The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Baha Mar’s main contractor is sticking to its position that it cannot produce documents for a New York court case because it remains “locked out” of its offices at the $3.5 billion project site.

Michael Guiffre, China Construction America’s (CCA) US attorney, asserted that his client was unable to produce documents for ‘legal discovery’ “because it has been locked out of its project offices since June 2015”.

Attorneys for Controlled Demolition Inc (CDI), a US sub-contractor that is demanding CCA (Bahamas) pay it an alleged outstanding $754,704 balance for work completed on the $3.5 billion project, have accused the Chinese state-owned company of employing this as part of “stonewalling” tactics.

Mr Guiffre, though, denied this in an August 22, 2016, letter, and argued that CCA was “only capable of producing documents in its possession, custody, or control; it cannot produce what it does not have”.

“Defendant [CCA] stored most of its hard copy and electronic data relating to the project at its project site offices,” he added. “Defendant has repeatedly explained that it does not have access to these documents because it has been locked out of its project offices since June 2015, when the project owner [Sarkis Izmirlian] filed its bankruptcy petition.

“Far from seeking to ‘stonewall’ discovery, [CCA] has sought to overcome the hurdles presented by its lack of access to its project offices. Defendant is continuing its efforts to identify alternate sources of responsive documents, and it believes that it has additional e-mail data which may contain responsive documents. Defendant is working to produce any additional responsive documents before the president of the company is deposed by plaintiff [CDI] in September.”

Document discovery is a key part of the legal process, as it enables all parties to obtain and exchange evidence that is relevant to their respective cases.

And many observers are likely to be suspicious of CCA’s assertions that it remains ‘locked out’ of its offices at the Baha Mar project site, given recent developments involving the $3.5 billion investment.

Given that CCA has now signed an agreement with Baha Mar’s secured lender, the China Export-Import Bank, for the project’s construction completion, its representatives are already likely to be back on-site - especially as remobilisation is scheduled to occur this month.

The Baha Mar project site is also under the control of the Deloitte & Touche receivership team, which acts as agents for the China Export-Import Bank. The latter is effectively a CCA ‘affiliate’, given that both are owned by the Beijing government.

As a result, CCA, which had already removed many of its computers and files around the time of the Chapter 11 bankruptcy protection filing, should have no difficulty ‘accessing’ the Baha Mar site.

Its seeming ‘inability’ to access information relating to work on Baha Mar, especially its construction contracts, may also leave some wondering how effective it will be in assessing and adjudicating claims submitted by Bahamian creditors - especially its sub-contractors. CCA has a seat on the five-person committee that will oversee the creditor payouts.

Meanwhile, Mr Guiffre told the southern New York federal court that CCA had produced some 1,600 pages of documents in response to CDI’s discovery requests, but alleged that the latter had failed to clarify some of its demands.

He added that it was incorrect for CDI to suggest that the Baha Mar project had been “terminated”, an event that in any case would have “no bearing on [CCA’s]defense that addressing plaintiff’s claims before the Dispute Resolution Board (DRB) is a condition precedent to this lawsuit”.

Mr Guiffre also accused CDI of seeking “to obtain every scrap of derogatory information” available on his client in relation to the Baha Mar project via its request for documents dealing with Mr Izmirlian’s claims of “shoddy workmanship” and other alleged breaches.

“Plaintiff’s [CDI] argument that it is entitled to seek discovery as to all payments defendant [CCA] received from the owner [Mr Izmirlian] is similarly overbroad and without merit,” Mr Guiffre said.

“Such a request, particularly in a multi-billion dollar project involving numerous sub-contracts, work packages and phases, seeks irrelevant information that is grossly disproportionate to the needs of this case, in which plaintiff seeks $754,704.

“Moreover, as is standard practice in the construction industry, the owner allocates payments to specified work. Thus, defendant agreed to produce payment applications it submitted to the owner and related documents to the extent they correspond with or relate to plaintiff’s payment applications or plaintiff’s work.”