The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian contractors yesterday disclosed it was “a grind” to obtain timely payment for work done on the $3.5 billion Baha Mar project, with waits up to 90-120 days hitting cash flow and eating into already-thin profit margins.

Robert Myers, Caribbean Landscaping’s principal, confirmed to Tribune Business that his company was among those that were enduring “frustrating” waits to receive payment for work done on the Cable Beach redevelopment.

Emphasising that it was a case of ‘when’, not ‘if’, payments were forthcoming, Mr Myers said the delays “have to be hurting performance” on Baha Mar’s construction and its timely completion.

He revealed to this newspaper that there were times his company, which has performed landscaping work on the golf course and new roads, “literally had to stop work” because it could not afford to carry the Baha Mar development with its own cash flow.

While unsure of the reasons for the delayed payments, Mr Myers suggested it might have something to do with the long communications line between Nassau and Beijing, plus the constant turnover of personnel at both Baha Mar and its Chinese partners.

Sources close to Baha Mar yesterday pointed the finger of blame at the development’s lead contractor/project manager, China State Construction, telling Tribune Business it was responsible for all payments to contractors/sub-contractors - including Bahamians - on the development.

This suggests there have been tensions between the Izmirlian family-owned Baha Mar on one side, and its Chinese state-owned partners on the other, over the development’s construction progress. The project has already missed its originally-projected December 2014 opening, and Baha Mar is now attempting to distance itself from the payments issue.

These developments coincided with yesterday’s publication of a Wall Street Journal article, whose contents matched what several Tribune Business sources have been suggesting ‘off-the-record’ for the past six weeks.

Apart from suggestions that some individuals and businesses were consulting attorneys over how to respond to delayed payments for work rendered, several contacts cited a lack of co-ordination and communication by China State Construction as the chief reasons why Baha Mar had experienced construction delays.

One contact told Tribune Business that he knew an architect and engineer, both employed by Baha Mar. One had already resigned and the other was about to, the source said, both citing “frustrations” over how the project was being managed.

This newspaper was also told that top Baha Mar personnel on the construction side were “doing a fantastic job in impossible circumstances”.

Baha Mar representatives declined to directly address the concerns expressed to either Tribune Business or the Wall Street Journal article when contacted by this newspaper, saying only that the developer was concentrating on its late Spring 2015 Grand Opening.

“We remain very focused on our Grand Opening celebration for late Spring 2015,” Robert Sands, Baha Mar’s senior vice-president of government and external affairs, said.

“That’s going to be our position on this particular matter.”

The Wall Street Journal report alleged that Sarkis Izmirlian, Baha Mar’s chairman and chief executive, visited Beijing in April to complain directly to top China State Construction officials about the slowdown in construction progress.

The Chinese firm allegedly responded by sending scores more workers to the Bahamas. Yet the report also cited the same co-ordination/communication breakdowns referred to by Tribune Business sources.

With high-rise construction work on the hotels unfinished, the decision was made to keep the cranes in place. Yet no message was passed to contractors doing the ‘ground work’, and workers turned up only to find they could do nothing because the cranes were in the way.

“We’ve had real difficulties getting paid on a timely basis. It’s not one-off, it’s repeatedly,” Mr Myers, who is also the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chairman, confirmed to Tribune Business.

“It hurts our cash flow, and in a VAT scenario it doesn’t get any better if we have receivables well past 90-120 days. For us, it’s just frustrating. You’re asked to jump through hoops, and we’ve done that to a great extent.

“But what’s happened in the past, when we’ve done it for Atlantis, is that when someone jumps through hoops, you’re supposed to pay them. We do get paid, but it’s tough. It’s not that they’re objectionable or tough. It’s just a grind of delays. For whatever reason, it’s an issue.”

Emphasising that he was “very pro” Baha Mar and its potential economic impact, Mr Myers added: “The problem is that the margins are tough.

“If you are leading against payment, those margins and profits get eaten up very quickly, especially when you are holding overdraft facilities, receivables for 90-120 days.

“You are shooting at 3-4 per cent net. It doesn’t take much to erode that when you are owed thousands of dollars for months. That’s when it eats it up. We can’t afford to cash flow their project,” he added.

“There are times when I literally had to stop work because I can’t afford to cash flow the project any further. We’re not a bank, we’re a landscaping company. No matter how hard they try, they can’t seem to get it improved.”

Mr Myers said his company waited for over a year to receive payment for hurricane clearance work.

While unaware of the reasons for the continued delay in making payments, the BCCEC chairman suggested it might result from China State Construction’s Beijing or other offices having to sign-off on all payments.

Another factor, he added, might be the constant turnover in personnel. No sooner were invoices and related queries settled with one person, then that worker left, and the process had to be repeated with a new staff member.

“From my standpoint, this has to be hurting them,” Mr Myers added. “I’ve been in construction for 35 years, and if you want to get a project built you have to pay your contractors.

“If you want to motivate your contractors, you have to pay them on time. This has to have an effect on performance.”