The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Sarkis Izmirlian yesterday urged the Minnis administration to impose “a moratorium” on completion of Baha Mar’s sale, and warned he was mulling legal action against the Christie administration’s “state-sponsored discrimination”.

Baha Mar’s original developer launched a withering assault on the ‘Heads of Terms’ for the $4.2 billion project’s construction completion, variously describing the multi-million dollar tax incentives granted to the Chinese as “toxic”, “one-sided” and a “wholesale giveaway” that the Bahamas cannot afford given its precarious fiscal position.

He also demanded that the new government “reopen the investigation” into the casino license granted to Baha Mar’s potential new owner, Chow Tai Fook Enterprises (CTFE), and publicly disclose the Gaming Board’s assessment of its suitability.

Outlining his two key requests, Mr Izmirlian told the Minnis administration: “Place a moratorium on the completion of any sale of Baha Mar and other transactions under these agreements.”

This, he argued, would enable the new government and the Bahamian people to assess “the toxicity” of the former Christie administration’s dealings with the Chinese, “and how the best interests of Bahamians can be met”.

Baha Mar’s original developer then demanded: “Reopen the casino license investigation and report the findings of the Gaming Board, given the extensive public record about the...... associations of Chow Tai Fook’s owners – a record that appears to have been intentionally and conveniently ignored under the previous administration.”

Mr Izmirlian’s statement, in the name of his BMD Holdings vehicle, places the newly-elected Minnis administration in a potentially difficult position, given Opposition claims - and a perception among some - that he played a key ‘behind the scenes’ role in its election victory.

Any “moratorium” on completing Baha Mar’s sale, from the China Export-Import Bank’s Perfect Luck vehicle to CTFE, risks placing the $4.2 billion project into ‘cold storage’ again at a time when its jobs and potential output remain one of the few short-term options for boosting Bahamian GDP.

Mr Izmirlian’s statement will also prompt recollections of Dr Hubert Minnis’s pre-election social media posting, where he said an FNM government would seek a purchaser for Baha Mar if no sale had been closed by the time it took office. This is despite the fact that Baha Mar is the China Export-Import Bank’s, not the Government’s, asset to sell.

And the call for the Gaming Board to “reopen” its assessment also puts Dionisio D’Aguilar, minister of tourism, in a personal quandry. He now has ministerial responsibility for the Gaming Board, but - as a former Baha Mar director under Mr Izmirlian - was the first to question CTFE’s suitability to hold a casino license.

Mr D’Aguilar had sought to link CTFE’s owners, the Cheng family, and their New World Development subsidiary, to the potential exploitation of Macau’s VIP gaming rooms by Chinese organised crime gangs through their investment in Stanley Ho’s companies.

CTFE has vigorously and consistently refuted such claims, describing them as “completely baseless and untrue” - with no gaming authority having refused it a license or interest in an entity that held one.

Mr Izmirlian, though, suggested that clauses 1.2 and 3.11 of the ‘Heads of Terms’ violated the Bahamian constitution and statute law by discriminating against himself and foreign members of his Baha Mar senior management team.

These clauses stipulated that Mr Izmirlian, entities related to him and his former senior executives could not participate in the claims payout process, nor have any shop or restaurant leases renewed - unlike other creditors and tenants.

“The Heads of Terms also underscores the extremes to which the former Government of the Bahamas and China Export-Import Bank conspired to impair the economic interests and reputation of the original developer, Sarkis Izmirlian,” the BMD Holdings statement said.

“Not content to stop at the confiscation of the resort, the Heads of Terms expressly prohibits any payments to companies associated with Mr Izmirlian, a long-time resident and the largest foreign investor in the history of the Bahamas, as well as payments to the former expatriate executives of Baha Mar.

“This is state-sponsored discrimination, contrary to the laws and constitution of the Bahamas, and sets an awful precedent for foreign investment in the Bahamas. Accordingly, BMD is considering its legal options against the parties involved in constructing these highly questionable agreements.”

Some will likely view Mr Izmirlian’s statement as a last-ditch attempt to reinsert himself into the Baha Mar process, and an effort to prevent any ‘back-sliding’ by the new government. It is thought that Mr Izmirlian was alarmed by Carl Bethel, the attorney general, saying that no other documents relating to the former administration’s Baha Mar dealings will be unsealed.

“The Heads of Terms is only one document of many about the former government’s secret dealings on Baha Mar, and the only document made public thus far. It is a bread crumb trail to many other referenced documents that must be vetted to determine the extent of the improper giveaways,” Mr Izmirlian’s statement said yesterday.

Among the key documents that remain sealed are the Hotels Encouragement Act Agreement between the former government and the China Export-Import Bank, signed on September 9, 2016, last year and which CTFE will inherit.

This contains the ‘devil in the detail’, namely the value of the tax incentives granted, and the volume and nature of products and equipment that will be brought in duty-free.

Mr Bethel said other documents, such as the sales agreement between CTFE and Perfect Luck, and the China Construction America (CCA) letters detailing how they planned to compensate former sub-contractors, related to private transactions and would remain confidential to protect their commercial integrity.

Mr Izmirlian, meanwhile, attacked the tax incentives granted to the China Export-Import Bank and CCA, arguing: “The giveaways laid out in the Heads of Terms by the Christie administration to China Export-Import Bank and Chow Tai Fook are egregious and an insult to the Bahamian people.

“What else did the former administration do in its desperation to get any kind of a deal to announce related to the sale of Baha Mar to try to win re-election?

“In BMD’s view, these documents confirm the nation’s fears that the previous administration had engaged in the wholesale giveaway of hundreds of millions of dollars in tax waivers and concessions that the country could not afford, and that rightfully should have been earmarked for the Bahamian people, solely to facilitate a charade of a sale in the lead up to the general election last May.”

The original developer also slammed the ‘Heads of Terms’ for Baha Mar’s construction completion as a further example of “self-dealing” by members of the former Christie administration, although he provided no specifics to back this up beyond what is already known.

Tribune Business previously reported that apart from being tweaked to account for VAT’s introduction, the tax incentives granted to CTFE are the same as those that were given to Mr Izmirlian.

The ‘Heads of Terms’ concessions were also linked as a ‘trade-off’ for the China Export-Import Bank agreeing to the $101.5 million compensation for Baha Mar’s former staff and creditors, even though it had no obligation to do so. And failure to grant such incentives may have resulted in Baha Mar’s creditor failing to complete the project, instead letting it sit there to become a ‘white elephant’.

Still, Mr Izmirlian’s statement continued: “The grossly unfavorable concessions revealed in the Heads of Terms, along with other commitments made by the prior Government to satisfy by the end of this year - including CTFE’s demands for increased power generation from Bahamas Power and Light, for the city dump, and for what it wants from the Water and Sewerage Corporation - place a crippling financial burden on the Bahamas that the country can ill-afford at a time when the new Government is forced to borrow another $722 million.

“It is outrageous that the Christie administration would agree to grant 1,200 new Chinese work permits to CCA when Bahamian workers could, and should, finish this resort. At a conservative estimate, with the cost of completion standing at $600 million, these sums would have been a welcome boost to the local construction industry.

“These permits literally take food out of the mouths of Bahamians to reward the same Chinese construction company that had failed to meet multiple opening dates that it had set. It is unthinkable that a Government that claimed it was working in the best interests of the Bahamian people would have agreed to such terms.”