minister yesterday called for the law dealing with VAT disputes to be “rebalanced” as he branded the ease of doing business in The Bahamas “a joke”.
Dionisio D’Aguilar, Superwash’s principal, told Tribune Business that mandating businesses come up with 100 percent of the disputed tax sum before they can challenge the Department of Inland Revenue’s (DIR) assessment is “too onerous” on the private sector and “crafted to give all the advantages to the tax collection authority”.
Speaking after it was revealed that Sandals is challenging the tax authority’s demand for it to pay the disputed $30.844m upfront in cash, rather than via bank guarantee or other security, he argued
• Ex-minister: Bahamas business ease ‘a joke’
• ‘All advantages’ to DIR from paying upfront
• Firms ‘almost guilty’ before proven innocent
that the appeals process “has to be fair and has to be seen to be fair” to both the Government and businesses.
Rather than paying the disputed sum in full, Mr D’Aguilar told this newspaper a more “balanced” method would be for companies to pay a percentage of the disputed VAT and Business Licence fees. This, he argued, would ensure those contesting the Department of Inland of Revenue’s demands have a stake in the outcome
BPL admits its Briland power woe ‘untenable’
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
HARBOUR Island’s latest electricity woes are “cruel” to residents and “insulting” to wealthy investors who have sunk millions of dollars into acquiring high-end homes in a destination with inadequate infrastructure.
James Malcolm, a former Ministry of Tourism executive who is a realtor, and now runs a vacation rental/property management business on Briland, told Tribune Business it was “ludicrous” that one “of the most coveted tourism destinations” in The Bahamas faces at least a four-hour load shedding rotation until this coming weekend.
Speaking out after Bahamas Power & Light (BPL) itself admitted that Briland likely faces “an untenable situation” for the whole week, he confirmed that diesel supplies on the island were exhausted by Friday to raise the prospect that many homes and businesses might run out of fuel for their generators before an anticipated fresh shipment arrived yesterday.
Mr Malcolm, estimating that Harbour Island real estate activity has generated around $40m in combined VAT and real property tax revenues post-COVID for the Public Treasury, told this newspaper that home purchasers are getting little to no return on this investment as few if any of these tax
without crippling their operations and cash flow through having to come up with huge sums. And, while not impeding the authorities’ ability to pursue and collect from genuine tax delinquents, he suggested that the law be further revised to mandate that the losing party - whether taxpayer or DIR - pay the other side’s legal and other appeal costs. This, the former minster of tourism and Immigration argued, would deter
Opposition to Gov’t: ‘Which Sandals is
it?’
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
THE Opposition’s chairman yesterday argued that the Government is sending mixed messages over whether it views the Sandals resort chain as a “tax dodger” or “national hero”.
both sides from bringing “weak” and frivolous appeal cases.
However, Mr D’Aguilar said the VAT Act as presently written is almost tantamount to making corporate taxpayers “guilty before they have a chance to prove themselves innocent” by mandating that the full sum in dispute be paid before a challenge to
Dr Duane Sands told Tribune Business that the contrasting signals sent out by the Ministry of Finance and Department of Inland Revenue on one side, and the Ministry of Tourism, Investments and Aviation on the other, “make no sense” as he asserted: “I suspect there is far more to the Sandals / Beaches story than the immediate spin being put on it.”
Speaking out after a week in which it was revealed that the tax authorities are pursuing Sandals Emerald Bay for a combined $30.844m in unpaid VAT and Business Licence fees, only for the resort chain to reveal two days
Opposition finance chief blasts ‘indefensible’ bank fee increase
By FAY SIMMONS Tribune Business Reporter jsimmons@tribunemedia.net
THE Opposition’s finance spokesman yesterday demanded that Bahamians be given greater protection against “inexplicable and indefensible” bank fee hikes as CIBC became the latest to unveil increases. The BISX-listed bank has revealed that personal, business and corporate banking clients will all experience fee increases as of September 1. The greatest
increases are in the monthly service fees, which will rise by 40 percent for personal banking clients, and 25 percent and 20 percent for business and corporate clients, respectively.
This prompted Kwasi Thompson, the east Grand Bahama MP, in a column published on Page 2B today, to call for “real financial consumer protection in The Bahamas”. He accused the commercial banks of continuing to “pile on” fee increases at the same time as they are cutting back services to
SEE PAGE B7
Opposition seizes on PLP chair’s admission of ‘cash flow crunch’
• Sands: Gov’t ‘taxing private sector into oblivion’
• Fred Mitchell admits to ‘tight economic squeeze’
• Gov’t has to target ‘big players avoiding taxes’
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
THE Opposition yesterday seized on remarks by the Progressive Liberal Party’s (PLP) chairman as confirmation the Government is facing “a cash flow crunch” and “taxing the private sector into oblivion”.
Dr Duane Sands, the Free National Movement’s (FNM) chairman, told Tribune Business that the message issued by his counterpart, Fred Mitchell, on Friday to supporters of
the governing party both explained the Davis administration’s “aggressive behaviour” towards the private sector and affirmed the “poorly-kept secret” regarding the Government’s liquidity woes.
Mr Mitchell, in a message seen by this newspaper, described The Bahamas as being “in a tight economic squeeze” with the Government seeking to avoid tapping the international credit markets for foreign currency financing because
SEE PAGE B4
DIONISIO D’AGUILAR
DR DUANE SANDS FRED MITCHELL
BAHAMIANS NEED ‘REAL FINANCIAL PROTECTION’
By J. KWASI THOMPSON
THE Davis administration must step up and provide real financial consumer protection in The Bahamas. We continue to witness banks in this country piling on more and more fees and charges on Bahamian consumers while providing less and less customer service.
The Government must provide greater regulatory protection for Bahamians against increasingly inexplicable and indefensible cost increases. We are advised that a major domestic bank will be increasing their rates as of September. However, in December last year, it saw a strong financial performance for its 2023 fiscal year with net income of over $100m, up 74 percent from the previous year. A reasonable question to ask is why raise fees now?
For many years there have been calls for better
customer protection from ever-increasing banking fees. Almost two-thirds of Bahamian businesses say the fees charged by commercial banks need “major improvements” according to a recent survey by the Central Bank of The Bahamas. Bahamians have complained about unreasonable fees for cashing cheques at banks other than the one the funds are drawn on, plus large and non-transparent Automatic Teller Machine (ATM) usage charges. In some cases, fees have increased by more than 40 percent without explanation or justification. Reports by the Central Bank reveal that banking fees continue to rise every year. Banks have been removing their ‘brick and mortar’ presence from the Family Islands, which has caused great distress to islands such as Andros and Long Island. The Government must act without delay. There must be improved and enhanced regulations covering indiscriminate and indefensible charges by
the banks. The Central Bank must be mandated by law to require banks to justify fees and charges charged to customers. We in the Opposition maintain that The Bahamas would benefit from strategies to advance financial consumer protection regulation; enforceable provider and industry standards, such as codes of conduct with the force of law; and an independent organisation that has the power to enforce regulations, standards and initiatives to improve consumer awareness and financial capability.
These changes should focus on
1. Transparency - Customers know what they are getting and what they are paying for.
2. Fair Treatment - Customers are treated fairly and are not sold inappropriate/harmful financial services. Fees should be justified and only increased after consultation and justification.
3. Effective RecourseCustomer complaints are resolved fairly. Customer
complaints can be dealt with through an independent body.
4. Equal Access - Customers have equal access to services regardless of which island they live on.
The Bahamas recently passed two pieces of legislation that, unfortunately, did not go far enough.
The Consumer Protection Agency should be expanded to incorporate a Financial Consumer Protection Agency. This would include providing a Bill of Rights for customers of a bank and an Enforceable Code of Conduct for Banks. For example, in Canada, the Financial Consumer Agency protects the rights of every bank customer. These include rights concerning opening a bank account, cashing a cheque, receiving information and getting your issues resolved. In Jamaica, there existsunder The Banking Services Act - The Banking Services (Deposit-taking institutions) (customer related matters) Code of Conduct that has enforcement clauses.
The Bahamas should have an agency or authority such as the Financial Ombudsman in the UK, whose office is independent and has the clear power and authority to negotiate and impose pre-emptive and corrective measures over banking institution noncompliance and instances of misconduct. The Financial Ombudsman has similar powers to the ombudsman, but focuses on banking and insurance matters.
The Bahamas would benefit from an authority that has a range of enforcement tools to allow it to investigate, have the powers of cease-and-desist orders, and reprimands such as a confidential caution or reprimand letters, and fines in banking and insurance disputes.
Financial institutions should be held to account, and follow enforceable rules and standards on providing statements and reference letters free of charge; special provisions for senior citizens and the disabled; and what statements should include
- services, fees, interest rates and penalties. There should also be rules of notification on the interest rate to be paid or charged on any account; any non-interest charge on any account of the consumer (transaction fees, overdraft fee). Banks would have to notify their consumers when the latter’s accounts have become inactive or dormant, and the related consequences, including applicable charges. The nature and extent of the change, particularly its potential impact on the consumer, should dictate the required format and the length of time for advance notice, and whether personalised, individual notification to the customer is required. Banks should be obligated to treat their customers fairly. Banks should be prohibited from, and held legally accountable for, employing any practice that could be considered unfair.
Bahamas minister urges strong regulation for deep sea mining
A BAHAMIAN Cabinet minister has urged global authorities to create a strong regulatory regime that will minimise any adverse effects from deep sea mining.
Vaughn Miller, minister of the environment and natural resources, called on the International Seabed Authority (ISA) to develop stringent monitoring mechanisms and a comprehensive environmental impact assessment framework for such activities.
Speaking at ISA’s 30th anniversary, and during its 29th session in Kingston, Jamaica, Mr Miller said conditions have been set for “critical discussions that will shape the future of our shared ocean resources”. The ISA is the United Nations (UN) governing body for all oceans areas that lie outside national territorial boundaries.
Mr Miller called on countries attending the ISA 29th session to “carefully consider legitimate concerns” about deep seabed mining, while recognising its potential benefits. “The regulatory framework we establish must include the necessary environmental safeguards, based on the science, to mitigate adverse impacts on marine biodiversity and ecosystem services,” he said.
Dr Rihanna MurphyNeely, the Department of Environmental Protection and Planning (DEPP) director, is also attending the 29th ISA session, and said “coastal nations have a responsibility for the areas under their national jurisdiction. However, the seabed is the patrimony of all humanity”.
“We must be careful and intentional about what we as global citizens allow to happen in these spaces; much of the ocean is still unexplored and not well understood,” Dr NeelyMurphy added.
“Deep-sea research is exposing new realities and changing the way we view basic life processes. With this understanding, we must proceed with caution in the manners that we go about disrupting the balance that exists in the depths of the ocean. We have very little understanding of how what goes on thousands of feet below the surface impacts our lives on land and the
marine life that we depend on.”
The Bahamas has enacted stringent environmental regulations and sustainable practices supported by sound scientific research, Mr Miller said during his address to the ISA.
“In The Bahamas we are acutely aware of the peculiar challenges involved in balancing research, academic advancement and sustainable development as a developing and small island state,” he said, noting that this nation is one of few in the Caribbean to have drafted and enacted legislation on marine scientific research.
“Given The Bahamas’ heavy reliance on marine resources, my country strongly supports stringent environmental regulations and sustainable practices supported by sound scientific research. We cannot emphasise enough the priority that our country places on protecting and preserving the marine environment and its delicate ecosystems.”
The Biological Resources and Traditional Knowledge Act 2021, for example, gives the DEPP the authority to regulate access to biological resources and associated traditional knowledge, prohibit unlawful genetic bio-prospecting and gathering, and ensure fair and equitable sharing of the benefits arising from the use of Bahamian biological resources and traditional knowledge.
“My delegation encourages the Secretariat to continue its efforts in finding innovative ways to assist and incentivise young scientists from countries such as mine,” Mr Miller urged, calling on the Assembly to develop a general policy on environmental protection.
This week, researchers found electric currents from the same minerals that deep sea miners are targeting may be responsible for oxygen production thousands of feet under the ocean. This area of research is critically under-funded. Mr Miller alluded to the support, regulatory and financial, of scientists from these areas as essential.
Nicholas Higgs, a Bahamian marine biologist who was a part of this nation’s delegation attending the ISA Sessions, said
this nation could benefit from ISA funding awards schemes to build capacity and facilitate Bahamian professionals in this area.
“Everything that sits in these waters is the heritage of all humanity,” he said.
“We should be active in these discussions and make sure that, when the benefits arise, that The Bahamas is getting a fair sharewhether it be from mining or from all the other things that might come from scientific discoveries or from biotechnology.
“Who knows? The next cure for cancer or the next antibiotic might be discovered in some organism living in this deep ocean territory, so we need to think carefully about how we proceed.”
Captain Godfrey Rolle, chairman of the Bahamas Maritime Delimitation Committee at the Ministry of Foreign Affairs, added:
“It’s absolutely critical that we are a part of this body which comes out of the UN Convention on the Law of the Sea that deals with
management of the oceans within our national jurisdiction and outside of it.”
The Bahamas participated in the voting between two candidates for ISA secretary-general who each offer different views on the future of deep sea mining. The last election was held in 2016, which saw Michael Lodge of the UK return to office. As the incumbent, he served two terms and was supported by Kiribati for re-election to a third term. The other candidate for the position of secretarygeneral, Leticia Carvalho, is Brazilian and has worked within the UN system to champion the rights of small island developing states (SIDS) rights. After a tally of ballots, Ms Carvalho emerged as the new ISA secretary-general. She is the first woman and first scientist to hold the position. The sessions took place at the ISA Building in the Kenneth Rattray Conference Room, Kingston, Jamaica.
L-R: Vaughn P. Miller, minister of the environment and natural resources; David Davis, permanent secretary, Ministry of the Environment and Natural Resources; and Helmut Turk, former Austria Ambassador to The Bahamas (1993-1999).
L to R: Vaughn P. Miller, minister of the environment and natural resources; Nicholas Higgs, Bahamian marine biologist; Captain Godfrey Rolle, chairman, Bahamas Maritime Delimitation Committee, Ministry of Foreign Affairs; David Davis, permanent secretary, Ministry of the Environment and Natural Resources; and Dr Rhianna Neely-Murphy, director, Department of Environmental Planning and Protection (DEPP).
VAUGHN MILLER, minister of the environment and natural resources, makes his remarks at the at the 30th anniversary of the International Seabed Authority (ISA) and its 29th Session in Kingston, Jamaica.
Photos:SAMANTHA C. BLACK
L-R: NICHOLAS HIGGS, Bahamian marine biologist; Karen Rolle, Ministry of Foreign Affairs; Captain Godfrey Rolle, chairman, Bahamas Maritime Delimitation Committee, Ministry of Foreign Affairs; David Davis, permanent secretary, Ministry of the Environment and Natural Resources; Vaughn P. Miller, minister of the environment and natural resources; Dr Rhianna Neely-Murphy, director, DEPP; and Fayne Thompson, Ministry of the Environment and Natural Resources consultant.
Utility trouble leaves Eleuthera ‘so broken’
By ANNELIA NIXON
ELEUTHERA businesses are “so broken” by equipment either damaged or fried by the island’s longstanding energy woes that they are no longer pursuing compensation from Bahamas Power & Light (BPL).
Keyshna Kemp, proprietor of Transformations Fitness Centre, a gym on mainland North Eleuthera, said frequent power outages, coupled with sudden dips and surges due to unstable voltage fluctuations, have damaged electric treadmills, three air conditioning units and multiple other fitness equipment.
“I give up,” she said. “I now got the large manual ones instead because the electrical ones.... you’ve never heard an explosion until you’ve heard a treadmill explode. When they send a surge and it moves so quickly, there’s smoke everywhere. You have to quickly hit the breaker so you can shut it down and pull it out.”
Mrs Kemp said power instability has also knocked out several new washers at her laundromat business, Da Wash House. She explained that the washers’ computer boards were blown due to electrical surges. After calling BPL consistently for a year,
due to a power outage damaging electronics in her home, Mrs Kemp said she thinks she received about $100 compensation.
“They had me sign something that says to not ask them for anything else and it took me a year of calling,” she said. “I think my cell phone bill was more than $100.” This experience has discouraged her from seeking reimbursement for the gym and laundromat equipment.
Mrs Kemp said Eleuthera are “so broken we don’t even push the issue any more. Now, I have a treadmill that’s not working. I just find the $500, order the parts and pay the 45 percent duty when it comes”. She added that she would like to equip both her businesses with generators but,
because she has to spend money replacing and fixing the machines, it is difficult to invest in one.
Elkin Ferguson, owner of Blu Auto Cleaning, a carwash and car detailing company, said BPL’s frequent power outages prevent him from using certain cleaning tools including his vacuum cleaner. As a result, he is unable to clean vehicles in the time allocated by clients, resulting in the loss of money.
“I can lose big time,” Mr. Ferguson said. “Sometimes half a day it is off. Sometimes it’s off for a couple hours. Some of those cars I can’t do because people have to get the car back at an appointed time. So I lost. When I could have done six [cars] I only did three.”
LPIA set to $200m upgrade over the ‘next 12-18 months’
By ANNELIA NIXON
THE deputy prime minister yesterday gave a 12-18 month timeframe for the $200m investment required to expand Lynden Pindling International Airport’s (LPIA) capacity.
Speaking as The Bahamas hosted the Airports Conference of the Americas for the first time ever, Chester Cooper, minister of tourism, investments and aviation, said this nation’s major aviation gateway is now “too small” to handle the volume of tourist and domestic traffic it must now deal with.
Speaking to an audience that included representatives from the American Association of Airport Executives, the International Association of Airport Executives, the US Federal Aviation
Administration (FAA) and International Civil Aviation Organisation (ICAO), Mr Cooper said: “As beautiful as LPIA is, it is too small. “We have seen a significant level of growth in tourism arrivals. In 2023 we have had a record setting year with air arrivals 10 percent ahead of the prior year, making LPIA one of the busiest airports in the Caribbean region and, as a result, we are projecting needing another $200m investment over the next 12 to 18 months.”
The deputy prime minister also explained that the Family Island airport upgrade initiative was launched to help build and maintain “30 state-owned airports”. He added: “This is why we have launched the Family Island Renaissance programme - to develop PPPs (public-private partnerships) to fully
revitalise 14 airports across the islands for an estimated $260m.”
Dr Kenneth Romer, director of aviation, said Cat Island’s New Bight airport is in full development while $10m in renovations to Governor Harbour’s Airport are completed. He added that plans have been approved for many other islands.
Addressing the passenger and user fees now being charged at Bimini’s airport, Dr Romer said: “There was actually a delay in the implementation of fees. I think persons are going to see very soon - I’m not saying now - what those fees are contributing to.
“Our deputy prime minister has indicated that there will be a review of all of the fees charged, a regional comparison, and I expect him to speak to that when we get those reports in.”
One BPL employee said many of the recent power outages are due to a lack of generators, failing generators and tall trees getting caught in the power lines.
“We [are] cutting trees out the line because every island I’ve been to so far has a tree problem,” the employee said. “The trees grow up in the line and it’s causing outages because whenever the trees touch the line, and they come in contact with another line and they cause the lines to clash, all that leads back to the generation plant and it causes all the power to go out.”
Besides BPL, Eleuthera businesses are also
grappling with Water & Sewerage Corporation outages and low system pressure. Mrs Kemp told Tribune Business that low water pressure has been a consistent problem since she moved to Eleuthera 21 years ago. When she took over Da Wash House from previous owner, Claudia Kelly, on January 8, she quickly realised water pressure issues would negatively impact the washing machines. She spent several hundred dollars on purchasing a water pump, which helps keep the water flowing at a decent pressure at the laundromat. “When the water pressure is very low in the
wash house, the washing machines, they shut down,” Mrs Kemp said. “I would not have survived this long. I went home frustrated too many times because of how weak the water pressure was in this building.”
Mr Ferguson said the low water pressure has prevented him from using his pressure washer on numerous occasions. He added that sudden reductions in pressure can damage his tools.
“When you’re washing [a car], especially using a pressure washer, the water has to be up enough that it doesn’t burn the pressure
WASHERS at Da Wash House that are out of order.
Opposition seizes on PLP chair’s admission of ‘cash flow crunch’
of the high debt service/ interest burden this would impose on taxpayers.
Explaining why the Government was justified in pursuing Bahamian businesses for every single cent owed to the Public Treasury, the PLP chairman - also a member of the Cabinet as minister of foreign affairssignalled that it is seeking to preserve what little fiscal and borrowing headroom it has given the threat posed by more powerful and frequent hurricanes.
“The country is in a tight economic squeeze. We are seeking to pay as we go, not to borrow if we don’t have to, with hurricanes hanging in the atmosphere ready to strike at any month,”
Mr Mitchell wrote. “That means that we have to collect every tax [dollar] that is owed before turning to credit if a hurricane hits.
“What is clear is that poor and working class people have been paying their taxes but some big players have been avoiding paying the taxes. They also have a megaphone to get the [media] and others to shout on their behalf that the sky is falling. The poor don’t have such an advocate. The PLP is their advocate and we do so by ensuring that everyone pays their fair share.”
The Bahamas Uncensored website, widely considered to have acted as a mouthpiece for Mr Mitchell’s views for more than a quarter-of-a-century, doubled down on this message at the weekend by seemingly affirming that these cash flow pressures are forcing the Government to part-pay many of its vendors and creditors in installments rather than one-time.
“Right now, The Bahamas government has
NOTICE
IN THE ESTATE OF BORDEN ADOLPHUS HIGGS late of the Settlement of Spanish Wells in St. George’s Cay, one of the Islands of The Commonwealth of The Bahamas. Deceased.
NOTICE is hereby given that all persons having any claims against the above-named Estate are required on or before the 15th day of August A. D., 2024 to send their names and addresses and particulars of their debts or claims to the undersigned in writing or in default thereof they will be excluded from the benefit of any distribution AND all persons indebted to the said Estate are hereby requested to pay their respective debts to the undersigned on or before the date above mentioned.
AND NOTICE is hereby also given that at the expiration of the time period above mentioned, the assets of the late BORDEN ADOLPHUS HIGGS will be distributed among the persons entitled thereto having regard only to the claims of which the Executors shall then have had notice in writing.
Roberts, Isaacs & Ward, Unit No.2, Cable Beach Court Professional Centre, 400 West Bay Street, Nassau, Bahamas.
decided to take a tough road - the road less travelled - by not going to the credit markets to make up the yawning deficits which confront us,” the website stated. “The Ministry of Finance has decided to heavily control expenditures by parcelling out bill payments to creditors in small bites and collecting aggressively taxes that are owed. Not surprisingly, there is push back.”
Dr Sands, though, contrasted Mr Mitchell’s statement and the website’s commentary with what he described as “the rosy picture” painted by the Government for the past two years that all was fine with the Bahamian economy and the Government’s fiscal position.
“Whoever it was intended for, they finally admitted what was a poorly-kept secret - that there are cash flow pressures - and it explains their aggressive behaviour and their arbitrary behaviour towards the business community in particular,” the Opposition chairman told Tribune Business.
“This administration, having over-stretched themselves with spending, finds themselves in a cash flow crunch and are looking to the private sector as
a bottomless pit to be taxed into oblivion to make it up as opposed to addressing it by any degree of correction to make it up.
“The approach of this administration is that they are a Robin Hood government. They are going to take from whomever they perceive to be wealthy to distribute it to whoever they want, and the view is to buy votes and buy favour.”
Mr Mitchell, though, argued that criticisms from the Opposition and others that the Government is “anti-business” do not hold up under scrutiny. Pointing out that all taxpayers have a “legal and moral obligation” to pay taxes that are due, he asserted that the two examples cited - the $357m demand made of the Grand Bahama Port Authority, and $30.844m Sandals tax dispute - were merely seeking to collect what is owed.
“Neither of those examples hold water. What is the Government supposed to do when people owe taxes (big people) and don’t pay? If they do not, you try to get the money. That’s it, plain and simple,” Mr Mitchell said.
“What you see playing out now is the noise of those who don’t want to pay... Anyone who wishes
Utility trouble leaves Eleuthera ‘so broken’
FROM PAGE B3
washers up,” Mr Ferguson said. “The water pressure has to be good. That right there is messing up my tools, and my cheapest pressure washer is $250. The expensive one is $500.” His wife, Anastacia Ferguson, who owns Tru Serenity Beauty Salon & Accessories, said she stores water in bottles to counter the low system pressure if she has a client coming. She said water interruptions
to settle tax issues knows that the PLP has an open door policy and all matters can be settled amicably. But there is an obligation both legal and moral to pay what is owed.”
Dr Sands, though, argued that the Government is seemingly making no connection between its cash flow/liquidity issues and its continued spending without any adjustments or restrictions. Asserting that the Davis administration “don’t want to admit” the cash flow/liquidity issues, he added: “They continue to paint this rosy picture about how wonderful it is and how many millions are coming off the cruise ships, but the perception on the ground does not support or go along with that.”
Pointing to how the Government was forced to adjust the practice of armed officers entering businesses to accompany revenue officials, following push back from the private sector, Dr Sands added: “We’ve seen these aggressive tactics, not only with Sandals but with the Port Authority and private businesses such as CBS Bahamas.
“We’ve seen armed intrusions to go after perceived tax revenue and many businesses can tell you similar stories about similar
aggressive attempts to gain additional tax revenue. They need the money.
“I have it on very good authority that we have professional vendors that are now owed six months of fees, charged by government agencies and the like, whether it’s tax refunds or credits or payment for services rendered. These services should be paid for on a monthly basis and now the Government is six months’ behind. We’re hearing this over and over and over,” the FNM chairman continued.
“It’s certain things are far worse than they wish to let on. I thank the chairman of the PLP for his honesty. We all kind of knew that was the situation but they have been denying it the whole time. He has now put it in black and white.”
Dr Sands added that it was “striking” that the “glaring admission about the state of fiscal affairs in the country” had come from Mr Mitchell rather than the two Cabinet ministers who have oversight of the Ministry of FinancePrime Minister Philip Davis KC, as minister of finance, and Michael Halkitis, minister of economic affairs.
occur “just about every day or every other day”.
Mrs Ferguson told Tribune Business she prepares because Water & Sewerage Corporation rarely sends advance warnings of when the pressure is about to decline or supply is going to cut off completely. She would like the Corporation to better communicate to the public when they should expect water interruptions. Despite her irritation, Mrs Kemp does not blame Water & Sewerage
Corporation employees who she said do their best with what they can. Leon Lundy, minister of state in the Prime Minister’s Office, said Eleuthera residents should see an
improvement in the water supply “over the coming months”. Tribune Business was unable to get a comment from the Corporation before press time
FROM HOPE TO FEAR
By CHRIS ILLING CCO @ Activtrades Corp
Interest rate cut hopes turn into recession fears. This sentence describes the emotions from last week on the financial markets. From Asia, through to Europe and the US markets, Thursday and Friday’s session resulted in a big loss for the major indices.
All Wall Street indices plunged again on concerns about whether
US economic growth can continue until the Federal Reserve cuts interest rates. The New York-leading index, the Dow Jones Industrial Average, lost 2.1 percent at the end of the trading session, while the technology-heavy Nasdaq
100 fell by around 2.8 percent.
A report showing the number of new hires by US employers slowed much more than expected last month caused fear in the markets. The news followed a series of economic reports
on Thursday that were weaker than expected.
Bad news from Amazon and Intel, after the US stock market close the previous Thursday, put an additional burden on the stock markets on Friday. Amazon, the world’s largest online retailer, disappointed investors with its outlook for the current quarter. The chip manufacturer Intel also missed expectations and now wants to cut more than 15 percent of jobs in a $1bn savings programme. The
dividend from the fourth quarter is to be omitted for the time being. The share price fell almost 30 percent to about $21 per share. The US index, the Nasdaq 100, has now fallen by 11 percent since its record high in the first half of July. Nevertheless, after the long hype about artificial intelligence, there is still a significant plus over the year-to-date of about 10 percent.
But not all ‘blue chips’ had a bad end of the week.
BPL admits its Briland power woe ‘untenable’
dollars are being reinvested in the community, its utilities and infrastructure.
Affirming that he was “sweating it out like everyone else”, Mr Malcolm said of BPL’s latest Briland woe: “It’s ludicrous. Two hotels are closed, the Dunmore and Coral Sands. The marinas are fairly empty. There’s not a lot of activity. It’s almost like the off-season and they cannot power the island. We’re coming into August, there’s not a lot of tourism. The island is in very low occupancy, and they still have to shed power.
“I calculated that in the last four years of real estate activity here, of which I’ve been part, just from the 10 percent VAT on the conveyance of property and real property tax, which has gone up significantly after they took the cap off and did the reassessments, conservatively $40m has gone into the Public Treasury from these two things alone.”
Mr Malcolm said he cares for one homeowner’s property where more than $100,000 in real property tax is paid annually. “What are they getting in return?” he asked. “It’s embarrassing that you’re asking the foreign second homeowners to pay exorbitant real property taxes and there’s no power on the island. Come on. After they paid a huge transfer tax to buy the property?
“Where’s our infrastructure.... our water, our power? I’m getting fed up with it. It’s embarrassing to look at second homeowners being asked to pay $100,000 in real property tax and I’ve got to tell them the generator is without diesel because the power has been on and
off, on and off. There was no diesel as of Friday.
“It’s inexcusable in this day and age for the amount of revenue this island puts into the Public Treasury. Where is the return on investment? Give us a proper power plant please. You’re making residents pay property tax but the money is not going to improve our infrastructure. There is nothing in exchange. The money is not coming back to the island.”
Mr Malcolm said it was “insulting” to second homeowners that they have received no return on their tax payments, while describing the power outages as “quasi-cruel” for Briland residents and those who work on the island.
“It’s impacting one of the most popular and coveted destinations in The Bahamas,” he added. “This is a destination where wealthy people from all over the world pay millions of dollars to buy property here and there’s no power, there’s no water.”
BPL, in a statement to Harbour Island residents and customers, apologised for both the load shedding and lack of transparency and information provided to customers. It blamed the problems on Briland’s increased energy demand which, coupled with the
absence of spare generation capacity due to “sudden failures”, has left it unable to meet the destination’s electricity load.
“BPL presently has six one mega watt (MW) rental generation units installed on Harbour Island. This is an increase from 5 MW, and was necessary to provide redundancy if any of these units failed or maintenance was necessary,” the stateowned energy supplier said.
“Harbour Island’s load demand now well exceeds 5 MW, which means that all the units must be online continuously. This has created various challenges in recent months as maintenance and sudden failures have resulted in lost generation and subsequent outages.
“BPL works closely with its rental generation partner to complete maintenance or carry out repairs expeditiously as we realise that having all units fully operable is essential. From time to time, these repairs require parts that need to be shipped or flown in from other countries, and that extends the time that a unit is unavailable,” BPL added.
“This is precisely where we find ourselves now as one of the units is down for repairs and we are awaiting the shipment of necessary parts. In the interim, we
are load managing. This means customers may experience daily power outages in three to four-hour intervals, especially during peak periods.
“This time may be extended during days when the island sees increased visitor arrivals, particularly the current Emancipation Day weekend.” BPL then admitted that the necessary repairs may only be completed by this Saturday, August 10, leaving Harbour Island with several more days of intermittent power cuts.
“We realise that this is an untenable situation for residents and businesses on the island, and we are working with our rental partner to procure the necessary parts as soon as possible. Their estimated timeline to have the parts on island and
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complete repairs is the end of this week, August 10, 2024,” BPL said.
“While every measure is being undertaken to expedite this process, we will improve our communication with residents. A load management schedule will be shared with the community daily. We do want to advise that based on system demands at any given time, the schedule may be adjusted in duration and areas impacted.
“Simultaneous with the repairs to the rental unit, we are also working to install 5 MW of BPL-owned generation on Harbour Island in the next six to eight weeks. While it will not fully meet the island’s load demands, we are confident
Apple made slightly less money with its iPhones in the past quarter, but the iPad tablets were able to more than fill this gap. Sales rose by 5 percent year-onyear to $85.5bn. The bottom line was a profit of $21.45bn on the books; around 8 percent more than a year ago. Investors rewarded the result with stock-buying, and the share price rose to about $224 per share. The savvy investor will pick wisely in those volatile times.
that BPL-owned generation serving as a back-up to the re-establishment of the subsea cable providing power from the Hatchet Bay power station will provide long-term stability.” Going into apology mode, BPL added: “BPL... sincerely apologises for the lack of transparency regarding this present challenge on Harbour Island. BPL sincerely apologises to its customers in Harbour Island who have been experiencing intermittent outages since July 30, 2024, and gives our assurance that we are working to stabilise your supply on the island.
“More importantly, we sincerely apologise that customers were not advised of the current generation challenges and its impact on the Harbour Island community.”
NOTICE
NOTICE is hereby given that SHANTAL CRYSTAL ALLEN McKenney Avenue, Nassau, 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 6th day of August, 2024 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, New Providence, The Bahamas.
BAHAMAS POWER AND LIGHT (BPL) HEADQUARTERS
‘Rebalance’ onerous VAT dispute payment demand
the Tax Appeals Commission can proceed.
The VAT Act’s section 81 (s) (c) stipulates that any challenge to a Department of Inland Revenue tax assessment must be “accompanied by payment of the total amount of tax assessed, or security for such amount, in a form acceptable to the [VAT] comptroller at the time the assessment is lodged”.
“As time progresses, and you begin to see the extent of this very unfair provision or component of the VAT Act, it just goes against the grain of being almost found
guilty before you’ve had a chance to prove you are not,” Mr D’Aguilar told Tribune Business.
“It’s primarily executed by the public service and, living in such a small community, it could be abused. If the Inland Revenue comes along and says ‘we think you owe this tax’, and you say ‘I don’t think we do’, then Inland Revenue says you have to pay the full tax while you do whatever to litigate and despite you disputing it.
“There needs to be some boundaries on that when you are disputing $30m and $10m tax bills... I’m
not saying that the Department of Inland Revenue shouldn’t have the right to pursue aggressively what they think is the right tax. That’s their job.”
Mr D’Aguilar suggested that, rather than companies lodge the full disputed VAT sum before they can appeal a Department of Inland Revenue assessment, they instead pay a percentage of the amount demanded such as 10 percent to ensure they have a stake in the outcome and do not delay or drag out challenges.
Tribune Business understands that the Minnis administration looked at
such a reform but, ultimately, no changes were made to the relevant provisions in the VAT Act. Many in the private sector view the way the appeal provisions are written as being designed to deter appeals against government tax assessments.
Noting that companies incur legal costs, as well as “time, disruption and effort”, in contesting Department of Inland Revenue assessments, he told this newspaper: “I think the law has been crafted to give all the advantages to the tax collection authorities.
“I think it needs to be rebalanced where businesses have the opportunity to move these disputes into the courts, and shouldn’t be hugely disadvantaged by exercising their right to pursue the matter in court.... Everyone complains that the Tax Appeals Commission in recent times is not functioning as it should.
“I think people should have the opportunity to hold public officers to account to a certain degree. You cannot come along and say: ‘You owe me $3min taxes’, I say ‘I don’t’, and you say I have to pay $3m to contest it. Or that they’ll not give you a Business Licence until you pay it. To me, that doesn’t sound right,” Mr D’Aguilar said.
“There should be a rebalancing that gives the Department of Inland Revenue the ability to pursue delinquent taxpayers with the right of taxpayers to legitimately contest decisions of the Department of Inland Revenue. There appears to be a belief among the tax authorities, and past experience has drawn them to this conclusion, that everyone is trying to lie, duck and cheat on taxes.”
Sandals Emerald Bay and its operator, Clearview Management, are from the only company being pursued by the Department of Inland Revenue for taxes allegedly owed from past
fiscal years. Few companies have spoken out about how aggressive these audit, assessment and collection efforts have been, but it is possible to get an insight from the Sandals matter and previous Tribune Business reports. Two BISX-listed firms, AML Foods and Cable Bahamas, have both disclosed to their shareholders that they are contesting Department of Inland Revenue demands for around $1m in taxes each. AML Foods in late 2023 pledged to “vigorously contest” the Government’s demand that it produce nearly $1m in “unpaid” VAT related to Grand Bahama’s portHurricane Dorian economic recovery zone (SERZ). It added then that it will “initiate a formal dispute” against the Department of Inland Revenue’s (DIR) assessment. To trigger the appeal, the Solomon’s and Cost Right operator said in notes to its financial statements that it would have to either place a bond or make full payment of the $925,732 in alleged arrears.
And Cable Bahamas, in its 2023 annual report, confirmed that its Aliv mobile subsidiary was “involved in a formal dispute with the Department of Inland Revenue concerning an assessment issued... for unpaid taxes and fees totalling $1.594m. “The assessment covered the period from April 1, 2017, to December 31, 2021, and related to VAT and Business Licence fees on insurance proceeds and international inbound roaming charges among others,” Cable Bahamas said, adding that it had “deposited” the disputed sum with the tax authority and aimed to “vigorously contest” the demand.
Mr D’Aguilar, meanwhile, said Sandals was “absolutely right” in its argument for securing a bank guarantee to cover the disputed sum rather than
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make a cash payment. “It has to be fair. It has to be seen to be fair,” he said of the dispute process. “Everyone should an equal right to contest a decision as traumatic as that [Sandals].
“I’m not saying Sandals is right, and I’m not saying Sandals is wrong. They should have the right to pursue it without having to give all that money to the Government first.” The former minister added that requiring the losing party to pay the other’s legal and other appeal costs was on way to prevent frivolous challenges and tax assessment findings as he lamented the current law’s ease of doing business impact.
“The ease of doing business in The Bahamas is a joke,” Mr D’Aguilar told Tribune Business. “There’s nothing easy about doing business in The Bahamas. Speak to any businessman in The Bahamas and they’ll tell you that. It never gets any better.
“The politicians try and make a difference but every time they make a law the bureaucracy kicks in and they interpret as they wish to interpret it. Nothing changes because the bureaucracy seemingly does not improve. They just pile on the paperwork, more paperwork and more confusion. There’s nothing easy about doing business in The Bahamas, period. That’s a joke.
“As you unleash the Department of Inland Revenue on the business community, and they interpret everything any way they want, you cannot fight them. You must pay what they say you must before you can contest it. Most people say it’s not worth it and just pay it,” Mr D’Aguilar said.
“I’m not aware of any company successfully challenging a ruling by the Department of Inland Revenue and getting their money back. There’s no posted child who’s taken on City Hall, won and got their money back. There’s no example of that. You want to get on with running your business, and don’t want to be in painful and protracted litigation with Inland Revenue. No one wins that battle.”
NOTICE is hereby given that ROBINSON CELESTIN of Pinedale Eight Mile Rock, Grand Bahama, 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 6th day of August, 2024 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, New Providence, The Bahamas.
Opposition finance chief blasts ‘indefensible’ bank fee increase
consumers via branch closures and such like.
“We continue to witness banks in this country piling on more and more fees and charges on Bahamian consumers while providing less and less customer service. The Government must provide greater regulatory protection for Bahamians against increasingly inexplicable and indefensible cost increases,” he asserted.
“We are advised that a major domestic bank will be increasing their rates as of September. However, in December last year, it saw a strong financial performance for its 2023 fiscal year with net income of over $100m, up 74 percent from the previous year. A reasonable question to ask is why raise fees now?” Tribune Business research confirmed he was talking about CIBC Caribbean (Bahamas).
The bank’s revised fee schedule showed monthly service fees will increase from $2.75 to $3.85 for
personal banking clients, while business and corporate banking clients will see a $3 increase from $13.20 to $16.50 and $16.50 to $19.80, respectively. Withdrawal fees for personal banking clients will increase by 27 cents, and those for business and corporate banking clients will see a 16-cent increase. Deposit fees will also see an increase of 27 cents for corporate, savings and chequing accounts, while savings plus accounts will now have a $1.38 deposit fee after being zero before. Business banking clients will pay an additional 38 cents. Last year, CIBC Bahamas reported net income $122.3m for its 2023 financial year, up 74 percent from the previous year. Jacqui Bend, the bank’s managing director, said the bank “delivered a strong financial performance”.
She added: “For the year ended October 31, 2023, the bank reported net income of $122.3m, up $52.1m or 74 percent, from
for that economy, directly and indirectly.”
later that the same resort will temporarily close on August 15 to facilitate its $100m transformation into the Beaches brand, Dr Sands said: “They’ve managed to spin the Sandals story in a way that makes no sense.
“On the one hand you accuse the resort of being a tax dodger, yet on the other hand they are wonderful corporate partners doing the right thing for Exuma and the elimination of hundreds of jobs for an indefinite period of time is a good thing. It could be six to eight months, it could be more.
“It shows the right hand and the left hand don’t talk to each other. Tourism is clearly not talking to finance, because finance is framing Sandals and their proprietors as tax dodgers.... so much so that this thing is going to court. But the tourism minister says no, they are national heroes that the country needs, in to save the day. Which is it?” the Opposition chair continued.
“I suspect there is far more to the Sandals Beaches story than the immediate spin being put on it by the minister of tourism and Ministry of Tourism. There’s no way that you can say the loss of jobs for an uncertain period is a good thing for the economy of Exuma and the economy of The Bahamas, particularly when that resort is the largest engine
Chester Cooper, deputy prime minister and also minister of tourism, investments and aviation, last week said Sandals will double its full-time Exuma workforce to 850 staff when the $100m transformation of its Emerald Bay property into the Beaches brand is complete.
Also Exuma’s MP, he said the existing resort will temporarily close on August 15 for between six to eight months to enable the necessary construction work and remodelling to take place.
Asserting that some 400 workers will be employed during the construction phase, he added that the project will develop a much larger resort at the same location under the familyoriented Beaches brand.
Obie Ferguson, the Trades Union Congress (TUC) president, told Tribune Business that Sandals should provide the existing 425-strong Emerald Bay workforce, of whom 200 hail from Exuma, with an “assurance” that they will be retained and brought back to work when the property re-opens as a Beaches-branded hotel.
Voicing concern that Sandals might elect to repeat what it did when it closed its Royal Bahamian property, terminating the existing workforce and hiring many new staff, Mr Ferguson suggested that the resort chain provide the Emerald Bay workers with training to prepare them for
the prior year’s net income of $70.2m. The year’s significantly improved results were largely due to the revenue uplift from higher US benchmark interest rates.
“Additionally, as the economy continued to recover from the aftermath of the COVID-19 pandemic, transaction-based operating income returned to normalised levels, improving over the prior year.”
Mr Thompson, meanwhile, highlighted consumer complaints about “unreasonable” cash chequing fees and “non-transparent” ATM usage fees.
He said: “In some cases, fees have increased over 40 percent without explanation or justification. The reports by the Central Bank reveal that banking fees continue to rise every year. Banks have been removing their brick-and-mortar presence from Family Islands, which has caused great distress to islands like Andros and Long Island.
“The Government must act without delay. There
the re-opening along with financial assistance to help them make ends meet in the interim.
He added that the closure was occurring just as families were starting to prepare for the Back to School shopping season, raising questions over how staff will find the necessary financing. “No one is suggesting for a moment that a company ought not to upgrade its product and make its product more appealing to its clients. That’s not what we’re saying,” Mr Ferguson said. “We’re saying it’s a small country. We have approximately 243,000 workers in The Bahamas. We’re saying that if the need becomes necessary to renovate, even in the absence of a union being there, meet with some of the key workers in the complex and say: ‘We’re not going to terminate you’.
This announcement came, though, just days
must be improved and enhanced regulations covering indiscriminate and indefensible charges by the banks. The Central Bank must be mandated in law to require banks to justify fees and charges charged to customers.”
Mr Thompson said The Bahamas would benefit from stronger regulations to increase transparency, fair treatment, effective recourse and equal access. He added that the Consumer Protection Agency should be expanded to include a Financial Consumer Protection Agency and provide a bill of rights for clients and an enforceable code of conduct for banks.
Mr Thompson also suggested the implementation of a financial ombudsman with the authority to enforce corrective measures when commercial banks are found to be non-compliant or engaging in misconduct.
He said: “The Bahamas should have an agency or authority like the Financial
after it was revealed that the same resort and its operating entity, Clearview Management, were embroiled in a dispute with the Bahamian tax authorities over $30.844m in allegedly unpaid taxes. It is unclear whether the announcement was brought forward to distract from the tax dispute, although Sandals’ own release refers to an “acceleration of plans” relating to the Beaches expansion. Neither Mr Cooper nor Sandals referred at all to the tax dispute in their respective statements.
One possibility is that the matter has been settled with the resort chain agreeing to move forward with its Beaches plans, which it has harboured for almost a decade, in return for the sum owed being forgiven or heavily discounted.
Sandals is disputing assertions by the Bahamian tax authorities that its Emerald
Ombudsman in the United Kingdom that is independent and has the clear power and authority to negotiate and impose pre-emptive and corrective measures in cases of a banking institution’s non-compliance and instances of misconduct.
The Financial Ombudsman has similar powers to the Ombudsman but looks at banking and insurance matters.
“The Bahamas would benefit from an authority that has a range of enforcement powers and tools to allow it to investigate, powers of cease-and-desist orders, reprimands such as confidential caution or reprimand letters, and fines in banking and insurance disputes.”
Mr Thompson said commercial banks should be prohibited from engaging in “unfair” practices, and should be regulated to notify clients when their accounts are inactive or dormant as well as the fees or charges they will incur.
Bay resort only reported 40 percent of revenues earned as it defended its one-of-akind “business model”.
Melissa John, the Exuma hotel’s financial controller, in a September 8, 2023, letter to the Department of Inland Revenue (DIR) denied the property had failed to properly disclose “the true nature of transactions” which have sparked demands for $30.844m in allegedly unpaid VAT and Business Licence fees combined.
The Department’s audit findings, which covered six years between 2017 and 2022, claimed the tax arrears had arisen because Sandals Emerald Bay and its operator, Clearview Management Ltd, had under-reported gross revenue income for the period by more than $284m.
The dispute, according to documents filed with the Supreme Court, appears to result from the Sandals’ corporate structure and business model. All guest bookings and payments are made to the resort chain’s
He said: “Financial Institutions should be held to account and should follow enforceable rules and standards on providing statements and reference letters free of charge, special provisions for senior citizens and the disabled, what statements should include (services, fees, interest rates and penalties). Also rules on notification on interest rate to be paid or charged on any account, any noninterest charge on any account of the consumer (transaction fees, overdraft fee).
“And rules on Banks notifying their consumers in case their transactional accounts have become inactive or dormant, and the related consequences, including applicable charges. The nature and extent of the change, particularly its potential impact on the consumer, should dictate the required format and the length of time for advance notice, and whether personalized, individual notification to the customer is required.”
corporate parent, Sandals Resorts International 2000, and its third-party booking platform and sales agent, Unique Travel Corporation. Both these entities are domiciled in Panama.
Rather than funds flow up the corporate chain, from subsidiaries to parent company, in Sandals’ case the money trail appears to move in the opposite direction - from Sandals Resorts International 2000 to the resort where the relevant guest has booked their vacation.
The crux of the Department of Inland Revenue’s assessment, and eightfigure tax demand, is that Sandals Emerald Bay over that six-year period only declared the net income received from its parent and not the gross sum collectively paid by tourists to stay at the Exuma property. As a result, the resort both under-reported and underpaid VAT and Business Licence fees for that period.
Google illegally maintains monopoly over internet search, judge rules
By MATTHEW BARAKAT and MICHAEL LIEDTKE Associated Press
A JUDGE on Monday ruled that Google's ubiquitous search engine has been illegally exploiting its dominance to squash competition and stifle innovation in a seismic decision that could shake up the internet and hobble one of the world's best-known companies.
The highly anticipated decision issued by U.S. District Judge Amit Mehta comes nearly a year after the start of a trial pitting the U.S. Justice Department against Google in the country's biggest antitrust showdown in a quarter century.
After reviewing reams of evidence that included testimony from top executives at Google, Microsoft and Apple during last year's 10-week trial, Mehta issued his potentially market-shifting decision three months after the two sides presented their closing arguments in early May.
"After having carefully considered and weighed the witness testimony and evidence, the court reaches the following conclusion: Google is a monopolist, and it has acted as one to maintain its monopoly," Mehta wrote in his 277-page ruling.
It represents a major setback for Google and its parent, Alphabet Inc., which had steadfastly argued that its popularity stemmed from consumers' overwhelming desire to use a search engine so good at what it does that it has become synonymous with looking things up online. Google's search engine currently processes an estimated 8.5 billion queries per day worldwide, nearly doubling its daily volume from 12 years ago, according to a recent study released by the investment firm BOND.
Google almost certainly will appeal the decision in a process that ultimately may land in the U.S. Supreme Court.
For now, the decision vindicates antitrust regulators at the Justice Department, which filed its lawsuit nearly four years ago while Donald Trump was still president, and has been escalating it efforts to rein in Big Tech's power during President Joe Biden's administration.
"This victory against Google is an historic win for the American people," said Attorney General Merrick Garland. "No company — no matter how large or influential — is above the law. The Justice Department will continue to vigorously enforce our antitrust laws."
The case depicted Google as a technological bully that methodically has thwarted competition to protect a search engine that has become the centerpiece of a digital advertising machine that generated nearly $240 billion in revenue last year. Justice Department lawyers argued that Google's monopoly enabled it to charge advertisers artificially high prices while also enjoying the luxury of not
SECRETARIES OF STATE URGE ELON MUSK TO FIX AI CHATBOT SPREADING ELECTION MISINFORMATION ON X
By CHRISTINE FERNANDO Associated Press
FIVE secretaries of state are urging Elon Musk to fix an AI chatbot on the social media platform X, saying in a letter sent Monday that it has spread election misinformation.
The top election officials from Michigan, Minnesota, New Mexico, Pennsylvania and Washington told Musk that X's AI chatbot, Grok, produced false information about state ballot deadlines shortly after President Joe Biden dropped out of the 2024 presidential race.
While Grok is available only to subscribers to the premium versions of X, the misinformation was shared across multiple social media platforms and reached millions of people, according to the letter. The bogus ballot deadline information from the chatbot also referenced Alabama, Indiana, Ohio and Texas, although their secretaries of state did not sign the letter. Grok continued to repeat the false information for 10 days before it was corrected, the secretaries said.
The letter urged X to immediately fix the chatbot "to ensure voters have accurate information in this critical election year."
That would include directing Grok to send users to CanIVote.org, a voting information website run by the National Association of Secretaries of State, when asked about U.S. elections.
"In this presidential election year, it is critically important that voters get accurate information on how to exercise their right to vote," Minnesota Secretary of State Steve Simon said in a statement.
"Voters should reach out to their state or local election
officials to find out how, when, and where they can vote."
X did not respond to a request for comment.
Grok debuted last year for X premium and premium plus subscribers and was touted by Musk as a "rebellious" AI chatbot that will answer "spicy questions that are rejected by most other AI systems."
Social media platforms have faced mounting scrutiny for their role in spreading misinformation, including about elections.
The letter also warned that inaccuracies are to be expected for AI products, especially chatbots such as Grok that are based on large language models.
"As tens of millions of voters in the U.S. seek basic information about voting in this major election year, X has the responsibility to ensure all voters using your platform have access to guidance that reflects true and accurate information about their constitutional right to vote," the secretaries wrote in the letter.
Since Musk bought Twitter in 2022 and renamed it to X, watchdog groups have raised concerns over a surge in hate speech and misinformation being amplified on the platform, as well as the reduction of content moderation teams, elimination of misinformation features and censoring of journalists critical of Musk.
Experts say the moves represent a regression from progress made by social media platforms attempting to better combat political disinformation after the 2016 U.S. presidential contest and could precipitate a worsening misinformation landscape ahead of this year's November elections.
having to invest more time and money into improving the quality of its search engine — a lax approach that hurt consumers.
As expected, Mehta's ruling focused on the billions of dollars Google spends every year to install its search engine as the default option on new cellphones and tech gadgets. In 2021 alone, Google spent more than $26 billion to lock in those default agreements, Mehta said in his ruling.
Google ridiculed those allegations, noting that consumers have historically changed search engines when they become disillusioned with the results they were getting. For instance, Yahoo — now a minor player on the internet — was the most popular search engine during the 1990s before Google came along.
Mehta said the evidence at trial showed the importance of the default settings. He noted that Microsoft's Bing search engine has 80% share of the search market on the Microsoft Edge browser. The judge said that shows other search engines can be successful if Google is not locked in as
the predetermined default option.
"Advertisers consistently testified that shifting significant ad spending from Google to Bing would be ineffective (and unwise) because of Bing's lack of scale," Mehta wrote.
Still, Mehta credited the quality of Google's product as an important part of its dominance, as well, saying flatly that "Google is widely recognized as the best (general search engine) available in the United States."
Mehta's conclusion that Google has been running an illegal monopoly sets up another legal phase to determine what sorts of changes or penalties should be imposed to reverse the damage done and restore a more competitive landscape.
"The court confirmed what almost everyone in the industry already knew: that Google is a monopoly and is abusing its power to harm consumers and enrich itself," said Roger Alford, a law professor at the University of Notre Dame.
The potential outcome could result in a wide-ranging order requiring Google to dismantle some of the
VARIOUS Google logos are displayed on a Google search, Monday, Sept. 11, 2023, in New York. U.S. District Judge Amit Mehta ruled Monday, Aug. 5, 2024, that Google’s ubiquitous search engine has been illegally exploiting its dominance to squash competition and stifle innovation in a seismic decision that could shake up the internet and hobble one of the world’s best-known companies.
pillars of its internet empire or prevent it from shelling out billions annually to ensure its search engine automatically answers queries on the iPhone and other internet-connected devices. After the next phase, the judge could conclude only modest changes are required to level the playing field.
"Google's loss in its search antitrust trial could be a huge deal—depending on the remedy," said eMarketer senior analyst Evelyn Mitchell-Wolf. "A forced divestiture of the search business would sever Alphabet from its largest source of revenue. But even losing its capacity to strike exclusive default agreements could be detrimental for Google. Its ubiquity is its biggest strength, especially as competition heats up among AI-powered search alternatives."
Regardless she added, a drawn-out appeals process will delay any immediate effects for both consumers and advertisers.
If there is a significant shakeup, it could turn out to be a coup for Microsoft, whose own power was undermined during the late 1990s when the Justice Department targeted the software maker in an antitrust lawsuit accusing it of abusing the dominance of its Windows operating system on personal computers to lock out competition.
That Microsoft case mirrored the one brought against Google in several ways and now the result could also echo similarly.
Just as Microsoft's bruising antitrust battle created distractions and obstacles that opened up more opportunities for Google after its
Photo:Richard Drew/AP
1998 inception, the decision against Google could be a boon for Microsoft, which already has a market value of more than $3 trillion. At one time, Alphabet was worth more than Microsoft, but now trails its rival with a market value of about $2 trillion.
Besides boosting Microsoft's Bing search engine, the outcome could hurt Google at a critical pivot point that is tilting technology in the age of artificial intelligence. Both Microsoft and Google are among the early leaders in AI in a battle that now could be affected by Mehta's market-rattling decision.
Microsoft
CEO Satya Nadella was one of the Justice Department's star witnesses during the testimony that covered his frustration with Google deals with the likes of Apple that made it nearly impossible for the Bing search engine to make any headway, even as Microsoft poured more than $100 billion in improvements since 2009.
"You get up in the morning, you brush your teeth and you search on Google," Nadella said at one point in his testimony. "Everybody talks about the open web, but there is really the Google web."
Nadella also expressed fear that it might take an antitrust crackdown to ensure the situation didn't get worse as AI becomes a bigger force in search.
"Despite my enthusiasm that there is a new angle with A.I., I worry a lot that this vicious cycle that I'm trapped in could get even more vicious," Nadella said on the stand.
