By YOURI KEMP
Tribune Business Reporter
ykemp@tribunemedia.net
TREASURE Cay homeowners yesterday warned they “can’t afford” for the development to be “tied up for years” by a $3bn claim against the Government.
Craig Roberts, an Abaco hotelier, told Tribune Business that residents “really can’t afford two or four years or more of litigation” after this newspaper revealed that controversial Austrian investor, Dr Mirko Kovats, is seeking an astronomical sum in damages after the Davis administration rejected his bid to acquire the project from the Meister family.
Mr Roberts, who is leading a counter-offer to acquire Treasure Cay, said: “This is a very sad time for all of us in Treasure Cay. Our tiny community needs the hundreds of jobs and millions of dollars new resort construction will bring to this island. Three billion dollars in damages on a $31.5m investment sounds weak. I hope the Government has some good lawyers who can bring the issues to a head quickly.”
Dr Kovats, a Lyford Cay homeowner who has permanent resident status in The Bahamas, is alleging that his Treasure Cay acquisition and other local real estate deals “have been subject to undue influence by the Government”, which he is accusing of “interference in a private commercial transaction”.
Eric Bethel, property owner and Treasure Cay amenities board member, and the development’s former head of security, yesterday said of the legal battle: “This is going to tie up Treasure Cay for years to come. We can’t afford that.”
Warning that this may result in residents leaving Treasure Cay, he added: “The people in Abaco are really going to suffer over this, especially the people in North Abaco and the homeowners, too. There is nothing going on in Treasure Cay now, and the Meisters aren’t going to do anything, and now there’s not going to be a sale, so it means no rental incomes coming in, so it’s bad all around.”
No other prospective buyer will go near purchasing Treasure Cay until the legal battle is resolved. Mr Bethel, understanding this, urged the Government to “fix this problem” as soon as possible because “this isn’t going to be good.”
Mr Roberts, meanwhile, challenged Dr Kovats’ claim that the Meister family has not returned his $2.33m deposit. “I know that Kovats’ deposit was returned a month ago,” he charged. The Austrian financier has also initiated legal action against the Meisters and their company, Family Adventure Holdings, demanding that they uphold the February 2021 sales contract or, in the alternative, return his $2.233m deposit equivalent to 10 percent of the purchase price
Legal filings in the US and The Bahamas, which have been obtained by Tribune Business, reveal that the Austrian, who lives at McCullough on Clifton Bay Drive, initiated Judicial Review proceedings against the Government on October 27, 2022, after the Bahamas Investment Authority (BIA) rejected his efforts to acquire the remaining 1,600 acres at Treasure Cay from Robert and Stefan Meister via a $22.325m deal.
Documents detail a series of meetings with the Prime Minister, Cabinet ministers and other senior government officials, with Philip Davis KC at one point purportedly telling Dr Kovats: “Don’t let me down” were the Government to approve the Treasure Cay sale. The Davis administration ultimately decided against this, confirming its decision to Dr Kovats in the BIA’s June 16, 2022, letter.
The Lyford Cay resident appears especially unhappy with the Government’s escalating demands that he post a performance bond to guarantee the Treasure Cay redevelopment he promised will actually happen. The sum required rose from an initial $5m to $25m by the time that Dr Kovats’ commercial attorney, Greg Cottis, met with the Prime Minister on August 24, 2022, in a final bid to avoid litigation and move the project forward.
It is unclear how the total $3.127bn damages sought by Dr Kovats have been calculated, although they appear to represent lost sales revenues and profits that would accrue to him if his Treasure Cay plans were approved. They seem to have been calculated using a report produced by the CBRE Group, an international real estate firm, for “updated Albany/South Ocean development plan proceeds” as well as based on property values at Abaco’s Baker’s Bay project.
Many observers are likely to be highly sceptical at the damages calculation submitted by Dr Kovats and his attorney, Damian Gomez KC, the former minister of state for legal affairs, as well as their prospects of Judicial Review success. One source, speaking on condition of anonymity, told Tribune Business: “How he can take the Government to court and expect to win is beyond me. They can turn anyone down. That’s the nature of the beast.”
The concern for The Bahamas is that prime tracts of real estate, extremely valuable for driving future development, investment and job creation, face being potentially tied-up for years in expensive, time-consuming court fights. Several sources have suggested that litigation is frequently employed as a hardball negotiating tactic by Dr Kovats as a means to an end in securing his desired outcome.
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