The Tribune

Let’s be clear: If the Government’s bid to appoint provisional liquidators to take over Baha Mar succeeds, then Sarkis Izmirlian and his family will be out, potentially costing them their entire $850-$900 million investment.

It’s certainly legitimate to ask whether Prime Minister Perry Christie - via the winding-up petition - is showing the depth of his gratitude to a man (and family) who, if court documents are accurate, he personally sought out to redevelop a dying Cable Beach into a tourism mecca.

Few, if any, investors would have stuck at the Baha Mar project for the 13 years that Mr Izmirlian has done, and all the time and money this has entailed. He and his family have borne most of the risk, and had several opportunities to walk away if they had so chosen.

Mr Izmirlian could have done so in 2007, when Mr Christie and his first administration failed to sign-off on the various land and road ‘side agreements’ just prior to that year’s general election, seemingly fearing a loss of votes should the arrangements become public.

He could have done so again in 2009, after Baha Mar’s initial partner, Harrah’s Entertainment, walked away following its ownership change and fears about the global economic slump.

But no, Mr Izmirlian stuck at it in his bid to give Mr Christie the legacy he craved: A Cable Beach to tank alongside the ‘legacy’ that Atlantis had given to his predecessor, Hubert Ingraham. Mr Izmirlian eventually managed to find the necessary financing from China, little realising that deal would be the source of the present predicament.

Cutting through the Prime Minister’s national address last Thursday, no one should be fooled by his statement that the interests of Baha Mar (meaning the Izmirlians) will be protected by the appointment of provisional liquidators under the supervision of the Supreme Court.

The Government’s playbook is clear. Get the PricewaterhouseCoopers (PwC) team in. They will end the Delaware Chapter 11 proceedings, ensuring Baha Mar is brought under the control of the Supreme Court - an advantage for the Government and China, but not Mr Izmirlian.

The PwC team will then work with China Export-Import Bank, as financier, and China Construction America, as contractor, to come up with a plan to complete Baha Mar and open it in double quick time. The Izmirlians will be cut out.

Once that happens, the provisional liquidators’ work is finished, and a completed Baha Mar can be passed to China Export-Import Bank as the main secured creditor. The bank can then choose whether to remain as owner, or seek a buyer.

Many observers, including Democratic National Alliance (DNA) leader Branville McCartney, have questioned the almost indecent haste with which the Government filed its winding-up petition with the Supreme Court.

Given the complex issues and deep-rooted dispute between the parties, the Government’s self-imposed 48-hour deadline for all sides to reach an agreement in Beijing last week was wildly unrealistic.

Mr McCartney last week suggested there were likely non-diplomatic protocol reasons for why the Prime Minister did not attend, and he questioned whether the Government’s attendance was effectively for ‘PR purposes’. Its team travelled an awfully long way at the taxpayer’s expense when its winding-up petition strategy appeared to have been ‘pre-programmed’.

The Government’s desire for Baha Mar to be opened as quickly as possible is understandable, given its projected economic impact and employment creation. And there is the spectre of Standard & Poor’s (S&P), and a credit rating downgrade that could reduce the Bahamas to ‘junk’ status, within 90 days.

Clearly, the Christie administration has decided the Chinese have more to offer than their 13-year partners in bringing this dream to fruition. But, in its haste to solve the Baha Mar dilemma, is it in danger of sacrificing long-term sovereignty and the economy for short-term gain?

In choosing to seemingly take China’s side, the Prime Minister appears to be ignoring the fundamental root of the Baha Mar problem: China Construction America, the project’s contractor, failed to deliver on time and on budget.

This sent Baha Mar into the cash crisis that prompted its Chapter 11 filing, and both court-filed documents and interviews with witnesses to the project’s construction confirm there is a case for the contractor to answer. No doubt.

Baha Mar seems to have made life far from easy for China Construction America, a contractor it clearly never trusted from the start in 2011, with allegedly late designs and numerous changes that did not account for extra time and monies. In the absence of trust, it could only head one way: Downhill.

There is more than enough blame to go around over Baha Mar; how it should be apportioned is up to someone else to decide. Yet the Government has abandoned its original role of neutral mediator, sided with a party that is at least partly culpable for the problem, and intervened in spectacular style with its winding-up petition in what is a commercial dispute. All with the seeming goal of ousting Mr Izmirlian in concert with the Chinese.

The Prime Minister appears to be jettisoning a developer to whom he, his government and the country owe so much for sticking at it when others would have quit years ago. The suspicion continues to be that the Government is solidly in China’s camp because it needs Beijing to come through on the economic/investment ‘wish list’ that Mr Christie took with him to Beijing in early January. Translation: The Prime Minister, and the Government’s, re-election chances probably hinge on how much China delivers on, and pi* them off by siding with the Izmirlians on Baha Mar is not what the doctor has ordered when it comes to achieving this particular objective.

Has Mr Izmirlian made mistakes? Definitely. We all do. And one can understand his frustrations getting the better of him, given that he is so close, yet so far, from seeing his 13 years’ effort come to fruition with a project that is, tantalisingly, said to be 97 per cent complete.

He has certainly said too much. The “shoddy workmanship” comment should never have been made in public, as it inspired the Chinese to freeze Baha Mar out and move to take over the project. And the public spats with the Prime Minister and the Government do little credit to either party, only inflaming tensions further and making resolution more difficult.

Yes, there has been provocation. And the Prime Minister and his administration may well be feeling hurt, betrayed, blindsided and ‘stabbed in the back’ by the Chapter 11 filing. But Mr Christie appears to have made a classic mistake: He has taken all this personally.

This is business, and requires cool heads, not emotion. He and his Government also appear to have “wrapped themselves in the flag” by repeatedly raising the issue of sovereignty, calling for the matter to be resolved in the Bahamas rather than Delaware - a tactic likely to be designed to swing public opinion behind the Government (whose team had no difficulty rushing off to China).

Should Baha Mar have been developed in phases like Atlantis? Certainly. Was it too ambitious? Probably. Does Baha Mar need to pay its bills and taxes? Absolutely. Is it too big to fail? No.

While attorneys always work on a ‘twin track’ approach, settlement as well as litigation, it appears that the Baha Mar dispute will now have to be resolved in the courts. That will do nothing for achieving the objective all parties wants: Getting Baha Mar open and completed as quickly as possible. In fact, a protracted legal battle may well push any opening back into 2016 at the earliest. Yes, Baha Mar will open, but under whose ownership and when still have to be answered.

Yes, China has much to offer the Bahamas. It is an economic powerhouse, and a potential source of much trade, investment, employment and financial services and tourism business. The Government would be foolish to ignore such opportunities, and China is key to Baha Mar, not least because the China Export-Import Bank has a $2.4 billion mortgage secured on the Cable Beach real estate.

But the Bahamas must remain grounded in reality and develop a long-term strategy. These are state-owned Chinese entities it is dealing with, and their investment is dictated by Beijing’s geo-political strategies. China is still effectively a one-party dictatorship, and the Communist Party’s tentacles often run deep into all state-owned businesses.

The investments by Hutchison Whampoa in Freeport, and China Construction America at the British Colonial Hilton, are fine. These are private deals. But the Government should be very careful about giving the keys to downtown Nassau’s redevelopment to the Chinese - it would give the Beijing government too much sway over this economy.

This leads back to Baha Mar, and the question of whether the Government may sacrifice the long-term for short-term gain. Prime Minister, it’s your call, but be careful.