By NEIL HARTNELL
Tribune Business Editor
The Prime Minister’s self-congratulation over the Baha Mar dispute outcome was yesterday slammed by the FNM’s deputy leader, who argued that the Government had “caused almost irreparable harm” to the Bahamas’ investment reputation.
K P Turnquest told Tribune Business that the Opposition’s assessment of the Baha Mar resolution “differs significantly” from the Prime Minister’s, who described it as “one of the most brilliant set of negotiations ever done in advancing the cause of the Bahamas”.
The FNM deputy leader, in particular, said the Government’s intervention in the court proceedings to oppose the Chapter 11 bankruptcy filing by the original developer, Sarkis Izmirlian, had sent an especially chilling message to other potential investors in the Bahamas.
Mr Turnquest said his discussions had revealed that possible investors were “concerned” the Government may take similar action against themselves, and seek to strip their developments of agreed incentives and assets if they did something it did not like.
“I think our interpretation or assessment of this deal differs significantly,” the east Grand Bahama MP said of the Prime Minister’s comments.
“He’s put the Bahamas through a traumatic period that was unnecessary, and caused almost irreparable damage to this jurisdiction’s reputation as a safe investment destination.”
Mr Turnquest was referring to the Government’s intervention in summer 2015 to oppose Mr Izmirlian’s bid for the Chapter 11 process to be given recognition in the Bahamas by the Supreme Court.
Many observers, including former Prime Minister Hubert Ingraham, believe the Government should have stayed out of the court battle, and left it to be treated as a commercial dispute between Mr Izmirlian and the Chinese entities, the China Export-Import Bank and China Construction America (CCA).
The Christie administration, though, argued that its intervention was based on ‘sovereignty’, and that a dispute involving Bahamian assets and hundreds of Bahamian creditors should be dealt with by this nation’s courts, rather than the Delaware bankruptcy court.
It also justified its move on the grounds that the Government was the second largest unsecured creditor behind CCA, while the involvement of public land and some $1.2 billion in tax concessions in the project also required intervention.
While this may have been a valid argument, many observers interpreted the Government’s intervention as evidence that it was ‘in cahoots’ with China’s Baha Mar interests to oust Mr Izmirlian, especially given that its re-election prospects were heavily tied to the project’s prior completion and opening.
They contrasted the Government’s approach to Baha Mar to the Ingraham administration’s ‘hands off’ approach to Brookfield Asset Management’s takeover of Atlantis from Kerzner International, which involved a court battle among the latter’s creditors.
While Mr Izmirlian’s Chapter 11 recognition bid was technically flawed, and the China Export-Import Bank would likely have won the case by itself, the Government’s eagerness to intervene in a private, commercial dispute and remove an investor it had long backed was certainly noticed by the international investment community.
Mr Turnquest told Tribune Business that investors coming to the Bahamas needed to feel they were “protected in a free market”, and able to seek redress for any grievances through this nation’s investment and court processes.
“I remain steadfast in my position that this is a commercial transaction,” he said of Baha Mar, “that should have been allowed to run its course through commercial litigation.
“I don’t think there was a need for the Government to get involved in it, and it caused damage to the Bahamas’ reputation as an investment destination, costing millions of dollars in tax revenues for the period it was closed and displacing 2,000 Bahamian employees.
“The damage that has been caused, in our view, has been unnecessary, and it will take some time to recover the reputation of this country internationally,” the FNM’s deputy leader added.
“The impression out there in the investment community is that the Government intervened, rightly or wrongly, in a commercial transaction, and that brings a level of concern among investors, many of whom feel vulnerable investing in an international destination.”
Mr Turnquest admitted he had “no evidence” that the Government’s handling of the Baha Mar dispute had cost the Bahamas any foreign direct investment (FDI) projects or dollars.
Yet he added: “Speaking to several potential investors, it is a concern.”
The FNM’s unsurprisingly negative assessment of the Christie administration’s agreement with the China Export-Import Bank and Baha Mar’s new owner, Chow Tai Fook Enterprises (CTFE), is arguably premature given that no details have been publicly released for anybody to conduct an impartial assessment.
However, there has hardly been an avalanche of FDI projects and inflows injected into this nation in the Baha Mar dispute’s aftermath.
Apart from the project at Children’s Bay Cay and Williams Cay in the Exumas, other announcements have included the Mediterranean Shipping Company (MSC) transformation of Ocean Cay; the proposed Carnival cruise port in east Grand Bahama; and Hutchison Whampoa’s $300 million Phase V Freeport Container Port expansion.
While the Children’s Bay project is showing signs of moving forward, the MSC development is still largely in the ‘pipeline’ phase. There has also been little substantive movement on the two Grand Bahama investments.
Mr Turnquest, meanwhile, pledged that the FNM would “not stand in the way” of Bah Mar’s opening under CTFE, and the creation of thousands of jobs for Bahamians.
“The opening of this project is a good thing,” he added. “We might not like the deal as has been done, and what it contains, but we certainly won’t stand in the way and begrudge Bahamians being put back to work.”