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Payment Row Caused Baha Mar ‘Slow Down’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government has intervened in the row between Baha Mar and its main contractor, amid suggestions that China Construction America slowed down its work rate in the run-up to the planned March 27 opening due to a payment dispute.

Multiple Tribune Business sources, speaking on condition of anonymity, confirmed that Prime Minister Perry Christie last week chaired a meeting of all parties involved in the $3.5 billion Cable Beach development in a bid to ensure they could still work together to get the project open.

The meeting represented the first direct involvement of the Bahamian and Chinese governments in attempting to resolve the latest problems afflicting the mammoth resort project.

Apart from Mr Christie, those present at the Prime Minister’s Office included deputy prime minister Philip Davis; minister of state for investments, Khaalis Rolle; Baha Mar chairman Sarkis Izmirlian; China Construction America representatives Daniel Liu and ‘Tiger’ Wu; the Chinese Ambassador to the Bahamas; and a host of Ministry of Works personnel.

Tribune Business was told by well-placed sources, with knowledge of the meeting, that China Construction America “admitted they slowed down” in the lead-up to Baha Mar’s planned March 27 opening because of a dispute with the developer over the payment it should have received for February’s construction work.

This admission was said to have acted as a ‘bombshell’ revelation for some persons attending, given that China Construction had given a commitment - and subsequent assurances - that the $3.5 billion project would open on time.

Highly-placed sources within the Christie administration yesterday corroborated that the meeting took place and much of the detail, including those who were present.

Yet, while they stopped short of confirming that China Construction America made the ‘slowdown’ admission, the same sources said they had been informed of this outside the meeting.

“China Construction America admitted they had slowed down the project because a month’s payment for February was delayed,” one source said of the meeting’s key revelation. “That was a comment made in the Prime Minister’s Office.

“It was very telling, and everyone seems to wondering why did they admit that, and after they’d given assurances for the opening on March 27.”

Baha Mar, in announcing the opening’s postponement, blamed its Chinese contractor partner for the delay. It said China Construction America had given repeated assurances that the March date would be hit, while also blaming the contractor for failing to meet the necessary quality standards.

China Construction hit back by slamming Baha Mar’s comments as “totally inappropriate”, plunging relations between the two sides - who are equity partners and sit together around the Boardroom table - to a new low.

Mr Izmirlian, though, returned to the attack last week. In an address to the National Conclave of Chambers of Commerce, he urged China Construction America to understand the “discontent” it was causing in the Bahamas by failing to complete the Baha Mar project.

“Our general contractor needs to meet its assurances so we are in a position to properly open this world-class destination resort,” Mr Izmirlian told the Conclave’s luncheon.

“Indeed, this amazing property is supposed to be the symbol of international co-operation. It is now up to our general contractor to decide how this next chapter will be written.

Baha Mar spokespersons declined to comment when contacted by Tribune Business yesterday, but sources familiar with developments confirmed that China Construction’s February 2015 payment was delayed due to differences over the sum due.

“The payment was delayed,” one source, speaking on condition of anonymity, confirmed. “But the two parties were in negotiations to determine the value of the sums due. All other payments had been met.”

The source questioned why China Construction America chose to slow down the project’s ‘work rate’ at the vital moment, namely the month leading up to the planned opening.

One Cabinet level source, while confirming the meeting took place, was unable to corroborate whether China Construction America confessed to the alleged ‘slowdown’ in the meeting with the Prime Minister.

Yet the source said: “I don’t know if it [the comment] was made in the room, but it’s not the first time I’ve heard that.”

They added that the meeting was called to update the Government on Baha Mar’s progress, with the Prime Minister “looking for commitments as to when the thing will be completed and open”.

“The dates keep moving around, and hopefully that happens soon,” they said.

Another added: “The Prime Minister was trying to encourage the parties to work together to resolve this, and ensure there’s no further delay. It’s not only the reputation of Baha Mar that’s at stake, but that of the Bahamas.

“Baha Mar hasn’t met certain deadlines. That triggers no issues with the Government, but all the resort brands [Hyatt, Rosewood and SLS] are very anxious. The brands are now projecting June 1, and going online with hotel rooms and reservations for that date.”

Tribune Business was unable to reach China Construction America representatives for comment before press deadline last night.

Comments

banker 5 years, 5 months ago

Clever .. someone is playing games. Suppose you have deep pockets and want to eliminate your partner. Any you know that your partner is financed to the hilt. Maybe having cash flow problems due to a late opening? So what do you do? You drag your feet. Drag out the opening. Wait for the bottom line to turn into a big mess of red ink. Then you step up to save the day, but guess what -- you are the majority shareholder now.

This is just pure speculation, but if my name had very few syllables, these are the kinds of power games that I would play. Why else would an equal partner shoot themselves in the foot?

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Cornel 5 years, 5 months ago

If you look on the Rosewood and Hyatt web sites the firs day a reservation can be made is August 1. . . .

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newcitizen 5 years, 5 months ago

It's pretty common in construction to slow down or even stop when the money does. CCA was working overtime to meet the deadline, but the money stopped, so the go back to working regular hours. They also can't be blaming the missed opening on a slow down of work for one month. They have now been working for almost an entire extra month and are still nowhere close to being finished. They weren't working at double or triple speed, so the date would have been missed either way.

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banker 5 years, 5 months ago

OK, I understand the slow down, but aren't they equity partners? I don't understand why they are shooting themselves in the foot by dragging their feet??? Unless they had an ulterior motive for doing so.

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newcitizen 5 years, 5 months ago

The fact that they are a partner makes it weird. Your original post about them using it to leverage position is interesting and does make a lot of sense.

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sal329 5 years, 5 months ago

Will it open by July 1, 2015 ??? What a crazy way to encourage visitors after these delays. I hope all is well by June !!! S. NYC

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TheMadHatter 5 years, 5 months ago

So nobody seems to care WHY the money slowed down? The specifics of the dispute and how much was disputed?

What it it was found that the amount disputed was only like $30 million? Then it would fall on Min of Finance or whoever to look STUPID for sinking our country for such a trivial sum.

But, I guess this info is simply not available (as usual).

TheMadHatter

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John 5 years, 5 months ago

It is good to see that Bah Mar has stationed a "crossing guard" at the padestrain crossing near the entrance by Melia during rush hour. This has improved the traffic flow in that area to the relief of motorists heading in both direcxtions during the morning rush.

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