The Tribune

By LARRY SMITH

WELL, we all know by now that the prospect of Baha Mar opening without untold collateral damage to our tourism brand, our national reputation and investor confidence, is more and more unlikely.

In the works since 2005, the “greatest development in the western hemisphere” – the project that was supposed to save our economy and solidify Perry Christie’s legacy – has now become a millstone around our collective necks.

After ramping up staff and supplies, and booking guests for the anticipated March opening (already postponed from December by the contractor), construction came to a grinding halt, and Baha Mar was left twisting in the wind – with no income to pay refunds, salaries or operating expenses.

There was no way, under such circumstances, that anyone close to the situation could be unaware of the likely eventual outcome. But that was the political line promulgated by the government, which also claimed it was not about to take sides in a private dispute.

Within days, all pretence at impartiality and civility had vanished, and the Attorney-General was in court attacking Baha Mar in concert with the Chinese, while offering to pay the salaries of employees for a month to avoid a political backlash.

Clearly, relations between the parties had broken down completely. And things only worsened this week. A Progressive Liberal Party-oriented website not run by Foreign Minister Fred Mitchell has called explicitly for the government to deport Sarkis Izmirlian. And consider these late Monday-night shenanigans:

First, at 7pm, the developer issued a terse statement accusing the government of concocting a sideshow over its Chapter 11 bankruptcy application.

“One truly has to wonder why the government is not fully supporting the project’s developer – who, along with the people of the Bahamas, has been victimised by the repeated failures of the general contractor to complete construction … the government has sown confusion and doubt about the future of Baha Mar.”

At quarter to midnight, the Prime Minister hit back - questioning Sarkis Izmirlian’s mental state.

“(Baha Mar’s) leadership appears to be going to pieces under the mounting pressure. I am at loss to recall any previous instance of a foreign investor who took it upon himself to publicly excoriate the government in such a shrill and belligerent manner. This is no time for Mr Izmirlian to buckle under the pressure and lose his balance.”

And finally, after midnight, China Construction America (Bahamas) released, for the first time ever, a statement blaming the developer’s mismanagement and dishonesty for the project delays.

“Baha Mar’s decision to file for bankruptcy protection is the direct result of its failure to secure adequate financing and its mismanagement of the design of the project, (including) over 1300 construction change directives … (the) recent public attempt to blame CCA Bahamas and our subcontractors for the delays is misleading and dishonest.”

All this came at the end of a day when Prime Minister Christie and Opposition Leader Hubert Minnis couldn’t even agree on a time to meet to discuss the country’s biggest economic crisis in recent times.

The spiked statements rushed out late Monday night showed that the biggest development project in the region had sunk to the level of a schoolyard slanging match. But more to the point, they also revealed that the government was taking sides with the Chinese to gang up on the developer.

The reason for this is clear to me – the government has made a political calculation that the Chinese have more to offer than Izmirlian does. And we don’t even have to entertain any of the sleazy corruption stories that are running wild around town to accept this.

According to one senior political insider, “Who is questioning whose sanity here? Something stinks at Baha Mar and we have not heard the end of it. The national reputation issue is of grave concern – we may not be able to recover from this.”

Former Attorney-General Carl Bethel characterised the government’s intervention as “a fit of pique” that would lead to further delay. “The government said it would not take sides, but by intervening in a private sector dispute they have effectively taken the side of (the Chinese).”

The scale of the dispute is as grand as the $3.5 billion project itself. The developer, a long time permanent resident and investor, is seeking multi-millions in compensation for substandard construction work. The Chinese state-owned contractor has countered with similar demands for work completed but not paid. And hundreds of millions more will have to be spent before the resort can open.

Meanwhile, construction has stopped, employees have been furloughed, and our Prime Minister is whining about not being taken seriously.

Stories have circulated for months about sabotage by Chinese workers, infrastructure issues, safety code infractions, money laundering and serious communication problems between Chinese- and English-speakers working on the project.

The contractor has complained about 1,300 change orders, and Works Minister Philip Davis has confirmed that “several stop orders” were issued by government inspectors.

According to one local contractor with experience in large projects, “this was a complicated project, but the holy grail of a contractor is to finish on time and on budget. Change orders typically have cost and time implications that can involve renegotiation of the contract. Stop orders require that all work ceases and will also impact completion time.”

We have yet to hear of any fallout from the luxury hotel brands that have signed on to the Baha Mar project (Hyatt, SLS Lux and Rosewood). But a protracted delay in finding a resolution to the current impasse is likely to force these international companies to rethink their participation in the resort.

A foreclosure by the Chinese creditor or a liquidation under Bahamian law would lead to years of protracted and unsightly wrangling, with huge implications for the economy, not to mention large sums siphoned off by predatory lawyers and accountants.

But yesterday, it appeared the parties had decided to make a last-ditch effort to resolve their differences through negotiation. Baha Mar asked the Supreme Court for an adjournment on its application for endorsement of Chapter 11 proceedings, so that “good-faith negotiations” could continue.

The adjournment was agreed to by lawyers for the Chinese creditor, the Chinese contractor and the government. Justice Ian Winder adjourned the matter until July 20, so we now have two weeks to speculate on the outcome.

We can only hope that all the parties will be able to restrain themselves. At the end of the day, the highest priority should be given to the Bahamian people and the future of our economy.

After all, what would you think if you were looking in from the outside at the ridiculous spat between Christie and Minnis over such a serious and urgent matter? Really, whose sanity would you be questioning?

What do you think? Send comments to lsmith@tribunemedia.net or visit www.bahamapundit.com