The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government was yesterday urged by a former Contractors Association president to develop measures that will stop Bahamians “getting left holding the bag over and over again” on troubled foreign direct investment (FDI) projects.

Stephen Wrinkle told Tribune Business that the construction industry, and wider Bahamian private sector, could not afford a future repeat of what happened in the Baha Mar impasse.

Calling on the Government not to pass up the opportunity, the ex-Bahamian Contractors Association (BCA) chief said the construction industry had not only performed as requested, but effectively carried Baha Mar financially for 15-18 months as a result of not being paid.

“It would be a shame if the Government does not adopt policies to prevent this situation reoccurring with Bahamian contractors and suppliers,” Mr Wrinkle told Tribune Business.

“There’s no reason for us to get left holding the bag on these foreign direct investment projects, and it happens over and over again.”

While Mr Wrinkle suggested no specific measures or policies himself, there have been past calls - particularly from the trade unions - for foreign investors/developers to be required to lodge performance bonds or a similar type of security.

These funds, which would be placed in escrow, could be used to compensate Bahamian creditors should the developer flee the Bahamas and leave no assets behind in this nation to claim against.

Some 123 Bahamian contractors are said to be owed a collective $74 million for work performed on Baha Mar, and recovering this sum is not as straightforward as it first appeared.

While those contractors employed directly by Baha Mar and its companies will be able to submit compensation claims via the process announced by the Government, those hired by the project’s main contractor, China Construction America (CCA), must negotiate directly with it for monies owed.

Mr Wrinkle told Tribune Business on Wednesday that based on CCA’s past performance in dealing with Bahamian contractor claims, the prospects of its former sub-contractors receiving what they are owed has “diminished substantially”.

He urged those contractors whose claims fell into the ‘CCA pool’ to unite, form a group and prepare to take legal action against the Chinese contractor in the Supreme Court if they were dissatisfied with the compensation owed.

“You know the saying: ‘We get swing’. There it is. We got swing by the Chinese,” Mr Wrinkle told Tribune Business. “I’m so glad I got out of it [working on Baha Mar[].

“The reason Bahamian contractors got more and more involved was because Baha Mar was not satisfied with the quality of work from CCA, and the productivity from CCA.

“That’s why they aggressively moved to take back packages of work that could be returned back to the Bahamian contractors. They [Baha Mar] formed a direct relationship with Bahamian contractors, and they were able to finish 97 per cent of the work.”

In contrast, Mr Wrinkle said CCA “never fully mobilised the site with skilled workers”, and never met any of the deadlines it agreed to for completing Baha Mar on time and on budget.

Expressing concern that CCA had not been held to account for its alleged failings, which many believe contributed directly to Baha Mar’s missed opening and year-long impasse, the ex-BCA president added: “CCA never finished the contract.

“It’s [the claims process] great for people who worked for Baha Mar, but CCA has done nothing in terms of completing the performance of the contract works.

“I’m afraid the Bahamian contractors will have to take it to court. If the Government couldn’t negotiate with them [CCA] to settle it, how do you think the contractors are going to negotiate with them? The contractors have been left with no representation whatsoever to settle these accounts.”

Prime Minister Perry Christie, in unveiling the agreement with the China Export-Import Bank, Baha Mar’s secured creditor, for the project’s construction completion, said CCA had to compensate its sub-contractors and vendors as part of the deal.

“China Construction will finish the works, and will resolve outstanding claims with its suppliers and sub-contractors,” Mr Christie said that night.

“Going forward, many of the same people and companies who were previously contracted will be re-engaged to complete the project.”

Typically, few details were provided, and there was nothing from the Prime Minister to indicate that there will effectively be two claims recovery processes - one for Bahamian creditors of the Baha Mar group of companies, and another for CCA’s sub-contractors and vendors.

The Government’s view is that because CCA (Bahamas) and its parent are solvent, with their own assets, they will be able to satisfy creditor claims from their own financial resources. And creditors will also have legal recourse if they are dissatisfied with the settlement on offer.

While suggesting that this week’s revelations had raised questions about the Prime Minister’s promises on compensation, Mr Wrinkle conceded that the Government had been left with little choice if it was to complete Baha Mar and get the project open.

Accomplishing this, he added, was now the main objective for both the Christie administration and wider Bahamas, with the ex-BCA president warning that it will require “a Herculean effort”.

“At this point in the game, it’s basically irrelevant who finishes it. The Government is at a terrible disadvantage in trying to get it finished anyway they can,” Mr Wrinkle told Tribune Business.

“It’s an extremely difficult situation at Cable Beach. Nobody knows the extent of the remediation works. That has to be considered too. There’s probably a lot more than meets the eye to get this place finished.”

Mr Christie previously estimated that Baha Mar’s construction completion would cost around $600 million, but this figure is likely to have increased, given that the resort properties will have deteriorated in the 15 months since the original developer filed for Chapter 11 bankruptcy.

And Mr Wrinkle said the fall-out from Baha Mar’s initial demise, with unhappy guests and a tarnished reputation, meant it may be difficult for any buyer to attract top-notch hotel and casino brands as operators.

He added that significant pre-opening expenses would be incurred, especially for staff recruitment, training, marketing and re-branding, potentially taking the cost of completing and opening Baha Mar to $1 billion or more.

“There’s a lot of things to happen before we receive guests at this facility,” Mr Wrinkle said. “It’s a really Herculean effort.

“It’s sad they dismissed Mr Izmirlian from this game. The one man who knew all the moving parts has been totally dismissed. They’re [the Government] trying to juggle a bag of marbles to make it work. It’s going to be very difficult to make it happen.”