The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The DNA’s leader yesterday said he was “very concerned” that Bahamian taxpayers will ultimately be landed with the multi-million dollar bill for compensating Baha Mar’s creditors via the tax incentives granted to the Chinese.

Branville McCartney told Tribune Business he had “no doubt” that the China Export-Import Bank and China Construction America (CCA) had received extra investment concessions in return for pledges to pay unspecified sums to Baha Mar’s unsecured creditors.

Describing CCA as “the real winners” from the Baha Mar debacle, Mr McCartney said he was “amazed” that the Chinese state-owned construction company was getting “another bite at the apple” despite the allegations of ‘shoddy workmanship’ surrounding its previous work on the $3.5 billion development.

And with the Government providing little to no detail on the Supreme Court-approved agreement struck with the China Export-Import Bank for Baha Mar’s completion, the DNA leader said it was impossible to determine whether it was a ‘good deal’ for the Bahamas and local creditors.

“The devil is in the detail, and we certainly don’t have sufficient details right now,” Mr McCartney told Tribune Business, adding that he was “very concerned about” the amount of tax and other investment incentives granted to the two state-owned Chinese entities.

He suggested that they would have demanded such concessions in return for compensating Bahamian creditors, meaning that payments to the latter would effectively be financed from tax dollars that will never reach the Public Treasury.

“There’s no doubt about that. That is probably what is going to happen,” said Mr McCartney.

“The Prime Minister was talking about the fact that Baha Mar employees will receive the monies owed to them... If they say they are going to pay the workers, that money is going to come from the monies the Chinese construction company and bank will not pay as taxes.”

Tribune Business, though, was assured by sources familiar with the terms of the Government’s agreement with the China Export-Import Bank that the burden for compensating Bahamian creditors will not ultimately be placed upon the Public Treasury and taxpayer (see other article on Page 1B).

This newspaper was told specifically that the investment incentives being granted for Baha Mar’s construction completion are no greater in sum, or extent, than what the Government would normally grant for a resort development of this size.

Prime Minister Perry Christie on Monday night said China Export-Import Bank, Baha Mar’s $2.5 billion secured creditor, had agreed to finance the project’s construction completion.

CCA will resume its role as the main contractor following construction remobilisation, with the company having agreed to “resolve” outstanding sums due to its sub-contractors and suppliers for work completed on Baha Mar.

In return, the Prime Minister added that the Government will “extend appropriate concessions, to facilitate the construction and promote the successful future operation of the resort”.

However, the absence of financial figures and specific details has already created much scepticism about the nature of the agreement between the Government and the bank, and whether it will actually deliver what the Prime Minister is promising.

Echoing those concerns, Mr McCartney said he was “amazed” that CCA had been re-engaged to complete Baha Mar, given the previous concerns and allegations regarding the quality of its previous work at the $3.5 billion project.

Many observers believe that CCA bears significant responsibility for the impasse that resulted in Baha Mar’s Chapter 11 bankruptcy protection filing last June, but the company now appears set to earn further millions while escaping accountability for previous actions.

“I think the real winner in this is the Chinese construction company,” Mr McCartney told Tribune Business of CCA. “We know they are going to be the ones to finish the work. They are the ones who are probably going to get up to probably $1 billion for more work, in addition to what they’ve been paid already.

“The ironic part about this is that this is the same company that allegedly did the shoddy workmanship in the first place.”

CCA has vehemently refuted and denied such claims, first made by Baha Mar’s original developer, Sarkis Izmirlian, and instead blamed the latter’s actions for the project’s demise.

However, Mr McCartney continued: “They [CCA] have not paid Bahamian contractors and workers, and now have another bite at the apple.

“It amazes me that this construction company has another bite at the apple again. CCA failed to meet its own self-imposed deadlines [for completing Baha Mar] twice before, and we’re still wanting, giving the work to this construction company to do it again? It’s a farce.

“This is the same company that, after they did work at Baha Mar that was not up to code, then turned around and started work at The Pointe,” the DNA leader added.

“To me, it seems that CCA has their foot on this government’s neck.”

Mr McCartney said the Prime Minister had also “failed to answer” who Baha Mar’s potential purchasers might be, other than to say the Government had agreed with the China Export-Import Bank that it should be a “world class hotel and casino operator”.

The DNA leader also questioned whether the agreement was putting “the cart before the horse” in completing Baha Mar’s construction before selecting a buyer, given that the latter would likely want to choose its own contractor and design specifics.

In unveiling the agreement with the Chinese, Mr Christie said “funds will be made available” for Bahamian contractors and other local creditors “to recover a significant portion, and possibly all”, of the monies owed to them.

Again, no details were provided on when payments would be made, how much and by whom to the Bahamian unsecured creditors.

“If you look at what the Prime Minister said, it was really nothing, because it was an agreement for an agreement,” Mr McCartney told Tribune Business.

“All this pomp and pageantry by the Prime Minister, it was a show. This was a typical Christie show to deflect and politick at the same time.”

The DNA leader suggested the Baha Mar announcement was timed to deflect public attention away from Moody’s downgrade of the Bahamas’ creditworthiness, plus the revived Renward Wells Letter of Intent (LOI) saga.