The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Blackbeard’s Cay and its 90-strong staff are threatened with “irreparable harm” as a result of its legal woes, which have already reduced cruise visitor numbers to the project.

Samir Andrawos, the project’s developer, is alleging that his $9 million construction investment is being jeopardised by the “adverse publicity” stemming from court battles with his Honduran partners, environmental activists and the Government.

The Blue Illusions principal, in an April 28, 2016, affidavit, also claims that there were “numerous complaints” from cruise passenger guests about the “menacing attitude” taken by a Government delegation which visited Blackbeard’s Cay on March 18.

Claiming that the group featured armed Royal Bahamas Defence Force personnel, Mr Andrawos alleged threats were made to completely shut down Blackbeard’s Cay and imprison its entire 90-strong staff.

The allegations are contained in a deluge of documents filed with the Supreme Court, which is now having to deal with four separate Blackbeard’s Cay-related cases, with the threat of more to come.

Apart from the Judicial Review action launched by the reEarth activist group, Justice Stephen Isaacs is now having to contend with two separate cases initiated by Mr Andrawos and his companies.

The allegations regarding the March 18 visit to Blackbeard’s Cay are central to an injunction application by Blue Illusions, which is seeking to prevent the Government “from further unlawful entry upon Balmoral Island”, where the project is located.

Mr Andrawos’s affidavit reveals he is asking the Supreme Court to grant further injunctions to prevent the Government “from breaching its lease” agreement with Blue Illusions, and interfering with its sub-lease of the property.

In the second case, Blue Illusions wants yet more injunctions. These, if granted, would prevent the Government from granting the necessary permits to export Blackbeard’s Cay’s eight dolphins back to Honduras.

It also wants the Supreme Court to block its Honduran partner, Instituto De Ciencias Marinas (IMS), from breaching the June 15, 2012, contract that underpins their Blackbeard’s Cay joint venture.

And, further complicating an increasingly tangled legal web, the dolphins’ key carer has filed a writ against Blue Illusions over some $600,738 in fees he claims the company has failed to pay.

The filings by Dr Albert Iglesias, a US-based veterinarian, also allege that Bahamas Customs is demanding more than $1 million in unpaid duties over the eight dolphins’ importation to this nation.

“I have been told by Robin Nichols, a consultant to [Carib Resorts, another Andrawos company] that the Comptroller of Customs is claiming over $1 million in respect of unpaid Customs duties owed for the importation of the said dolphins kept at the Balmoral Island facility,” Dr Iglesias alleged.

Justice Milton Evans, in his December 2015 ruling that found IMS was the dolphins’ true owner, suggested some of the documentary evidence presented at trial implied that the dolphins’ importation into the Bahamas was structured to evade import taxes.

He told attorneys for both sides that the documents “could give rise to the conclusion” that the Government was defrauded of due Customs duty, given that the dolphins were not accurately valued.

Both Blue Illusions and the Honduran-based Instituto De Ciencias Marinas (IMS) denied “any knowledge or intent” to defraud, and Justice Evans confined his ruling to determining that the latter was the dolphins’ true owner.

However, if Dr Iglesias’s allegation is true, it suggests that Customs has revisited the issue after Justice Evans’ ruling.

Other key revelations from the bundles of documents filed with the Supreme Court are:

• Blackbeard’s Cay’s original developer suffered “financial difficulties” that resulted in it owing the Government some $1 million in past due lease (rental) payments and per capita visitor taxes.

Mr Andrawos and Blue Illusions paid this off in December 2011 via a $1 million loan to the original Bahamian investor group, who included former PLP Cabinet minister, Charles Carter; Insurance Management chief, Cedric Saunders; and Abner Pinder.

• Blue Illusions is alleging that Nassau Dolphin Ventures, the joint venture with the Hondurans to manage Blackbeard’s Cay, has suffered an operating loss “every year” since 2012.

It is claiming that its owners, Samir Andrawos and his business partner, Victoria Iglesias, have loaned Nassau Dolphin Ventures some $2 million to-date to finance its operations and complete construction.

• The Central Bank’s February 2012 letter, granting Blue Illusions ‘resident’ status for exchange control purposes, reveals that the company was capitalised by $10 million in shareholder loans rather than equity.

Both Mr Andrawos and Ms Iglesias injected $5 million each. The Central Bank letter says the sub-lease is worth $3 million over 26 years, and that a Bahamian citizen, Douglas Silvera, had chosen not to take up his share allocation and invest in Blue Illusions.

Detailing his concerns over the Government’s March 18 visit to Blackbeard’s Cay, which is located off New Providence’s north coast opposite Sandals Royal Bahamian, Mr Andrawos alleged it was intended to allow IMS to inspect the dolphins.

He claimed the Hondurans were accompanied by Indira Brown from the Department of Marine Resources, several “armed members” of the Royal Bahamas Defence Force, and Customs officers.

Mr Andrawos alleged that Ms Brown “behaved offensively, threatening to close the dolphin facility and the entire business” of Blue Illusions. He then claimed that she “threatened the entire staff..... with imprisonment”.

“Following the visit of the Department of Marine Resources, we received numerous complaints from our guests from cruise ships about the menacing nature of the attitude of the Government personnel deployed during the said visit,” Mr Andrawos alleged.

The reEarth environmental group has been attempting to enforce the Judicial Review verdict it obtained in July 2014, which effectively required that the Government shut down the ‘cruise passenger getaway’. Those efforts were stayed temporarily, but that has now expired (see other article on Page 1B)

Tribune Business understands that the Government officials present on the March 18 visit vehemently dispute Mr Andrawos’s account of events.

However, while pointing out that periodic inspections of the dolphins has been carried out before, Mr Andrawos alleged: “The visit on March 18, 2016, was the first time that [the Department of Marine Resources] visited the dolphin facility with an armed escort.”

He described the Hondurans as “uninvited guests”, as Blue Illusions had given them no permission to visit Blackbeard’s Cay and inspect the dolphins.

Turning to the three contractual agreements underpinning the joint venture between Blue Illusions and IMS, Mr Andrawos alleged that Blackbeard’s Cay’s 90 employees would suffer “irreparable harm” unless the Supreme Court prevented the Hondurans from breaching them.

“Since obtaining the National Economic Council’s approval, [Blue Illusions] has expended over $9 million in construction costs and has incurred expenses of several million dollars in the operation of the dolphin facility,” Mr Andrawos alleged.

“The litigation hereinbefore referred to, and the actions of the defendants [Government and IMS] and reEarth have resulted in adverse publicity and the reduction of visitor numbers from cruise ships.”

Blue Illusions, and its joint venture, received government approval to take over the Blackbeard’s Cay project just prior to the 2012 general election.

The original Bahamian ownership group sub-let the 19.42 acre site to Mr Andrawos, via an agreement that provided for a 20-year extension of the lease.

The Blue Illusions chief said Blackbeard’s Cay had been hard-hit by Hurricane Floyd, resulting in closure and significant reconstruction costs while repairs were carried out.

“Blackbeard’s Cay Ltd experienced financial difficulties, resulting in its failure to pay fees and taxes due to the Government of the Bahamas,” Mr Andrawos alleged, exhibiting a demand from the Ports Department for $64,000 in unpaid dock fees.

“Further, Blackbeard’s Cay Ltd failed to pay its rents and per capita tax on visitors to the point that it owed the Government in excess of $1 million.

“[Blue Illusion] together with [IMS] agreed to take advantage of the economic opportunity of taking over the tourist facility operated by Blackbeard’s Cay Ltd,” he added.

“One of the conditions of the approval of [Blue Illusions] application to sub-let the premises at Balmoral Island was the payment to the Government of the outstanding $ 1 million rent.”

Then, firing back a reEarth, Mr Andrawos listed all the permits and approvals obtained from the Government for the Blackbeard’s Cay project.

He added that Blue Illusions was told the Bahamas Investment Authority (BIA) was “a one-stop shop” and that all applications could be submitted through it.

reEarth, though, won its Judicial Review action on the basis that the Government had failed to follow its own statutory processes in issuing the relevant permits.

Elsewhere, Mr Andrawos is alleging that IMS “has failed or refused to manage the dolphin facility at Balmoral Island”, even though it is obligated to do so as part of their joint venture agreement.

Arguing that Blue Illusions has “not accepted the repudiatory breach of contract”, Mr Andrawos is still claiming he paid $240,000 to purchase the eight dolphins - notwithstanding Justice Evans’s ruling.

He is alleging that should Blue Illusions fail in its appeal against that verdict, it will “have a good cause of action” to reclaim its $240,000 - something it has now asked the Supreme Court to rule on.

Mr Andrawos alleged that a US-based accountant for Nassau Dolphin Ventures, the joined venture with IMS, said the company “has operated at a loss every year since inception and no dividends have been paid”.

The one-page opinion from the accountant, Roy Garcia, states that Nassau Dolphin Ventures now has a cumulative operating deficit despite its contracts with the major cruise lines, such as Carnival.

“Over $2 million has been loaned to the company on behalf of Samir Andrawos and Victoria Iglesias in excess of initial member contribution in order to finish construction and finance the operations to-date,” Mr Garcia wrote. “These loans remain outstanding.”