By NEIL HARTNELL
Tribune Business Editor
A key Sarkis Izmirlian ally has conceded that the Chinese have been “victorious” in the Baha Mar dispute, with the company responsible for the project’s “melt down” now set for a multi-million dollar windfall.
Dionisio D’Aguilar, a former Baha Mar Board member, said the Government’s agreement to complete the project had placed China Construction America (CCA) “back in the saddle” despite Mr Izmirlian’s contention that it was the party most to blame for the project’s failure.
“The whole reason we had the melt down was their failure to deliver, their inability to deliver on time and on budget, and produce a quality product,” Mr D’Aguilar told Tribune Business on CCA.
“It’s a sad day, really, that the Chinese have been victorious in this, and the Chinese state has been victorious in this, and they’ve ended up back in the saddle with the project when they were the reason it came to a halt in the first place.”
Mr Izmirlian, Baha Mar’s original developer, alleged that it was CCA’s failure to deliver a completed project on March 27, 2015, as promised, coupled with its “shoddy workmanship”, that was ultimately responsible for his ill-fated decision to seek Chapter 11 bankruptcy protection in the US courts in late June last year.
CCA, though, vigorously refuted these claims, arguing that Baha Mar failed because of the developer’s mismanagement and repeated insistence on design and construction changes.
Mr D’Aguilar, meanwhile, also took issue with CCA’s presence on the five-person committee that will oversee the payments to Baha Mar’s Bahamian creditors.
“They shouldn’t be on it; not at all,” he argued. “They’re a creditor that shouldn’t be paid, and I’m sure that they’ll be the first to be paid.
“They’ll be back at the helm of the project, getting paid for work they had left. They [CCA] had some extraordinarily outrageous claims that people said they weren’t entitled to. It’s like letting the kids in the cookie jar.”
Tribune Business reported earlier this week on concerns that CCA’s committee membership constituted a ‘conflict of interest’. Apart from being able to exploit its committee membership to ensure it was paid first, and made ‘whole’, Baha Mar’s main contractor is also perfectly placed to “mitigate its liabilities” to the Bahamian construction industry by reducing the compensation sub-contractors and other locals firms it hired receive.
It remains to be seen how the committee will deal with CCA’s own demands, given the almost $68 million discrepancy between what Baha Mar (under Sarkis Izmirlian) alleged its main contractor was owed, and what the Chinese state-owned company was actually claiming.
Tribune Business’s review of documents filed with the Delaware Bankruptcy Court at the time of Baha Mar’s ill-fated Chapter 11 bid show CCA as the largest unsecured creditor, with the contractor owned some $72.635 million.
Much of this sum is likely owed, in turn, to its Bahamian sub-contractors. Yet Tom Dunlap, Baha Mar’s former president, alleged in an affidavit accompanying the Chapter 11 filing that CCA had been claiming it was owed around $140 million.
“CCA has alleged it has accrued but unpaid construction amounts and claims of approximately $140 million in the aggregate,”Mr Dunlap alleged at the time.
“[Baha Mar], in reliance upon the opinion of their chartered quantity surveyors, vigorously dispute most if not all of these allegations, and many of the disputed claims are subject to pending or future litigation between [Baha Mar] and CCA, its sub-contractors, and/or China State Construction Engineering Company.”
The China Export-Import Bank’s attitude towards CCA’s claim will also be interesting, given Mr Dunlap’s allegation that its own project monitors, Ryder, Levitt and Bucknall, found that the contractor had completed just 22 per cent of the work it had claimed for.
“CCA began to submit inflated invoices for work,” Mr Dunlap said back in June 2015. “For example, the debtors received monthly pay applications from CCA for the period February through May 2015 in an aggregate amount of $343.8 million for work in respect of which China Export-Import Bank’s own independent project monitor countersigned at a value stated to be worth only $76.1 million.”
And, in another irony, Tiger Wu, the very same executive named to the Baha Mar creditors committee, is also listed as the CCA contact person on the list of the $3.5 billion project’s 20 largest unsecured creditors.
The Government’s agreement with the China Export-Import Bank for Baha Mar’s completion will see CCA return as the main contractor, in return for both agreeing to compensate Bahamian creditors.
Mr D’Aguilar, though, lamented the fact that CCA would have no developer overseeing it, as had been the case under Mr Izmirlian.
“Why do we keep sticking with these people?” he added of CCA. “When are we going to wake up and smell the roses?”