The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government’s purported deal with the Chinese for Baha Mar’s construction completion has only “muddied and confused” the situation further, an ex-Board member yesterday suggesting they were taking a ‘backwards’ approach to resolving the impasse.

Dionisio D’Aguilar, who served as a director under original developer, Sarkis Izmirlian, questioned why the Government and Chinese seemed so intent on selecting the project’s contractor prior to identifying a new Baha Mar owner.

With the China Export-Import Bank’s receivership team in the middle of a Supreme Court-approved process to sell the $3.5 billion development, Mr D’Aguilar said it seemed to make far greater sense for that process to be completed before the contractor’s selection.

Otherwise, any purchaser faces being “saddled” with China Construction America (CCA), the original Baha Mar contractor, which has faced numerous accusations and controversy over its role in the project’s demise.

Mr D’Aguilar suggested that the ‘joint statement’ between the Government, the China Export-Import Bank and CCA’s parent, China State Construction Engineering Corporation (CSCEC), only raised more questions than answers.

By seeking an agreement for CCA to re-mobilise and complete Baha Mar’s construction, presumably with financing from the bank as the property’s secured creditor, Mr D’Aguilar said the Christie administration was binding any purchaser to using the Chinese contractor.

CCA may not complete Baha Mar to a preferred bidder’s specifications if it resumes construction work before the latter is chosen, a development that could threaten to derail any sale.

And, given the accusations of “shoddy workmanship” and overbilling previously hurled at CCA, and Mr Izmirlian blaming the Baha Mar impasse chiefly on its failure to complete the project on time, and on budget, many potential buyers would likely elect not to engage the Chinese contractor themselves.

As a result, Mr D”Aguilar queried whether the China Export-Import Bank had deemed all bids unsatisfactory, and instead decided to either hold on to Baha Mar or sell it to CCA.

“I guess the takeaway from this is that CCA is the preferred bidder, and maybe this is the first step in the march towards a complete Chinese takeover of this project,” Mr D’Aguilar told Tribune Business.

“I don’t know how you can sell a hotel, and impose on the future purchaser who the contractor is going to be.

Clearly, they’re making that decision now, which makes it more unattractive to any other purchaser, as you are saddled with this contractor that contributed to the impasse to begin with.”

Prime Minister Perry Christie gleefully touted the ‘joint statement’ produced by his government and the two Chinese companies following their weekend meetings in Beijing, suggesting the three parties had agreed on how Baha Mar’s construction would be completed and financed.

However, as pointed out by Tribune Business on Thursday, the ‘joint statement’ is some way short of a binding commitment by the Chinese, and appears to merely be an agreement to keep talking in hopes of reaching a deal.

While the two-page statement gave the Prime Minister what he was seeking for his Budget communication, namely something that could be sold to the Bahamian people as positive movement on Baha Mar, Mr D’Aguilar was among those expressing scepticism.

In particular, he argued that the Government appeared to be pursuing a ‘reverse’ or backwards approach to resolving Baha Mar’s fate by first choosing the contractor, as opposed to the new owner.

“It seems to muddy the process further. I’m confused,” he told Tribune Business of the joint statement. “If you’ve put out the bid for people to buy this property, that winning person then decides who the contractor is.

“Select the owner then a contractor, not a contractor over an owner. Would that not be the proper approach? Making the decision on who builds the property before deciding who owns the property signals that they’re going to transfer the property to CCA.”

CCA, which already owns downtown Nassau’s British Colonial Hilton, and is developing the adjacent $200 million The Pointe project, is believed to be among the bidders offering to acquire Baha Mar.

Many observers believe that a Chinese buyer is the likeliest outcome of the sales process, given that a such a purchaser would be willing to make the China Export-Import Bank’s $2.45 billion debt ‘whole’ in return for ‘soft’ loans in the future.

Both CCA and the bank ultimately share the same owner in the Beijing government, and Mr D’Aguilar suggested the ‘joint statement’ might be an attempt to “bamboozle” the Bahamian people into thinking it was a construction deal, when it was really designed to transfer Baha Mar to CCA’s control.

“It’s very odd. I don’t think they’re being transparent,” Mr D’Aguilar told Tribune Business. “I think they’re trying to do an end run and put the Chinese in charge.

“It seems odd to me that we’re in a bidding process, and in mid-stream they change tack, having not revealed what the bids are.

“Maybe the bids didn’t exceed or meet Sarkis’s offer, and in order not to lose face, they did what they have to do. I don’t get it unless they want to take over the whole project. This tells me it’s an all-Chinese deal.”