The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

LEGALLY-mandated performance bonds were yesterday described as the "missing piece" in the construction industry by the Bahamian Contractors Association's (BCA) president.

Leonard Sands, speaking as a panellist at the sixth annual Arbitration and Investment Summit, said: "If I were to a advise any contractors ,whether they would be building a modest home at $500,000, and a supplier supplying 50 per cent of the materials, I would encourage both parties to require bonds, because if either party reneges on their obligations, no one is harmed; the surety or bond company steps in.

"That is what is missing. That is a missing piece in the construction industry. There is no a statutory requirement for that right now for such agreements."

Mr Sands, who was addressing the topic, 'Construction Adjudication: Baha Mar open, now have we learned the lessons for Construction Dispute Resolution?', said there were companies that no longer exist as a result of having done business with a $4.2 billion project that stalled amid a dispute between its original developer, Sarkis Izmirlian, and primary contractor, China Construction American (CCA). "There should have been checks and balances along the way that prevented the position that the contractor put the owner in," said Mr Sands. "If you ran into a situation, why not call in the bond? I don't think there was a time where there was a threat to call in the bond. That is quite a quandry to me, given the project of that magnitude."

Back in December, Mr Izmirlian filed a $2.25 billion damages claim against CCA, accusing the company of "one of the largest construction-based frauds in this hemisphere".

In response, CCA called Mr Izmirlian's lawsuit "a vindictive and baseless attempt to redeem his own failures to properly manage his companies and their investment in the Baha Mar resort project".