By NEIL HARTNELL
Tribune Business Editor
A key Sarkis Izmirlian ally yesterday expressed fears that Atlantis’s “commercial viability” could be undermined if the Baha Mar agreement paves the way for China to dominate the Bahamian hotel industry.
Dionisio D’Aguilar, a former Baha Mar director, told Tribune Business that the China Export-Import Bank’s desire to be ‘made whole’ would likely result in the Cable Beach-based development being acquired by a Chinese buyer.
Together with China Construction America’s (CCA) ownership of The Pointe and British Colonial Hilton, Mr D’Aguilar said this could potentially give Beijing government-owned entities - and private groups beholden to it - control of a significant portion of Bahamian GDP.
While acknowledging that the agreement between the Government and Baha Mar’s main creditor might deliver “short term” benefits, in terms of the project’s physical completion and payment of Bahamian creditors, Mr D’Aguilar expressed misgivings over the long-term consequences.
He added that the Chinese could use their domination of New Providence’s hotel product to drive down room rates and prices, thereby imposing a commercial squeeze on Atlantis and other rivals, who lacked the same financial means to respond.
Explaining why, after some consideration, he was unhappy with the Government’s agreement with the China Export-Import Bank, Mr D’Aguilar told Tribune Business: “You have basically signed away Cable Beach to an entity that does not operate with the same normal democratic norms that we do.
“They have no shareholders to report to, they’re not motivated by profit, and their management executives are not subject to elections. It’s basically a dictatorship. They’re not culturally the same as us.”
“Think about it long-term,” Mr D’Aguilar added. “In the short-term, you get things moving. But long-term, when you it trouble, they will run you because they own such a large portion of your GDP and hotel product.
“They can reduce prices, drive down the quality of the tourism product, and threaten the commercial viability of Atlantis and any other major hotel project here. They can drive every other company out of this market, and scare off investors from coming into a market where there’s a player not motivated by profit.”
Mr D’Aguilar is not the first to raise fears that China could use its extensive hotel ownership interests to impose a ‘price squeeze’ on Atlantis and other companies, similar concerns having been previously expressed to Tribune Business by former deputy prime minister, Brent Symonette.
The former Baha Mar director added that these concerns were exacerbated by the fact that the project’s ‘buyer’ was likely to be a Chinese entity or group, given that they were the only candidates likely to meet the Export-Import Bank’s demand to be ‘made whole’.
With Baha Mar’s $2.45 billion secured creditor having agreed to finance the development’s completion, Mr D’Aguilar said that anywhere between $600 million-$1 billion could be added to the purchase price, pushing this towards the $3.5 billion level.
And he suggested that potential Chinese buyers, such as the Fosun Group, were deeply connected to both the Beijing government and Chinese communist party.
“Are we playing Chinese checkers here, where we are moving it from one balance sheet to another,” Mr D’Aguilar asked of Baha Mar’s fate.
“The only people who are going to pay, if the bank wants to be made whole to $3.5 billion or whatever they want, is another Chinese company my gut tells me. Playing Chinese checkers is not a good deal; not a good deal at all.”
Some cynics, though, will likely argue that it was Mr Izmirlian and Baha Mar themselves that set this in motion by bringing in the Chinese as the project’s financiers and contractors back in 2011.
Not wishing to “rain on Mr Christie’s parade” or appear “a sore loser”, Mr D’Aguilar said he, like every other Bahamian, wanted to see Baha Mar completed and open given the tremendous economic benefits it promises to deliver.
He acknowledged that it was also positive that the Bahamian contractors, former Baha Mar staff and other local creditors had been promised by the Prime Minister that they would be paid, although both the dollar figures and percentages remain unknown.
However, detailing the second of his three reasons as to why the agreement was “bad for the Bahamas”, Mr D’Aguilar told Tribune Business that Mr Izmirlian’s removal had “cut the soul out of the project”.
“Who’s running this project now,” he queried. “You have some soulless bureaucrat from the Chinese bank running it. You don’t have that passion, vision and drive from a developer like Sarkis Izmirlian.
“What makes all successful developments is that they have a developer there, driving it. You’ve cut the soul out of this project. There’s no passion now.”
The China Export-Import Bank and its Deloitte & Touche receivership are still pursuing buyers for the Baha Mar, with Prime Minister Perry Christie still hoping that a deal can be sealed, and the property’s key assets open in time for the late 2016-2017 winter season - an outcome most informed observers view as unlikely, if not impossible.
Mr D’Aguilar, though, argued that the move by the receivers/Government and their attorneys to successfully persuade the Supreme Court to ‘seal’ all details of the agreement suggested there were some specifics they wanted to hide.
“It lacks transparency,” he charged. “We don’t see what they had to give up to get $70 million for the contractors and open the project. They don’t want us to see it because obviously they’re probably embarrassed.
“They took the bits of the deal they liked and revealed those, and those they didn’t, they subjected to a veil of secrecy.”
The Christie administration has vehemently denied all this, and has pledged that details of the agreement with the China Export-Import Bank will eventually be made public in due course, although no specific timeline has been given.
However, Mr D’Aguilar concluded: “This agreement that Christie and his group have put together is a really bad deal for the Bahamas.
“It’s good that the creditors will get paid, but I don’t see any other positives coming from it. They can run on about it all they want, but it’s a bad, bad deal.”