The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Baha Mar yesterday accused the Government of “refusing” to pay its expatriate staff $1.776 million in collective wages that are due today, amid fears this will prompt many upper management executives to quit.

Magdalena Hamya, Baha Mar’s vice-president of human resources and organisational development, told the developer’s 2,500-plus staff via e-mail that the Government was effectively discriminating by moving to pay the salaries of its Bahamian, but not foreign, staff.

“The Government is refusing to pay the salaries owed to Baha Mar’s non-Bahamian employees due this Thursday. We are shocked and extremely upset by this action, and we have urgently appealed to the Government to reverse its damaging and short-sighted decision,” Ms Hamya wrote.

Baha Mar’s expatriate staff are paid monthly. They received their June pay cheques just prior to the developer going into Chapter 11 bankruptcy protection, this will be the first payment due since that event.

Ms Hamya said the Government was sending “a terrible message” by moving to pay Baha Mar’s Bahamian, but not foreign, staff.

She was swift to point out that the Government was responsible for preventing the developer paying all staff salaries itself, because by successfully uniting with Baha Mar’s Chinese partners to block the Supreme Court’s recognition of the Chapter 11 proceedings, it had prevented the $80 million financing facility put in place by Sarkis Izmirlian, the project principal, from being used to pay wages.

Bahamian staff are paid bi-weekly, and most observers felt the Government had little choice but to keep paying their wages given that it had already set a precedent by meeting two previous bi-monthly pay cycles from the Public Treasury.

It is unclear why the Government has elected not to pay Baha Mar’s non-Bahamian staff, although this may have been driven by a desire to keep its costs and financial exposure to the developer’s $7.5 million monthly wage bill down.

The move might also be part of the Government’s strategy to further squeeze Mr Izmirlian and Baha Mar, in the hope they will be driven to settle, if key expatriate executives leave because they are not being paid.

Expatriate workers in the hotel and tourism industry tend to hold upper management jobs, and any mass exodus at Baha Mar as a result of non-payment would have a severe impact on the developer’s operations and ability to function.

Should no deal between Baha Mar and its partners, China Construction America and the China Export-Import Bank, be worked out, then the developer plans to reduce its workforce to a ‘skeleton’ 52 staff necessary to preserve the resort assets. It is likely many of this ‘skeleton’ staff would be expatriates.

The Government’s strategy of applying the ‘Bahamian must come first’ slogan directly to the Baha Mar situation is not without risk.

Should a speedy resolution to the Baha Mar dispute be reached, the developer could be deprived of top employees essential to a smooth opening and operation of the $3.5 billion resort if non-payment of wages drove them away.

The departure of key management executives, and their in-built knowledge, would also make it more difficult for the PricewaterhouseCoopers (PwC) provisional liquidators to organise and negotiate agreements for Baha Mar’s eventual completion and opening.

It potentially threatens to send the wrong message to overseas investors looking at the Bahamas, as well as allowing Baha Mar’s executives to potentially ‘bad mouth’ this nation if they are forced to leave. This could deter skilled expatriate talent from coming to the Bahamas, impacting local businesses.

And an immediate exodus by Baha Mar executives will negatively impact the economy via broken lease agreements, reduced private school fees with children being pulled out, and lower consumer demand and spending resulting in reduced activity.

Ms Hamya, in her e-mail yesterday, said Attorney General, Allyson Maynard-Gibson, had promised in early July to cover Baha Mar’s full $7.5 million monthly payroll.

“The unfairness of the Government’s refusal is underscored by the fact that the Government has already processed two payroll cycles for our Bahamian citizens, and requested details required to process the third cycle,” she said.

“The Government’s refusal is all the more unfair because, as you know, over a month ago, Sarkis and Baha Mar sought to make arrangements to ensure that we would fulfill what we viewed as our ongoing obligations to our citizens, both Bahamian and non-Bahamian, by seeking and obtaining the approval of the Delaware Court under the Chapter 11 process for payment of all salaries and benefits for our citizens in the ordinary course of business.

“Unfortunately, the use of these funds has been blocked at this time because of the subsequent actions by the Government of the Bahamas. Sarkis remains ready and willing to make funds available needed for the payments of your salaries, but he is regrettably unable to do so as a result of the Government’s actions.”

Ms Hamya threw Mrs Maynard-Gibson’s concerns that Baha Mar was using its employees as “pawns” back at her, suggesting the Government was now doing this with the expatriate staff.

“This is a terrible message the Government is now sending to our non-Bahamian citizens,” Ms Hamya said. “We acknowledge the irony that you came to the Bahamas based on the Government’s stringent review of your qualifications in granting you a work permit..........

“It is very distressing for us to contemplate that the Government of the Bahamas finds it acceptable to leave you without salaries that you have already earned. We have vigorously responded to Government’s decision and urged them to reconsider and make immediate arrangements to have your salaries paid.”