The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Baha Mar’s main contractor was yesterday accused of “insulting the intelligence of the Bahamian people” over its missed completion deadline warning, with local industry players urging the Government to investigate the matter.

Stephen Wrinkle, a former Bahamian Contractors Association (BCA) president, questioned how a dispute over the delivery of 1,420 lounge chairs could delay ‘substantial completion’ of a $4.2 billion project.

“It’s a heck of a stretch for a $4.2 billion project to be held up by a couple of lounge chairs,” he told Tribune Business. “There’s something wrong with that. It doesn’t compute. That’s such a nominal amount.

“It’s an insult to say it’s holding that project up. You can go down to CostCo and buy them. How can 1,400 lounge chairs hold up a $4.2 billion project? There’s obviously more than meets the eye to this, and China Construction America (CCA) has a history of not meeting their deadlines.”

Mr Wrinkle was backed by Leonard Sands, the BCA’s current president, who said he could not see how the lounge chairs’ non-delivery would result in CCA missing the ‘substantial completion’ deadline.

He added, though, that the content and tone of CCA’s lawsuit was a potential “heads up” to the Government and Bahamian public that the contractor was in danger of missing yet another Baha Mar completion deadline.

“My personal opinion on it is I don’t think they have a legitimate argument for not hitting the deadline based on the lounge chairs’ delivery. I don’t see how that’s going to cause them not to meet the deadline,” Mr Sands told Tribune Business.

“I don’t know how that causes them to not to meet the substantial completion deadline for buildings, services and everything else. That’s what’s got everyone wondering.”

He added that the lounge chairs should be the responsibility of Baha Mar’s current owner, the China Export-Import Bank’s Perfect Luck, vehicle, and not CCA. However, the latter’s lawsuit against the chairs’ supplier says it is also responsible for the purchase, and delivery, of all fixtures, furniture and equipment that may be needed to complete the $4.2 billion development.

Mr Sands said, though, that failure to meet the October 15 ‘substantial completion’ deadline was unlikely to provoke a dispute similar to that which occurred under Baha Mar’s original developer, Sarkis Izmirlian.

That led to the Chapter 11 bankruptcy protection filing and a near two-year delay to Baha Mar’s opening, but Mr Izmirlian has since been ‘replaced’ by Hong Kong-based conglomerate, Chow Tai Fook Enterprises (CTFE).

Its principals, the Cheng family, have extremely close ties to the Beijing government, and Mr Sands said any missed completion deadline would likely “be handled a lot differently” than the impasse with Mr Izmirlian.

The BCA chief said additional resources, financing and staff was also unlikely to be a problem this time around, as the parties involved would do whatever was necessary to overcome any obstacles.

“I don’t think we’ll see those challenges,” Mr Sands said, “but it’s a ‘heads up’ that we may have challenges in meeting the deadline. That was a soft way of putting it out there. It’s going to be interesting.

“We’ll just have to monitor it, see if it’s going to be missed, by how much, and what the impact will be. There’s a lot of activity on the ground, things are happening, so I don’t think the impact will be that much.”

The concern for the Bahamas is that any setback in completing Baha Mar’s $600 million physical construction could delay the opening of the 300-room SLS property, which is due to open the same month as CCA is supposed to finish.

A missed completion deadline could also impact the Rosewood property’s opening, which is scheduled for March/April 2018. With Baha Mar still the ‘only game in town’ when it comes to major investment projects, any further delay could negatively impact desperately-needed job creation and economic activity capable of boosting Bahamian GDP.

Edison Sumner, the Bahamas Chamber of Commerce’s chief executive, said on Monday that he had been informed by Baha Mar executives that CCA’s lounge chair woe would not impact the property’s completion and opening schedule.

But several observers have privately queried to Tribune Business whether CCA, via the lawsuit against its Florida supplier, is already casting around for excuses and scapegoats as to why it may miss the October 15, 2017, construction completion deadline.

Mr Wrinkle, meanwhile, said CCA “has a history of not meeting deadlines”. He blamed the contractor’s inability to complete Baha Mar, on budget and on time, for the three missed deadlines under Mr Izmirlian that prompted the Chapter 11 filing.

The original developer blamed “shoddy workmanship” by CCA, with the latter placing the blame with Mr Izmirlian and his team for “mismanaging” the then-$3.5 billion development.

But, describing missed deadlines as CCA’s “modus operandi”, Mr Wrinkle told Tribune Business: “If a $4.2 billion project is stuck because of lounge chairs, we’ve got serious problems.

“That’s just an insult to the intelligence of the Bahamian public to pass off the opening for lack of a couple hundred lounge chairs, when they could go next door to the Melia and borrow them.

“The Government has to be keenly aware of this company, its inability to meet deadlines, to pass inspections and deliver the project on time,” he continued.

“We should be extremely concerned. This is a crisis situation. There’s no way a few hundred lounge chairs could prevent the opening of this scope of project and its substantial completion.

“They haven’t had a proper opening yet; everything’s been soft. There’s more than meets the eye, and it certainly warrants investigation by the interested parties, including the Government. They need to send out an SOS. How does a 300-room resort require 1,420 lounge chairs?”

CCA, in a lawsuit filed with the south Florida federal court last Thursday, alleges that these 1,420 chairs are “essential to the timely completion” of the Cable Beach development.

It warns that it will be unable to meet the October 15, 2017, ‘substantial completion’ deadline for finishing Baha Mar’s construction unless Florida-based Source Outdoor is compelled to deliver.

“The project for which these chairs are intended is the most significant tourist development in recent years in the Bahamas,” the Chinese state-owned contractor said in its Friday filings.

“Its completion has been carefully calibrated to coincide with the start of the ‘high season’ for tourism in the islands. Because of the significance of this project, and the overriding importance of the completion date, CCA is contractually obligated to complete its activities by October 15, 2017.

“Any failure to meet this contractual deadline would result in immediate, irreparable and incalculable damage to CCA’s reputation in the construction industry worldwide and within the Government of the Bahamas,” CCA continued.

“It would result in unprecedented derogatory publicity at the peak of the tourism season, and the resulting harm to CCA’s good name would be irreparable and virtually impossible to overcome.”