAUDELL LAFRANCE of Cowpen Road, New Providence, Bahamas, is applying to the Minister responsible for Nationality and Citizenship, for registration/naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 15th day of May, 2023 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, Bahamas.

The Department of Inland Revenue last week said its notice, warning taxpayers it will seize and sell-off their properties to recover past due liabilities, is “targeting extreme cases” who have totally disregarded their tax obligations for up to 10-20 years. It has also begun garnishing the bank accounts of companies owing significant VAT arrears, placing a hold on them and - in some cases - seizing funds by having financial institutions remit them.

The authorities plan to reveal the “first list” of targeted properties and real estate in early June 2023. Although the notice’s disclosure caused some alarm and disquiet, the Department of Inland Revenue is only targeting long-standing bill duckers and tax cheats who have ignored all prior outreach efforts, tax amnesties, notices and communications urging them to bring their real property tax liabilities current and comply with the law.

Bahamian owner-occupied property is, by law, exempt from the “power of sale” contained in the Real Property Tax Act, which means that citizens residing in homes that they own will not be impacted by

the latest crackdown. And, given that the real property tax exemption threshold was increased from $250,000 to $300,000 in last year’s Budget, many middle and lower income Bahamians do not pay the tax in any event.

Delinquent commercial, residential, foreign-owned land and foreign-owned owner-occupied properties are subject to the ‘power of sale’. Many appeared to interpret “residential” as including Bahamian-owner occupied properties, but this definition instead applies to duplex and triplex-type complexes that are rented out by their owner landlords who do not live on property.

Bahamian realtors backed the Government’s stance provided the ‘power of sale’ process was implemented equitably, allowed for due process and followed the law. John Christie, HG Christie’s president and managing broker, told Tribune Business: “I think on the bird’s eye view, looking down and not the minutiae, I think it’s actually a good thing. “It’s what every other country does if people don’t pay their property tax; the municipality comes along, gives them notice and follows a process, and sells them if there’s no

NOTICE

BRIENNE LIMITED

Incorporated under the International Business Companies Act, 2000 of the Commonwealth of The Bahamas registered in the Register of Companies under the Registration Number 205189 B. (In Voluntary Liquidation)

Notice is hereby given that the liquidation and the winding up of the Company is complete and the Company has been struck off the Register of Companies maintained by the Registrar General on the 2nd day of May, 2023.

Dated this 12th day of May, A.D. 2023

Jose Fernando Azevedo Bretanha LIQUIDATOR

resolution. The main thing is the implementation. That’s the problem we might have; the implementation being done right. We have a lot of things going on, and sometimes the Government hires outside companies to do it and they don’t know the law, so things go awry.

“It needs to be really well thought-out, done properly and done right in a wellorganised way so that there’s no mis-communication. Government sometimes puts things out, then has to back track because it’s not been worked out or thought through. But if people don’t pay their property taxes there should be a mechanism to address that as long as it’s done correctly,”

Mike Lightbourn, Coldwell Banker Lightbourn Realty’s president, also backed the move “with certain provisos” such as ensuring that properties were assessed correctly according to their market value. He suggested that some taxpayers may be withholding payment in

a bid to try and force the Government to adjust its valuation, as the law presently requires that they pay the full disputed amount before they can challenge this and their tax assessment.

“I think they’re only going after severe cases of non-payment,” Mr Lightbourn said. “You still have the right to go to court, contest it and get an appraisal. In some cases, people may not be paying because they have been over-assessed. If you want to contest the Government’s valuation you have to pay the full assessment first, which is outrageous. They should change that in the law.

“But people who just don’t pay; it’s time they were dealt with. I don’t think they’re going after the little fellow. In my opinion they are, as it should be, going after the bigger taxpayers. It will drive some people to make the payments, which is odd, especially for those with means.”

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Gov’ts support for BPL jumps $110m

quarter to end-March. Asked whether these loans were to help finance payments to Shell, Mr Wilson confirmed: “Yes, that’s correct.”

Under the heading “debt owed to government”, the debt bulletin confirmed: “Agencies and government business enterprises’ (GBEs) bilateral loans with the central government increased by $80m over the review quarter to $150.8m at end-March 2023, and by $110m since end-June 2022.”

Figures provided in the bulletin showed that BPL’s debt had risen from $113.6m at end-December 2022 to $192.3m at endMarch 2023, the increase matching the $80m rise noted earlier on the report. This sum had also risen from $85m at end-June 2022, again matching the $110m increase for the nine-month period.

The Opposition, though, yesterday seized on the increase to again attack the Government over what it branded as “the selfinflicted disaster” of failing

to execute the additional low-cost oil purchases in September 2021 to support BPL’s fuel hedging strategy. It argued that the debts owed to Shell, which had caused the jump in government financial support, had accrued from the failure to lock-in additional cut-price fuel volumes to support the hedge.

Kwasi Thompson, the Opposition’s finance spokesman, called for a “fulsome explanation” for the $110m lending increase and a breakdown of both the terms and interest rates involved. Asserting that the Debt Management Act requires lending to come from sums approved by Parliament, he said: “We call on the Government to indicate what appropriations were made by Parliament for this $110m in lending to state-owned enterprises.

“The Opposition questions whether this $110m loan represents the proceeds that BPL needs to pay off its fuel arrears due to the self-inflicted disaster the Davis administration created by their failure in October 2021 to execute

the BPL fuel hedge trades as was recommended by the BPL management.

“In other words, the massive failure by this PLP government on this BPL matter, we believe, has caused the Government to bail-out BPL and pay for the fuel arrears that built up because this government refused to act. The Bahamian people are once again on the hook....,” Mr Thompson argued in a statement.

“We demand that the Government provide a full report on the $110m in loans from government corporations along with all relevant terms and conditions. The Government must also show where Parliament appropriated the monies for this lending and explain why they feel it is appropriate to saddle the Bahamian people with the debt incurred by their disastrous decisions.”

BPL’s fuel hedging, and the Davis administration’s decision shortly after taking office in September 2021 not to execute the trades that would have secured additional cut-price oil volumes to keep consumers’

fuel charges relatively low between 10.5-11.5 cents per kilowatt hour (kWH), has become embroiled in a firestorm of political controversy.

Several sources have suggested there were good and valid reasons why it did not do so, namely that the cash-strapped government did not have the necessary $40m funding and cash flow available to finance the trades, especially with a $246m BPL loan coming due for repayment in February 2022 and nothing allocated to cover it.

However, the latest Fiscal Strategy Report revealed the extent of BPL’s financial woes and the need for government support. “The recent disclosure of approximately $150m of payment arrears of Bahamas Power & Light (BPL) represents a significant unbudgeted liability of the Government,” it said. “To ensure continued provision of essential electrical services to the public, the Government has committed to ensuring payment of this liability by the corporation.”

Alfred Sears, minister for public works and utilities,

who has responsibility for BPL, last October informed the House of Assembly that the utility’s debt to Shell was around $90m as he unveiled the plans to pay it off in a series of $10m monthly installments through to June 2023. The $90m potentially accounts for the bulk of the $150m arrears identified in the Fiscal Strategy Report.

However, the Prime Minister in early February told the House of Assembly that BPL’s $150m arrears were largely composed of unpaid fuel bills that had “failed to be paid by the FNM”. The Opposition subsequently asked for a breakdown of this $150m, what it represents and when the debt was incurred, but Mr Sears last month said the information was still being put together by a combination of BPL, the Ministry of Finance and Ministry of Works.

The need to repay Shell and, by extension, the Government is why Bahamian businesses and large households face up to a 163 percent increase in the fuel charge component of their electricity bill in upcoming months during

Ombudsman Bill ‘can’t pass and sit’

Attorney General can “exclude the exercise” of the ombudsman’s powers, he added that the ability to recommend that the holder of this office be removed should be vested with both houses of parliamentrather than just the Prime Minister - to provide more checks and balances.

The ORG chief also recommended that the legislation, and the ombudsman, cover not just state-owned enterprises (SOEs), government agencies and entities in which the Government has 49 percent minimum equity ownership, such as the Bahamas Telecommunications Company (BTC) and Arawak Port Development Company (APD), but private sector firms to which the state outsources functions such as debt collection agencies.

An ombudsman provides a pathway for citizens to redress grievances over maladministration and how they are treated by the Government, especially in accessing and receiving public services. Describing the Bill as “a major move forward” on improving

governance, transparency and accountability, as well as the delivery of public services, Mr Aubry said Bahamians needed to press for its full implementation and enactment once passed into law.

He added that it needed to go beyond just appointing someone to the position and salary, and ensure they have the necessary tools and resources to hold government accountable where needed and protect Bahamian citizens’ rights.

While he ombudsman can appeal to the Supreme Court any move by the Attorney General to restrict his/her powers, Mr Aubry told this newspaper: “The thing about it is the decision of the Attorney General to exercise the exclusion of the Ombudsman’s powers is based on his or her opinion. That, again, I think is too vague for this space.”

He suggest that more specific criteria for when the Attorney General can use these powers be included in the draft legislation, which has already been tabled in the House of Assembly. “The Bill allows that ‘the Attorney General may by notice to the ombudsman exclude the exercise of the

powers of the ombudsman in whole or in part to any specific complaint being investigated by the ombudsman if, in his opinion, the application of subsection (1) might be prejudicial to the public interest’,” ORG noted.

“This clause undermines the strength and independence of the Act and the ombudsman by conveying the power to limit the remit of the office to a politically-appointed official. Additionally, there is no specific set of conditions or guidelines in which the Attorney General may exclude the powers of the ombudsman.

“The Bill allows that they are able to be limited based on ‘an opinion’. This is not reflective of best practices or regional norms. Jamaica does not afford the Attorney General such power, and Trinidad, which does afford the Attorney General some ability to limit the ombudsman function, has a very specific set of criteria,” ORG continued.

“The ombudsman’s office should certainly have checks and balances. However, the Bill already provides for appeal of decision and a process for

removal of the ombudsman. Revision or removal of this clause would preserve the strength of the Bill. Remove the clause providing the Attorney General the capacity to exclude the exercise of the Ombudsman based on “opinion that it is prejudicial to the public interest” or revise to specify the conditions that would justify such a limiting of powers.”

ORG is also recommending that the power to remove the ombudsman lie with Parliament rather than just the Prime Minister. “The Bill states that the Prime Minister may represent to the Governor General that the ombudsman be removed,” it added.

“Although there are specific conditions for removal outlined, placing this power solely in the remit of the Prime Minister reduces the independence and potential for political influence to the Office of the Ombudsman.

“Best practices would recommend that this power

lie with the agreement of both houses of Parliament. Revise to give the power to represent removal of the ombudsman to lie with agreement among both houses of Parliament.” Mr Aubry, meanwhile, said the ombudsman’s power should be extended to cover private sector entities to whom government functions have been outsourced.

“What we saw in some of the most recent legislation put forward is the Ministry of Finance has the capacity to bring in private sector entities to do revenue collection. It’s not an entity covered by the Government, but it interfaces with citizens so it should be covered by this Act. They are exercising government functions,” Mr Aubry explained.

“The Act is specified to apply to cover, among other authorities, ‘any company registered under the Companies Act being a company in which the

the peak summer consumption months. The increases are far higher than what persons would otherwise be paying based on current global oil prices.

The $90m debt to Shell is likely to have been accrued because BPL held its fuel charge at the hedged 10.5 cents per kilowatt hour (KWh) price even after the trades to secure extra cut-price volumes were not executed. This resulted in BPL having to buy increasing fuel volumes at higher global market spot prices, and the 10.5 cents was insufficient to cover its fuel costs.

BPL’s fuel costs are supposed to be passed on 100 percent to consumers by law, and government officials last October conceded that it had cost taxpayers “tens of millions of dollars” to hold the utility’s fuel charge at 10.5 cents per KWh. With the Government prevented from providing direct subsidies, the higher BPL fuel charges are required to reimburse the Government for paying-off Shell’s debts and effectively keeping the lights on.

Government or an agency of government holds not less than 49 per cent of the ordinary shares’,” ORG said. “This would mean the state-owned enterprises, (BPL, NAD, Bahamasair), which reflects best practices in ensuring citizens capacity to seek redress across authorities that are not directly managed by government, but are supported with taxpayer funds.

“Greater accountability could be achieved through the further application of the Act to include private entities outsourced by the Government. This may be particularly relevant in current practice as the Government has the power to engage private entities in functions to secure revenue from citizens such as the recovery of property and other taxes. Expand the application of the Act to include private entities outsourced by the Government for the provision of essential services.”

Tanked Biden pick highlights escalation of dark-money forces

By TRENTON DANIEL Associated Press

When President Joe Biden nominated Gigi Sohn to serve on the Federal Communications Commission, the longtime consumer advocate expected to face criticism over her desire to expand free internet access and improve competition among broadband providers.

Instead, Sohn found herself the target of an aggressive campaign funded by a conservative group that doesn’t have to disclose its donors. The American Accountability Foundation called Sohn too partisan, anti-police and soft on sex trafficking. The attacks landed — to the point that even some Democrats abandoned her. Sohn withdrew her nomination, ditching her fight for a five-year term as an FCC commissioner.

“Look, I’m not naive. I’ve been a consumer advocate my whole career. I knew I was going to get some opposition,” Sohn told The Associated Press. “Now, did I expect what was to come — the dark money, the lies, the caricatures? No.”

The battle over the nomination is the latest example of how organizations with political and financial agendas have been able to sway public opinion by deploying donations that are impossible to trace. It is also emblematic of how nominees’ missteps — even on matters wholly unrelated to their prospective jobs — can become fodder for attacks.

In Sohn’s case, the stakes were high. Her confirmation would’ve ended a 2-2 split on the commission, enabling Biden’s administration to pursue its agenda of making communication networks more equitable. Sohn has been a vocal advocate of such regulations, which have been aggressively opposed by the telecom industry.

Sohn was not likely to coast to confirmation. Moderate Democrats were going to have trouble justifying their support for a nominee who had assisted controversial liberal groups, seemed to endorse tweets critical of police and accused Fox News of being “state-sponsored propaganda.”

When Sen. Joe Manchin of West Virginia announced his opposition to the nomination in March, the moderate Democrat cited Sohn’s “partisan activism, inflammatory statements

online, and work with farleft groups.” Even so, outside groups left nothing to chance. Just two of those organizations spent at least $420,000 on ads seeking to torpedo Sohn’s confirmation, a sum that is likely a fraction of the total spent.

Central to the advertising offensive was the American Accountability Foundation, which produced an advertising blitz assailing the nominee on Facebook, as well as in newspapers and on billboards.

Another group, cofounded by a former Democratic senator, said it spent “six figures” on ads arguing that Sohn was “the wrong choice for the FCC and rural America.” The National Fraternal Order of Police also joined the fray, chastising Sohn over endorsing social media posts that were critical of law enforcement.

Opposing nominations is hardly new in American politics. But a 2010 ruling by the Supreme Court freed corporations and unions to spend unlimited amounts on political campaigns and nomination fights. The Citizens United ruling also opened the door to an influx of untraceable donations, known as “dark money,” to special interest groups seeking to influence policy, elections and nominations.

Norman Ornstein, a senior fellow emeritus at the American Enterprise Institute, said such darkmoney groups are growing so powerful that they can “hamstring or stymie an entire administration” by discouraging qualified people from accepting nominations.

Sohn’s nomination was meant to be historic. If confirmed, Sohn would

have been the FCC’s first openly LGBTQ+ commissioner. When the White House announced her nomination in October 2021, it hailed her trailblazing biography and called her a consumer advocate who would “defend and preserve the fundamental competition and innovation policies that have made broadband Internet access more ubiquitous.”

When Congress failed to confirm Sohn during its last term, Biden didn’t give up. In January, he renominated her to the post.

Sohn was a favorite of progressives and had served as a top adviser for Tom Wheeler, the Obama-era FCC chair who enacted net neutrality rules that were jettisoned during the Trump administration. Such regulations would have required AT&T, Comcast, Verizon and other internet providers to treat all web traffic equally. The telecommunications industry has battled such rules, arguing they are illegal and overly burdensome.

Some business groups pounced at the possibility of Sohn joining the FCC. The U.S. Chamber of Commerce, the world’s largest business federation, said this year that it opposed Sohn’s confirmation “due to her longtime advocacy of overly aggressive and combative regulation of the communications sector.”

Telecommunications companies and their trade organizations took a less combative approach, at least in public. Some even congratulated her on her nomination.

It is not known whether those companies donated dark money to groups that attacked Sohn. A spokeswoman for USTelecom, a

national trade association on broadband, said the group and its “members did not take a position on Ms. Sohn’s nomination.” Behind the scenes, however, the industry’s lobbyists worked hard to kill the nomination, according to Sohn and her allies.

Telecom companies are among the nation’s biggest spenders on lobbyists, with the industry shelling out $117 million last year to influence lawmakers and administration officials, according to OpenSecrets.

In her withdrawal letter, Sohn blamed her failed nomination on “legions of cable and media industry lobbyists, their bought-andpaid-for surrogates, and

GIGI Sohn testifies before the Senate Commerce, Science and Transportation Committee, Feb. 9, 2022, during her nomination hearing to serve on the Federal Communications Commission in Washington. Sohn withdrew her nomination, ditching her fight for a five-year term as an FCC commissioner.

dark money political groups with bottomless pockets.”

“It was a perfect storm of, you know, industry interests,” Sohn told the AP in an interview last month at Georgetown Law School, where she is a fellow at its Institute for Technology Law & Policy.

At least three Democratic lawmakers agreed with Sohn’s assessment, describing her nomination as a proxy fight over the future of free broadband.

“If affordable broadband gets deployed anywhere, then somehow more affordable broadband might get deployed everywhere,” Sen. Maria Cantwell, D-Wash., the chair of the Senate Commerce Committee, said at Sohn’s February confirmation hearing. “So I think there’s probably billions of dollars at stake here, and that is why the vitriol is coming at you.”

Sohn took particular umbrage with the campaign waged by the American Accountability Foundation. The nonprofit boasted it spent “hundreds of thousands of dollars” on advertising to “educate the American people how wrong she was for the position.”

The AAF dished out more than $320,000 on

Facebook advertising, according a review of advertising data by the AP. Such ads blasted Sohn over her connections to two liberal groups and suggested she opposed stiffening sex-trafficking laws. An ad alleged she was a “complete political ideologue.”

The organization targeted most of its advertising in states where moderate Democratic senators are up for reelection next year, including Nevada, Arizona and Montana. In the closely divided Senate, nominees have little margin for error. They can lose only one Democratic vote if all Republican senators oppose them. It is unknown how much AAF spent on traditional advertising, which included ads in newspapers and on billboards. One of those billboards was on the Las Vegas Strip, looming above an illuminated sign of two showgirls replete with feathered headdresses.

The billboard called Sohn “too extreme” for the FCC and provided information for people to contact AAF. The likely target of that ad was not tourists but Sen. Jacky Rosen, a moderate Democrat seeking reelection next year.

Photo:Susan Walsh/AP

CEILING STANDOFF, COVID ERA OF BIG

SPENDING GIVES WAY TO NEW FOCUS ON DEFICIT

By LISA MASCARO

AP Congressional Correspondent

ONE outcome is clear as Washington reaches for a budget deal in the debt ceiling standoff: The ambitious COVID-19 era of government spending to cope with the pandemic and rebuild is giving way to a new focus on tailored investments and stemming deficits.

President Joe Biden has said recouping unspent coronavirus money is “on the table” in budget talks with Congress. While the White House has threatened to veto Republican House Speaker Kevin McCarthy’s debt ceiling bill with its “devastating cuts” to federal programs, the administration has signaled a willingness to consider other budget caps.

The end result is a turnaround from just a few years ago, when Congress passed and then-president Donald Trump signed the historic $2.2 trillion CARES Act at the start of the public health crisis in 2020. It’s a dramatic realignment even as Biden’s bipartisan infrastructure law and Inflation Reduction Act are now investing billions of dollars into paving streets, shoring up the federal safety net and restructuring the U.S. economy.

“The appetite to throw a lot more money at major problems right now is

significantly diminished, given what we’ve seen over the past several years,” said Shai Akabas, director of economic policy at the Bipartisan Policy Center, a nonpartisan organization in Washington.

The Treasury Department has warned it will begin running out of money to pay the nation’s bills as soon as June 1, though an estimate Friday by the nonpartisan Congressional Budget office put the deadline at the first two weeks of June, potentially buying the negotiators time.

“We’ve not reached the crunch point yet,” Biden told reporters Saturday before flying to Delaware for the weekend. “There’s real discussion about some changes we all could make. We’re not there yet.”

Staff-level negotiators resumed talks Saturday. The contours of an agreement between the White House and Congress are within reach even if the political will to end the standoff is uncertain. Negotiators are considering clawing back some $30 billion in unused COVID-19 funds, imposing spending caps over the next several years and approving permitting reforms to ease construction of energy projects and other developments, according to those familiar with the closeddoor staff discussions. They were not authorized to

discuss the private deliberations and spoke on condition of anonymity.

The White House has been hesitant to engage in talks, insisting it is only willing to negotiate over the annual budget, not the debt ceiling, and Biden’s team is skeptical that McCarthy can cut any deal with his farright House majority.

“There’s no deal to be had on the debt ceiling. There’s no negotiation to be had on the debt ceiling,” said White House press secretary Karine Jean-Pierre.

McCarthy’s allies say the White House has fundamentally underestimated what the new Republican leader has been able to accomplish — first in the grueling fight to become House speaker and now in having passed the House bill with $4.5 trillion in savings as an opening offer in negotiations. Both have emboldened McCarthy to push hard for a deal.

“The White House has been wrong every single time with understanding where we are with the House,” said Russ Vought, president of Center for American Renewal and Trump’s former director of the Office of Management and Budget. “They’re dealing with a new animal.”

The nation’s debt load has ballooned in recent years to $31 trillion. That’s virtually double what it was during the last major debt ceiling

showdown a decade ago, when Biden, as vice president to President Barack Obama, faced the new class of tea party Republicans demanding spending cuts in exchange for raising the debt limit.

While the politics of the debt limit have intensified, the nation’s debt is nothing new. The U.S. balance sheets have been operating in the red for much of its history, dating to before the Civil War. That’s because government expenditures are routinely more than tax revenues, helping to subsidize the comforts Americans depend on — national security, public works, a federal safety net and basic operations to keep a civil society running.

In the U.S., individuals pay the bulk of the taxes, while corporations pay less than 10%.

Much of the COVID-19 spending approved at the start of the pandemic has run its course and government spending is back to its typical levels, experts said. That includes the free vaccines, small business payroll funds, emergency payments to individuals, monthly child tax credits and supplemental food aid that protected Americans and the economy.

“Most of the big things we did are done — and they did an enormous amount of good,” said Sharon Parrott, president of the Center for

Budget and Policy Priorities in Washington.

“We actually showed that we know how to drive down poverty and drive up health insurance amid what would have been rising hardship,” she said.

Last year, Biden’s Inflation Reduction Act, which was signed into law over Republican opposition, was largely paid for with savings and new revenues elsewhere.

The popularity of some spending, particularly the child tax credits in the COVID-19 relief and the Inflation Reduction Act’s efforts to tackle climate change, shows the political hunger in the country for the kinds of investments that some Americans believe will help push the U.S. fully into a 21st century economy.

A case in point: A core group of Midwestern Republican lawmakers prevented a rollback of the Inflation Reduction Act’s biofuel tax credits their colleagues wanted to scrap, persuading McCarthy to leave that out of the House bill. The federal money is propping up new investments in corn-heavy agriculture states.

As McCarthy’s House Republicans now demand budget reductions in exchange for raising the debt limit, they have a harder time saying what government programs and

services, in fact, they plan to cut.

House Republicans pushed back strenuously against Biden’s claims their bill would slash veterans and other services.

McCarthy, in his meeting with the president, went so far as to tell Biden that’s “a lie.”

The Republicans promise they will exempt the Defense Department and veterans’ health care once they draft the actual spending bills to match up with the House debt ceiling proposal, but there are no written guarantees those programs would not face cuts.

In fact, Democrats say if Republicans spare defense and veterans from reductions, the cuts on the other departments would be as high as 22%.

Budget watchers often reiterate that the debt problem is not necessarily the amount of the debt load, approaching 100% of the nation’s gross domestic product, but whether the federal government can continue making the payments on the debt, especially as interest rates rise.

From the White House on Friday, Mitch Landrieu, the infrastructure implementation coordinator, talked up the $1.2 trillion bipartisan infrastructure bill Biden signed into law 18 months ago. He said it is creating jobs, spurring private investment and showing what can happen when the sides comes together.

“We say once in a generation because it hasn’t happened in our lifetimes, and quite frankly it may not happen again in the near future,” he said.

HOUSE Speaker Nancy Pelosi of Calif., accompanied by House Minority Leader Kevin McCarthy of Calif., left, House Majority Leader Steny Hoyer of Md., right, and other bipartisan legislators, signs the Coronavirus Aid, Relief, and Economic Security (CARES) Act after it passed in the House on Capitol Hill, March 27, 2020, in Washington.

Photo:Andrew Harnik/AP

BOLIVIAN EV STARTUP HOPES TINY CAR WILL MAKE IT BIG IN LITHIUM-RICH COUNTRY

By CARLOS VALDEZ Associated Press

ON A recent, cold morning, Dr. Carlos Ortuño hopped into a tiny electric car to go check on a patient in the outskirts of Bolivia’s capital of La Paz, unsure if the vehicle would be able to handle the steep, winding streets of the high-altitude city.

“I thought that because of the city’s topography it was going to struggle, but it’s a great climber,” said Ortuño about his experience driving a Quantum, the first EV to have ever been made in Bolivia. “The difference from a gasoline-powered vehicle is huge.”

Ortuño’s home visit aboard a car the size of a golf cart was part of a government-sponsored program that brings doctors to patients living in neighborhoods far from the city center. The “Doctor in your house” program was launched last month by the municipality of La Paz using a fleet of six EV’s manufactured by Quantum Motors, the country’s sole producer of electric cars.

“It is a pioneering idea. It helps protect the health of those in need, while protecting the environment and supporting local production,” La Paz Mayor Iván Arias said.

The program could also help boost Quantum Motors, a company launched four years ago by a group of entrepreneurs who believe EVs will transform the auto industry in Bolivia, a lithium-rich country, where cheap, subsidized

imported gasoline is still the norm. Built like a box, the Quantum moves at no more than 35 mph (56 kph), can be recharged from a household outlet and can travel 50 miles (80 kilometers) before a recharge. Its creators hope the $7,600 car will help revive dreams of a lithium-powered economy and make electric cars something the masses will embrace.

“E-mobility will prevail worldwide in the next few years, but it will be different in different countries,” says José Carlos Márquez, general manager of Quantum Motors. “Tesla will be a dominant player in the U.S., with its speedy, autonomous cars. But in Latin America, cars will be more compact, because our streets are more similar to those of Bombay and New Delhi than to those of California.”

But the company’s quest to boost e-mobility in the South American country has been challenging. In the four years since it released its first EVs, Quantum Motors has sold barely 350 cars in Bolivia and an undisclosed number of units in Peru and Paraguay. The company is also set to open a factory in Mexico later this year, although no further details have been provided on the scope of production there.

Still, Quantum Motors’ bet on battery-powered cars makes sense when it comes to Bolivia’s resources. With an estimated 21 million tons, Bolivia has the world’s largest reserve of lithium, a key component in electric batteries, but it has yet to

extract — and industrialize — its vast resources of the metal.

In the meantime, the large majority of vehicles in circulation are still powered by fossil fuels and the government continues to pour millions of dollars subsidizing imported fuel than then sells at half the price to the domestic market.

“The Quantum (car) might be cheap, but I don’t think it has the capacity of a gasoline-powered car,” says Marco Antonio Rodriguez, a car mechanic in La Paz, although he acknowledges people might change their mind once the government puts an end to gasoline subsidies.

Despite the challenges ahead, the makers of the Quantum car are hopeful that programs like “Médico en tu casa,” which is scheduled to double in size and extend to other neighborhoods next year, will help boost production and churn out more EV’s across the region.

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EMPLOYEES work on a Quantum electric car assembly line at a factory in Cochabamba, Bolivia, Tuesday, May 9, 2023. The Quantum, which can be recharged from a household outlet, can travel 50 miles (80 km) before a recharge and has a range of about 35 mph. At $7,600, it is the cheapest car on the market.

Photo:Juan Karita/AP

THIS photo shows tanks (in gray, beige and blue) storeing water that was treated but is still radioactive after it was used to cool down spent fuel at the Fukushima Daiichi nuclear power plant in Okuma town, Fukushima prefecture, northeastern Japan, on Feb. 27, 2021. Officials from Japan and South Korea are discussing a visit for South Korean experts at the Fukushima nuclear plant later this month to see preparation for a controversial plan to release to sea treated but radioactive water, one of their major sticking points between the two sides that are quickly thawing their long-strained ties.

JAPAN, SOUTH KOREA AGREE ON VISIT TO FUKUSHIMA NUCLEAR PLANT AHEAD OF PLANNED WATER RELEASE

By MARI YAMAGUCHI Associated Press

JAPANESE and South Korean officials held hourslong talks into early Saturday and agreed on a visit later this month by South Korean experts to the Fukushima nuclear plant before it begins the controversial release of treated but radioactive water into the sea. The safety of the water is a major sticking point as the two sides work to improve long-strained ties.

Discussions were held Friday in Seoul and online, in which the Japanese government also provided an update on the status of the tsunami-wrecked Fukushima Daiichi nuclear plant. Officials are preparing to release the water, saying it's an unavoidable step for the decommissioning process.

Japan's Foreign Ministry, after a nearly 12-hour meeting that ran past midnight, issued a statement early Saturday saying the two sides agreed to have a four-day visit by a South Korean delegation to Japan that includes a Fukushima nuclear plant tour, and that "further details, including its program" need to be finalized.

The government and the plant's operator, Tokyo Electric Power Company Holdings, say the water release will begin between spring and summer and take decades to finish.

A massive earthquake and tsunami in 2011 destroyed the Fukushima Daiichi plant's cooling systems, causing three reactors to melt and release large amounts of radiation. Water used to cool the three damaged reactor cores, which remain highly radioactive, leaks into the basements of the reactor buildings and is collected, treated and stored in about 1,000 tanks that now cover much of the plant.

The government and TEPCO say the tanks must be removed to make room to build facilities for the plant's decommissioning and to minimize the risk of leaks in case of another major disaster. The tanks are expected to reach their capacity of 1.37 million tons in early 2024.

Japanese Prime Minister Fumio Kishida, during his May 7-8 visit to Seoul for a summit with South Korean President Yoon Suk Yeol, announced that Japan would receive a team of experts at the plant later in May to address South Korea's concerns in a show of his desire to further improve relations.

South Korea's Foreign Ministry said Saturday the two sides held "in-depth discussions" on what the South Korean experts would see and do at the plant and that further consultations

were planned to finalize the details.

Seoul wants to send some 20 government experts to visit the Fukushima Daiichi plant on May 23-24, although the group's actual size will be determined after further talks with Japan, Park Ku-yeon, first vice minister of South Korea's Office for Government Policy Coordination, said Friday.

Park said the plant visit is aimed at "reviewing the safety of the entire ocean discharge process," including Japan's water treatment facility and its operation and technologies to measure contamination levels in treated water.

Asked whether Seoul would consider lifting its import ban on seafood from Fukushima if it determines Japan's water release plan is safe, Park replied "absolutely not," citing South Korean public concerns and a need for deeper investigations into the environmental impact of the 2011 disaster.

Japanese officials said the Korean delegation's plant visit is not an inspection and does not involve a safety assessment, review or evaluation of the water discharge plan, because it's already under review by the International Atomic Energy Agency. Japan has been assisted by the IAEA for credibility and transparency.

Chief Cabinet Secretary Hirokazu Matsuno said Thursday the visit would not affect the timing of a planned release of the water and that Japan continues to provide explanations about safety measures to aid understanding.

Japanese officials say the water will be safely filtered to below releasable levels by international standards and further diluted by large amounts of seawater before release, making it harmless to human health or marine life.

The plan has faced fierce protests from local fishing communities concerned about safety and reputational damage. Neighboring countries, including South Korea, China and the Pacific Island nations, have also raised safety concerns. South Korea and China ban food imports from around Fukushima and describe the water as "contaminated" instead of "treated" despite the Japanese government's repeated protests.

Some scientists say the impact of long-term, lowdose exposure to tritium and other radionuclides on the environment and humans is still unknown and the release should be delayed.

Historical disputes have strained ties between Tokyo and Seoul — most recently over the compensation of wartime Korean forced laborers during Japan's 1910-1945 colonization of the Korean Peninsula.

Photo:Hiro Komae/AP

HOUSING ADVOCATES WARN GOP SPENDING PLAN WOULD BE ‘DISASTROUS’

By R.J. RICO

Associated Press

HOUSING advocates are raising the alarm about House Republicans’ plan to dramatically cut the federal deficit to raise the debt ceiling, warning rental aid would be stripped from hundreds of thousands of struggling families who could face eviction and possible homelessness at a time when rents remain high.

House Republicans narrowly passed a sweeping measure last month that would roll back non-defense spending to 2022 levels — a proposal the National Low Income Housing Coalition said would slash housing and homelessness programs by 23%, a significant blow to the Housing Choice Voucher rental assistance program that around 2.3 million families rely on to cover rent.

“House Republicans’ plan would have drastic negative impacts on communities’ abilities to address homelessness and the housing crisis,” Diane Yentel, the coalition’s CEO and president, told The Associated Press. “If these

proposals were enacted, it would mean communities would have to take away housing assistance from people who already have it, and need it.”

Though House Speaker Kevin McCarthy’s legislation has virtually no chance of becoming law, Republicans hope it will force President Joe Biden to the negotiating table, where the GOP could seek concessions in return for lifting the debt ceiling and ensuring the U.S. Treasury can pay its bills.

Yentel said she worries that Democrats will agree to painful cuts to housing funds in order to reach a compromise.

In 2011, during a similar standoff over the debt ceiling, then-President Barack Obama and then-Speaker John Boehner agreed to automatic annual spending cuts — a deal Yentel said hamstrung the Department of Housing and Urban Development for years.

“The Budget Control Act led to very tight spending caps over 10 years for HUD programs as well as many others,” Yentel said. “Even though we haven’t been

under those tight spending caps over the past couple of years ... we still haven’t made up for all of the cuts since 2011.”

Due to high inflation and rising rents, voucher program funding needs to rise each year just to maintain the status quo, she said.

It’s been over a year since rent increases hit a fever pitch, with median listings rising 16.4% from January 2021 to January 2022, according to realtor. com. Rents rose 0.6% from March to April, according to federal data. Though still high, that’s one of the smallest increases in the past year.

“At a time where rents are so high, pandemic-era eviction resources have been all but depleted and homelessness is increasing in many communities — now, more than ever, we can’t afford any cuts to these programs,” Yentel said. “We need to be increasing funding for them.”

Joel Griffith, a research fellow at the conservative Heritage Foundation, said HUD funding has gotten out of control and that housing aid needs to be

a “temporary assistance program targeted towards those who are truly in need.”

Rep. Chip Roy, R-Texas, a member of the conservative Freedom Caucus, agreed. “How much debt is too much?” Roy said of the national debt. “We have an obligation to actually limit spending, so we should get serious about doing it.”

But in a statement to the AP, Democratic Rep. Emanuel Cleaver of Missouri called the House bill “egregiously offensive,” saying it “turns a blind eye to public housing and would further diminish our nation’s already short supply of affordable housing.”

In December, during a congressional hearing on affordable housing shortly before Republicans took control of the House, GOP Rep. Patrick McHenry told committee members he would work to “prioritize housing” and “actually achieve some bipartisan results.”

But over four months later, housing has received almost no attention in McHenry’s House Financial Services Committee, with

not a single hearing addressing the pressing issue.

It’s much the same at the Financial Services Subcommittee on Housing and Insurance, helmed by Rep. Warren Davidson, R-Ohio.

Of 74 bills introduced by GOP members, just one was related to housing, though a subcommittee hearing was scheduled for Wednesday on mortgages and housing affordability.

Laura Peavey, a spokesperson for McHenry, did not address whether the GOP spending plan would lead

to significant housing cuts. But she said it’s “important to note that after two years of unified Democrat control and trillions in new congressional spending, housing is now less affordable.” A spokesperson for Davidson did not respond to multiple requests for comment. Cleaver, the ranking Democrat on Davidson’s subcommittee, said he has tried drawing attention to housing but the recent collapse of Silicon Valley Bank has taken up most of the lawmakers’ time.

TENANTS and members of the Upstate Downstate Housing Alliance from across the state, demand New York Gov. Andrew Cuomo and state legislators pass universal rent control legislation that would strengthen and expand tenants rights across the state of New York before rent laws expire on June 15th during a protest rally at the state Capitol Tuesday, June 4, 2019, in Albany, N.Y. Housing advocates are raising the alarm about House Republicans’ plan to dramatically cut the federal deficit to raise the debt ceiling, warning that struggling families could lose access to rental aid.

Photo:Hans Pennink/AP

TENNESSEE COMPANY REFUSES US REQUEST TO RECALL 67 MILLION POTENTIALLY DANGEROUS AIR BAG INFLATORS

By TOM KRISHER AP Auto Writer

A TENNESSEE company could be heading for a legal battle with U.S. auto safety regulators after refusing a request that millions of potentially dangerous air bag inflators be recalled.

The National Highway Traffic Safety Administration is demanding that ARC Automotive Inc. of Knoxville recall 67 million inflators in the U.S. because they could explode and hurl shrapnel. At least two people have been killed in the U.S. and Canada, and seven others have been hurt as a result of defective ARC inflators, the agency said.

The recall would cover a large portion of the 284 million vehicles now on U.S. roads, but the percentage is difficult to determine.

Some have ARC inflators for both the driver and front passenger.

In a letter posted Friday, the agency told ARC that it has tentatively concluded after an eight-year investigation that ARC front driver and passenger inflators have a safety defect.

“Air bag inflators that project metal fragments into vehicle occupants, rather than properly inflating the attached air bag, create an unreasonable risk of death and injury,” Stephen Ridella, director of NHTSA’s Office of Defects Investigation, wrote in a letter to ARC.

But ARC responded that it no defect exists in the inflators, and that any problems are related to isolated manufacturing issues.

The next step in the process is for NHTSA to schedule a public hearing. It could then take the company to court to force a recall.

“We disagree with NHTSA’s new sweeping request when extensive field testing has found no inherent

defect,” ARC said in a statement Friday night.

Also Friday, NHTSA posted documents showing that General Motors is recalling nearly 1 million vehicles equipped with ARC inflators. The recall covers certain 2014-2017 Buick Enclave, Chevrolet Traverse, and GMC Acadia SUVs.

The automaker says an inflator explosion “may result in sharp metal fragments striking the driver or other occupants, resulting in serious injury or death.”

Owners will be notified by letter starting June 25, but no fix is available yet. They’ll get another letter when one is ready.

GM says it will offer “courtesy transportation” on a case-by-case basis to owners who fear driving vehicles that are part of the recall.

The company said that it’s doing the recall, which expands previous actions, “out of an abundance of caution and with the safety of our customers as our highest priority.”

One of the two deaths was a mother of 10 who was killed in what appeared to be an otherwise minor crash in Michigan’s Upper Peninsula in the summer of 2021. Police reports show that a metal inflator fragment hit her neck in a crash involving a 2015 Chevrolet Traverse SUV.

At least a dozen automakers have the allegedly faulty inflators in use, including Volkswagen, Ford, BMW and GM, NHTSA said.

The agency contends that welding debris from the manufacturing process can block an “exit orifice” for gas that is released to fill the air bag in a crash. Any blockage can cause pressure to build in the inflator, blowing it apart and hurling metal fragments, Ridella’s letter says.

But in a response to Ridella dated May 11, ARC Vice President of Product Integrity Steve Gold wrote that NHTSA’s

position is not based on any objective technical or engineering conclusion about a defect, “but rather conclusory statements regarding hypothesized blockage of the inflator orifice from ‘weld slag.’”

He wrote that welding debris has not been confirmed as the cause in any of the seven inflator ruptures in the U.S. ARC contends that only five have ruptured

while in use, and that “does not support a finding that a systemic and prevalent defect exists in this population.” Gold also writes that manufacturers must do recalls, not equipment manufacturers like ARC. NHTSA’s recall demand, he wrote, exceeds the agency’s legal authority.

In a federal lawsuit filed last year, plaintiffs alleged

that ARC’s inflators use ammonium nitrate as a secondary propellant to inflate the air bags. The propellant is pressed into tablets that can expand and develop microscopic holes if exposed to moisture. Degraded tablets have a larger surface area, causing them to burn too fast and ignite too big of an explosion, according to the lawsuit.