The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian contractors have been urged not to view themselves as “cap in hand beggars” in the Baha Mar claims process, the Chamber’s chairman arguing that they “have some leverage”.

Gowon Bowe told Tribune Business that the local construction industry’s value lay in both the quality of its work, and its inside knowledge of existing defects and what was required to complete the $3.5 billion development.

As a result, he argued that it was “cheaper” for China Construction America (CCA), the project’s main contractor, and China Export-Import Bank, the secured lender, to either pay Bahamian contractors what they were owed or come to a reasonable settlement.

“There is a significant amount of leverage,” Mr Bowe said when it came to the Bahamian construction industry’s recovery prospects. “They know where the light switches are, and the cracks in the walls. They’re the best ones to complete and deliver it.

“They should not see themselves as cap in hand beggars, as it’s cheaper to pay them than replace them entirely. They do have some leverage.”

Misgivings about whether the 123 Bahamian contractors, who are owed a collective $74 million, will be compensated for work performed at Baha Mar have been ever-present since it emerged that there are effectively two claims processes.

While contractors who are direct creditors of Baha Mar, owed a collective $16 million, will participate in the process outlined under the five-person payout committee, the bulk of the debt - some $58 million - is owed by CCA.

Those contractors who are CCA creditors will thus have to negotiate directly with the Chinese state-owned contractor separately to recover the sums they are owed, with many viewing this as placing Bahamians at a disadvantage.

The general consensus is that CCA has every incentive to ‘beat down’ the sums ultimately paid out to its sub-contractors, and that it will seek to extract concessions from the Bahamian firms based on promises of future work and payment.

This is despite Prime Minister Perry Christie’s assertion that CCA has to compensate its Bahamian sub-contractors and vendors as part of the agreement to complete Baha Mar’s construction. CCA’s creditors were taken out of the Baha Mar creditor payouts on the basis that it is solvent, and that Bahamian companies will be able to initiate legal actions to claim against its assets if they are dissatisfied with the settlement offered.

Mr Bowe, meanwhile, said the creditor processes outlined by the Government and the Chinese offered the prospect of a cheaper, and speedier, recovery than going through the courts.

Arguing that this was an outcome that, at face value, “every right-thinking businessman” would explore, he added of the Bahamian creditors: “They should be taking the view that this is positive as opposed to going through a long, drawn-out court battle to receive compensation.”

Particularly given that sources close to the creditor payout committee have suggested creditors owed more than $500,000 are likely to recover greater than 50 per cent of these sums - which many Bahamian companies and individuals had previously written off.

Much now depends on the ability of the China Export-Import Bank, and the creditor payout committee, to deliver on what has been promised, with payouts to Baha Mar’s 2,000-plus former staff supposed to occur at month’s end.

Mr Bowe told Tribune Business that Bahamians had to be careful not to appear “contradictory”, given that on one hand they were clamouring for government intervention over the payout process, while previously castigating the Christie administration for intervening in other areas of the economy.

And the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) chairman also urged Bahamians not to forget that Baha Mar was a private business transaction.

“What should not be lost is that the developer and all parties did not go into this transaction many years ago with a gun to their head,” Mr Bowe said.

“It was a deal struck where collateral was pledged, and if the developer defaulted on payment, it would lead to foreclosure and the secured creditor taking control of the project.”

He continued: “What we have is a situation where we’re looking at China and the Chinese, as opposed to looking at the transaction.

“This was a deal the parties struck with eyes wide open, and we cannot be critical of the style and mannerisms of the Chinese. We have to be careful about muddying a private transaction.”