The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Baha Mar and Value-Added Tax (VAT) have collectively “sucked” between $700-$900 million out of the Bahamian economy since 2015, a local businessman estimated yesterday, amid expectations that some funds may now be recovered.

Robert Myers told Tribune Business that while he would have liked “more transparency” in relation to the Baha Mar claims process, and a broader committee to oversee it, the Government deserved some credit for getting the Chinese to finance the payouts.

He added that “assuming” the payouts actually happened, and were done fairly, Bahamian businesses and the wider economy might recover at least some of the money that had been “lost” since January 1, 2015.

Central Bank data shows that some $600 million in VAT revenues were collected by the Government in the first 11 months of the 2015-2016 fiscal year, coming on top of $182 million that was realised during the first five months of the 2015 calendar year.

Although the combined $782 million is a gross figure, and some of this sum will have been either ‘netted-off’ or returned as VAT refunds and credits, Mr Myers estimated that with Baha Mar debts to Bahamian creditors ranging from $100-$160 million, between $700-$900 million had been removed from the Bahamian economy since New Year’s Day 2015.

“Baha Mar sucked that money out of the economy. It’s tens of million, and possibly multiple tens of millions, but that money has gone,” Mr Myers told Tribune Business.

“When you consider that, on top of the VAT money, there’s probably been $700-$900 million taken out of the economy [since] 2014. That’s a lot of money. That explains why we’ve had negative GDP growth for the last two years.

“Between VAT and Baha Mar, they blew the economy up. There was no disposable income. If there’s no disposable income, everything stops. People stop spending, and eventually business will grind to a halt.”

Mr Myers said that even if Baha Mar creditors recovered just a portion of what they are owed, it would provide a significant economic stimulus and a potentially “welcome Christmas present” for many.

While suggesting that the claims adjudication and payout process could have been structured better, the former Chamber of Commerce chairman said the Christie administration was to be commended if creditors were to receive compensation.

“I’d like to have seen a lot more transparency and a broader base to the committee,” Mr Myers told Tribune Business. “But based on what’s been said, we should be OK.

“We should be paid everything, which will be a welcome Christmas present at a time we need it. We’re certainly under $500,000.”

Mr Myers’ business, Caribbean Landscaping, is among the Baha Mar creditors, owed around $200,000. James Smith, the former minister of state for finance, who is a member of the payout committee, has said creditors owed $500,000 or less should be compensated in full.

“Ideally, that committee should have had somebody from the Bahamian Contractors Association, somebody from the Chamber of Commerce, somebody from Baha Mar on it,” Mr Myers added. “And the process should have been transparent. What’s good for one is good for all.”

He argued that creditors owed $500,000 or more should have been given more certainty about how much they were likely to recover, suggesting that they should have been supplied with percentages based on the amounts they were claiming.

Mr Myers also suggested that the various creditor classes - the former Baha Mar employees, and contractors and vendors - should receive their payouts at the same time.

While the committee is hoping to conclude all payouts to the 2,000-plus former staff by end-September, thereby dealing with around 90 per cent of Baha Mar’s creditors, it is targeting year-end to have dealt with all others.

Mr Myers, though, argued that paying everybody at the same time would demonstrate fairness, and ease fears that some creditors were being given preferential treatment.

“That will take out a lot of the flak and the stress that the Government is going to take,” he told Tribune Business. “If you start trickling payments out to people”, they are going to start criticising.

Mr Myers also conceded that Bahamian sub-contractors and suppliers of China Construction America (CCA), Baha Mar’s main contractor, had “no guarantees” that they will be paid.

While Prime Minister Perry Christie said CCA would compensate them as part of the deal to complete Baha Mar’s construction, these Bahamian creditors will not participate in the claims process, and will have to instead negotiate their compensation directly with the Chinese state-owned contractor.

However, given that the China Export-Import Bank, Baha Mar’s secured creditor, is under no obligation - legal or otherwise - to make “about $100 million” available to compensate Bahamians for the development’s debts, Mr Myers said the Government had likely secured the best deal it thought possible.

“I must say that the Government should be commended for negotiating that, because it’s a bloody mess,” he told Tribune Business.

“It’s taken for ever, but we have to be thankful we’ve got the Chinese to do this thing, because it’s tens of millions that have been sucked out of the economy that might get put back in.

“Assuming it’s actually done and it’s fair, hats off to them. They [the Government] deserve credit for that.”

Some observers, though, may question whether the Government obtained the best possible deal for Baha Mar’s Bahamian creditors. They will likely point to the offer by original developer, Sarkis Izmirlian, to make all of them and the China Export-Import Bank whole, which was neither accepted by the Christie administration nor the Chinese.