The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Baha Mar’s contractor yesterday slammed assertions by the developer that it was “a more effective and appropriate champion” of the Bahamian people’s best interests than the Christie administration over the $3.5 billion project.

The riposte came in a letter to US Bankruptcy Judge Kevin Carey from one of China Construction America’s (CCA) US attorneys, Michael Guiffre, who argued that Baha Mar was trying “to have it both ways” over the two sides’ discovery dispute.

He alleged that Baha Mar, in complaining that CCA and its attorneys have yet to provide it with 302 requested documents, was attempting to re-open an issue that the Delaware Bankruptcy Court had ruled on during an August 10, 2015, hearing.

Judge Carey had allowed discovery between the two parties to proceed while maintaining the non-disclosure privileges asserted by CCA, but Mr Guiffre’s letter alleged that the Delaware court had “openly questioned” the relevance of the information being sought by Baha Mar.

CCA is standing by the ‘common interest’ it has with the Bahamian Government and China Export-Import Bank, plus attorney-client privilege, as the basis for “withholding hundreds of documents” from Baha Mar’s discovery demands.

The developer believes these are essential to proving its claim that there was a ‘conspiracy’ between the three parties to oust its principals, the Izmirlian family, from the $3.5 billion Baha Mar project.

Judge Carey found that it was “a close question” as to whether CCA had a ‘shared interest’ defence to document production, adding: “I don’t think it’s a slam dunk winner for anyone.” He described the differences between the two sides as “massive”.

Rather than wait to decide this issue, Judge Carey instead set out a process to kick-start the discovery process but, not surprisingly, this has raised new controversies between Baha Mar and its Chinese state-owned contractor.

Mr Guiffre, in his letter, described as “untenable” Baha Mar’s argument that CCA and the Bahamian Government could never have a ‘shared interest’ because one was a private, for profit company, while the other “has a unique interest in the economic well-being of the Bahamian people”.

“Strangely, the debtors [Baha Mar] allege in their objection to CCA’s Motion to Dismiss that they not only champion the interests of the Bahamian people, but that they do so more effectively and appropriately than does the Bahamian government,” Mr Guiffre wrote.

The identify of the ‘more effective champion’ of the Bahamian people’s interests over Baha Mar is likely to be a matter of some debate and dispute, with the answer probably depending on which side of the political divide persons lie.

Meanwhile, turning to Baha Mar’s ‘conspiracy’ and ‘collusion’ allegations, Mr Guiffre said these were founded on the fact that CCA, the Government and the China Export-Import Bank had worked together to ensure the Supreme Court did not recognise the developer’s Chapter 11 bankruptcy protection filing in the Bahamas.

Yet he argued that Baha Mar was itself responsible for “tying” the Chapter 11 cases to the Bahamas by seeking recognition of these proceedings via the June 30 Supreme Court filing.

“The debtors cannot have it both ways, arguing that a common legal strategy arose in response to the debtors’ June 29-30 actions, while arguing simultaneously that there was no common legal strategy,” Mr Guiffre wrote.

“The entire basis for the debtors’ discovery demands is the allegation that the Bahamian executive branch has such similarity of legal interests with CCA and China Export-Import Bank that all three entities have engaged in a combined legal strategy to influence Bahamian courts not to recognise these Chapter 11 cases.

“The debtors themselves tied the Chapter 11 cases to the Bahamas by filing bankruptcy petitions in the US for Bahamian entities, on June 29, 2015, and then the next day seeking recognition in the Bahamas as part of an overall legal strategy.

“The common strategy of establishing the Bahamas as the appropriate forum in light of the debtors’ counter-strategy is ‘entirely logical’.”

Mr Guiffre confirmed that CCA, the China Export-Import Bank and the Government had “shared information” in relation to Baha Mar, and argued that the strategy had been “far from hidden” because it was detailed in a government press release.

Baha Mar’s attorneys attempted to argue at the August 10 hearing before Judge Carey that CCA and the China Export-Import Bank had violated the “automatic stay” he imposed in early July on all actions against the developer.

Linda Dakin-Grimm, for Baha Mar, argued that the two Chinese firms should have abided by the Delaware court’s rulings or contested them in the US, and not seek to “undermine” them by going to the Bahamas and “working behind the scenes to persuade local authorities”.

Ms Dakin-Grimm argued that the Chinese companies had “tried to affect the decision-making process in the Bahamas” by working with the Government to obtain the verdict rendered by Justice Ian Winder.

But Mr Guiffre, in his letter, said: “Upon questioning by the [Delaware] court, the debtors admitted that they are not suggesting that the decision of the Bahamian Supreme Court not to recognise the Chapter 11 proceedings is ‘in any way tainted’.

“Given the absence of an allegation of taint, the court logically questioned the utility of the debtors’ discovery demands. The court asked the Debtors to explain the relevance of the discovery even assuming that the collusion allegations were true.”

Mr Guiffre said Judge Carey described CCA’s actions as “entirely logical”, with the latter asking during the August 10 hearing: “So let’s - just for purposes of asking this question, let’s assume that CCA and China Export-Import Bank and the non-judicial branches of the Bahamian government, or some of them, all got together and said: ‘We need to figure out a way to convince the court in the Bahamas that there’s no way they should recognise the Chapter 11 in the US, and we should do all that we can to make sure that any judicial proceedings remain here in the Bahamas. Assuming all of that were true, so what?”

Judge Carey said the Chapter 11 proceedings did not prevent the two Chinese companies exercising their rights under Bahamian law, and further asked of Baha Mar’s attorneys: “So what you’re arguing, in essence, if you took it to a logical conclusion, is that the debtor was allowed to initiate a proceeding, but others involved there, even though they may also have been involved here of necessity, frankly, have their hands tied in making whatever argument or asserting whatever rights they would have had under Bahamian law?”

Meanwhile, Tom Dunlap, Baha Mar’s president, yesterday produced a report showing that 707 (non-Melia) staff were still working at the developer’s properties last week.

Of those, some 621 or 87.8 per cent were Bahamian, broken down into 486 line personnel and 135 management staff. The remainder, 86, were expatriates.