Bahamians object to Christie’s ‘act of desperation’
Bahamas Prime Minister Perry Christie announced last Wednesday that a “framework agreement” has been reached that could lead to resumption of work on the stalled $3.5 billion Baha Mar Resort. However, the pending agreement is being roundly criticized in the Bahamas, by everyone from the opposition political party to unpaid Bahamian contractors and the property’s original developer.
Christie, while appearing before the Bahamian Parliament to deliver his 2016-17 budget, announced that his government has reached a tentative deal with the Export-Import Bank of China (Exim), the property’s largest creditor, and China State Construction Engineering Corporation, the parent company of main contractor China Construction America (CCA) to “remobilize and restart construction to finish the project as expeditiously as possible.”
Both the bank and the construction contractor are owned by the Chinese government.
Bahamian politicians, contractors and the new company of Baha Mar founder Sarkis Izmirlian assailed what they said was a “back-room deal” negotiated in Beijing by Bahamian Attorney General Allyson Maynard-Gibson and senior adviser Sir Baltron Bethel, who reportedly had been dispatched to China with the task to negotiate a deal before the budget communication.
The protests relate to the fact that the Chinese state-owned construction company, and thus the Chinese government, would be first in line among 16 bidders to assume ownership of the massive resort and its parent company, Baha Mar Ltd., which has been in receivership since last fall.
Izmirlian halted payments to CCA last spring, claiming overbilling, inferior work and slow progress in missing three deadlines set for the opening of Baha Mar. The six-hotel complex (four new hotels, two refurbished existing properties), with what will be the Caribbean’s largest casino, was originally pegged for a December 2014 opening. After being forced to postpone the opening to March 2015 and then May 2015, Izmirlian stopped payments and CCA halted construction. The project has been idle since then.
Around 2,000 Bahamian employees were laid off as Izmirlian’s Baha Mar Ltd. filed for Chapter 11 bankruptcy in the U.S., a move that subsequently was rejected by the Bahamian government as illegal. At the time, Izmirlian said the bankruptcy filing would hold off creditors long enough for him to raise more money to complete the project.
Meanwhile, Christie’s government came under pressure to bring the parties together to finish the project, which was being counted on to revive the economy of the job-starved nation by returning the Cable Beach resort area to its former prominence.
Political opponents criticized last week’s deal as an “act of desperation” by Christie to finish the project ahead of next year’s elections. And, Izmirlian was joined by Bahamian contractors, former employees and opposition-party leaders in criticizing the notion that Baha Mar could be sold to the company responsible for the initial failure of the project.
“I don’t know why (the government’s) position would be to promote CCA finishing the project when they didn’t do it the first time,” a former Bahamian Contractors Association president told the Bahamas Tribune, adding that the plan would do nothing for Bahamian contractors who are still owed an estimated $74 million for work done on Baha Mar as subcontractors to the Chinese company.
“To let the Bahamian contractors and suppliers hang out to dry while the Chinese come back and finish the project is inconceivable to me,” said the former contractor association president, who was not identified by the Tribune. “And any right-thinking Bahamian must think the government has to include resolution of the outstanding debts before they commence work.
“Some people do stupid things, but that would be beyond stupid. I can’t imagine them not including this in the negotiations.”
BMD Holdings, Izmirlian’s current company, raised the same objections in a statement issued ahead of Christie’s announcement, saying the apparent deal “defies the sensibility of all Bahamians who toiled so hard in the belief that the Baha Mar would be opened in a timely manner as a world-class destination.
“It is very discouraging that China Exim Bank, knowing full well the serious irregularities already demonstrated by its sister company China State Construction Engineering Corp., would now turn to this very same entity to complete the work which its subsidiary CCA has failed to do time and again on previous schedules that it has provided…
“There is nothing in CCA’s past performance at Baha Mar that should lend confidence that they can complete Baha Mar on any schedule they provide and refrain from re-engaging in deceitful business practices, including overbilling and substituting inferior materials and systems to the detriment of the potential of this resort.”
The developer concluded its statement by urging Exim to enter into discussions with BMD Holdings for Izmirlian’s firm to regain ownership of the project. Izmirlian has pledged to repay all unsecured creditors, including the Bahamian contractors, and to put all Bahamians back to work.
The 2,000 laid-off Bahamian employees of Baha Mar also chimed in against the pending deal in a letter to Christie obtained by the Tribune. “Do we want to place Baha Mar once again in the hands of CCA, which has a proven history of enriching itself at the expense and suffering of Bahamians?” the letter said. “Your answer for the sake of the Bahamas and all who live here should be a resounding NO!
“We already have proof that at CCA projects, there are less jobs for Bahamians. Less Bahamians at work mean more Chinese at work. More Chinese at work means that dollars that should be going into our economy will be potentially taken out and shipped across seas.”
KP Turnquest, leader of the opposition Free National Movement party, told the Tribune that the Christie deal smacks of desperation.
“It’s an interesting development that the government is now seemingly taking the lead in finding a solution for this situation when there’s court-approved receivers and liquidators already engaged,” Turnquest said. “That’s unusual. It points to a very serious desperation on behalf of the Christie administration, and acting on desperation is never a good idea. Don’t give away the house for the sake of one roof.”
Christie’s announcement of a pending agreement followed his own angry reaction two days earlier to allegations raised by local radio talk show host Steve McKinney on his May 22 Hard Talk show. McKinney claimed that Christie’s government was poised to offer CCA a package of concessions to restart the project, including 30-year exclusivity on the casino license, an exemption to the value-added tax and the granting of Bahamian citizenship to 500 Chinese nationals attached to the project.
McKinney also said the Chinese demands included a requirement that Izmirlian’s group be shut out of any possibility to reclaim ownership of the resort.
The following day, Christie assailed the citizenship allegation as an “absolute lie,” saying “Bahamian citizenship is not for sale any time, at any price, to anybody.” He did not address the other allegations.
The Chinese state-owned bank clearly has the upper hand in negotiations as the lead creditor, having loaned around $2.4 billion to Baha Mar Ltd. Earlier this month, former Baha Mar director Dionisio D’Aguilar told the Tribune the status of Exim as owner of most of Baha Mar’s debt is prompting Christie to pressure Deloitte & Touche, the government-appointed receiver, to give CCA the status of “preferred bidder” for the project as a sister company of Exim.
