By NEIL HARTNELL
Tribune Business Editor
Attorneys for Baha Mar's main contractor have accused Sarkis Izmirlian of trying to besmirch its reputation by claiming it received "a bailout" to complete the $4.2 billion project.
China Construction America's (CCA) attorneys, in March 22 legal arguments before the New York State Supreme Court, alleged that Baha Mar's original developer was using its $145 million 'remobilisation' payment as "the first salvo" in a long-running public relations campaign to damage their client's reputation.
Mitchell Berger, in successfully arguing for non-disclosure of CCA's financial compensation for completing Baha Mar, also complained to Judge Saliann Scarpulla about Tribune Business's coverage of the claims against the Chinese state-owned contractor.
This was immediately dismissed by the judge, who said: "We get a lot of press in this court. I'm not put off by it, OK?" And Peter Sheridan, Mr Izmirlian's attorney, pointed out that Baha Mar's importance to the Bahamian economy and job creation meant the proceedings were bound to draw media attention.
"The press is following this case because it's 12 per cent of the entire gross national product of the Bahamas, so this is not something of minor public concern; it's a major public concern and they publish about this all the time," Mr Sheridan argued.
Still, the March 22 transcript shows Mr Berger achieved his main aim, which was to prevent public disclosure of the multi-million payments made to CCA for completing Baha Mar's construction following Mr Izmirlian's removal as developer.
Arguing that the information was proprietary, and could be exploited by CCA's competitors, Mr Berger argued that rivals would be able to link the payment information to the 'scope of work' detailed in the construction contract with the China Export-Import Bank's vehicle, Perfect Luck Assets.
"It's like a numerator and denominator," Mr Berger argued. "If you take the scope of work and compare it to the payment information, you can derive information if you are a competitor or CCA or sub-contractor of CCA.
"In essence, what they're willing to do for a job, and not just in ordinary circumstances, but under duress because [the construction contract] is really a settlement of existing claims. So it's sort of like what is CCA's point of pain. And that's valuable information for a competitor or sub-contractor."
Mr Berger then argued that Mr Izmirlian was using any financial data provided in relation to CCA and Baha Mar construction prices to undermine the contractor's reputation, and suggest it received "a massive bailout" for completing the project.
After providing the court with one of Mr Izmirlian's press releases, CCA's legal counsel said "it's not idle" to think that the original developer was seeking such payment details as part of an "ulterior purpose" and "first salvo in a long public relations campaign against" the contractor.
Mr Sheridan, on Mr Izmirlian's behalf, hit back by arguing that the pricing information was not connected to the 'scope of work' in the Baha Mar construction completion agreement. And he pointed out that the $145 million figure was disclosed separately in the Heads of Terms with the Bahamian government.
He also argued that CCA had failed to show why the payment information should be withheld, but this failed to find favour with the judge who ordered that the numbers be redacted.
The ruling was merely an opening skirmish in Mr Izmirlian's $2.25 billion fraud claim against Baha Mar's contractor. CCA is trying to persuade the New York State Supreme Court that Mr Izmirlian's lawsuit be 'stayed', and the two sides ordered into mediation, as the construction contract allegedly contains the clauses compelling arbitration as a first means of dispute resolution.
Mr Izmirlian, though, is arguing that himself and his BML Properties vehicle are not parties to the construction completion, which was agreed between CCA and Perfect Luck. As a result, they allege they are not bound by any of its arbitration-related clauses - especially since it replaced the original deal agreed by Mr Izmirlian.