PowerSecure International, Inc., which had supposedly topped the shortlist of companies tapped by the Christie administration to manage the Bahamas Electricity Corporation (BEC) - and which may already have been awarded the contract, given Deputy Prime Minister Philip Brave Davis' statement that a company had been selected - is facing two separate class action lawsuits filed in U.S. district court accusing the power management company of securities fraud. And it is not clear whether assurances of the company's integrity - given by U.S. Secretary of State John Kerry - have satisfied the Christie administration that the company is the best candidate to manage the utility.
It now appears likely that the reason for the delay in announcing the management company selected to run BEC was a desire by Prime Minister Perry Christie for a degree of certainty about the company his administration may have tapped for that job.
Christie told a newspaper while in Washington, D.C. last week that he had received "written support from the (U.S.) Embassy in Nassau, from the deputy secretary of state and the secretary of state of the U.S. government [John Kerry] with respect to a particular applicant, certifying their integrity".
"It is important that I say that because issues arise as to what is happening and especially when personalities, particularly those of us who are involved in politics, have our names called," he said. "I wanted to absolutely guarantee that we had the certification of the American government as to the integrity of the entities that we are dealing with. That has been forthcoming. To that extent we have been engaged with the American government."
Attempts by other news agencies to follow up on Christie's statement appear not to have met with success. In fact, state department officials who had allegedly promised a response to clarify what was reported as an "integrity certification" by U.S. Secretary of State John Kerry of PowerSecure appear to have now deflected those questions to the U.S. Department of Commerce. No U.S. agency has as yet commented on the matter in the context of the lawsuits.
Initially, the administration had planned to make the announcement upon the prime minister's return from China in early January. However, the announcement was delayed until after the Caribbean Energy Security Summit, hosted by U.S. Vice President Joe Biden in Washington, D.C. at the end of January. Christie has been back in town from D.C. for a week, but no announcement has been made about the disposition of BEC.
In 2013, the government announced a restructuring and at least partial privatization of BEC. In the beginning, the proposal was to split the company into two wings: one for power generation and the other for power distribution. Christie later decided that the focus ought to be on dealing with BEC's $450 million "legacy debt" and abandoned the idea of breaking BEC up, instead choosing to pursue a management agreement with a company that could deal with the debt. Christie and Davis have both identified the Nassau Airport Development Company (NAD) as the model for this path.
At one point, it was believed that China State Construction and Engineering Company (CSCEC) - the parent company of Baha Mar/British Colonial Hilton investor China Construction America - was the front-runner. However, once the terms of the deal changed and the Christie administration focused on management and debt restructuring, CSCEC appeared to lose interest. Cayman-based Inter-Energy was the other shortlisted company.
The U.S. government had previously gone to bat, as it were, for PowerSecure and another U.S. company that had been in the running early on: the U.S. Department of Commerce said in a June 2014 letter to Christie and Davis that PowerSecure had "years of experience in the realm of power generation and distribution and can bring to the table cutting-edge proposals to meet today's energy needs".
Allegations
The first lawsuit was filed in the Eastern Division of U.S. District Court in North Carolina on May 22, 2014, alleging securities fraud. A second suit was filed in the Western Division on July 8, 2014, also alleging securities fraud.
The lawsuits allege that PowerSecure made materially false and misleading statements and omissions about its stock, which led the stock to be traded at artificially inflated prices. These "materially false and misleading statements" resulted in the members of the class purchasing PowerSecure common stock at artificially inflated prices, the complaint says, adding that once the truth was revealed to the market, PowerSecure common stock plummeted, causing losses to the members of the class.
The reports of the PowerSecure lawsuits surfaced in the light of the revelation that Alstom SA, a French power and transportation company, had allegedly paid a bribe to secure a lucrative power contract with BEC.
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