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Contractor ‘fleeced’ Baker’s Bay homeowners of $10m

• Claims likely ‘tip of iceberg’ for construction sector

• Contractor chief: Reinforces urgency for regulation

• Company cited by PM Office for staff non-payment

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Accusations that a foreign contractor may have “fleeced” homeowners in Abaco’s high-end Baker’s Bay community of up to $10m are likely “only the tip of the iceberg” due to the absence of construction industry regulation.

Leonard Sands, the Bahamian Contractors Association’s (BCA) president, told Tribune Business that such allegations were why he continues to “strongly urge” that the Construction Contractors Act be given full lawful effect through the appointment of a Board that will have licensing authority and regulatory oversight for the sector.

He spoke out after Endeavor Development International, the contractor cited by the Prime Minister’s spokesman two months ago for failing to pay 40 Bahamian workers their due salaries, was accused by one Baker’s Bay homeowner of defrauding it of $3.167m through the submission of “fraudulent” payment applications.

Schumacher Homes Operations, in a complaint filed in the southern Florida federal court on March 2, 2023, alleged that the Bahamian-incorporated contractor and its US-based principal, Brian Dickens, had “stolen millions” paid to them for the construction of a high-end residence at Baker’s Bay.

“Defendants have stolen millions paid by Schumacher Homes for the construction of a luxury residence in Baker’s Bay, The Bahamas,” the lawsuit claimed. “Over the course of approximately one year, from September 23, 2021, to June 17, 2022, Schumacher Homes paid a total of $3.167m based on the submission of fraudulent pay applications.

“Instead of using Schumacher Homes’ funds dedicated for suppliers, defendants embezzled the funds. Moreover, Dickens intentionally inflated the charges for the construction. Of the $3.167m paid to-date, only $1.15m has been accounted for as bona fide charges for the construction and proper delivery of funds to suppliers.”

Schumacher Homes alleged that when Dickens realised he was about to be exposed, he transferred “valuable assets” between two Florida companies, Built by Brian and PCS Premier Construction Services. And it claimed that such conduct extended beyond just its property.

“Dickens.... has fleeced at least five other owners of properties in Baker’s Bay through similar fraudulent schemes totaling more than $10m in intentionally diverted funds and fraudulent charges,” Schumacher Homes alleged. There is no suggestion that Baker’s Bay itself, or its Discovery Land Company developer, knew of or were involved in the alleged conduct by Endeavor Development International, and they are not named in the complaint.

Mr Sands, in response, said of the allegations: “I can tell you that I’ve been maintaining that if we don’t have any regulatory framework to prevent this, why wouldn’t that happen? This is exactly why the Construction Contractors Board and its licensing of contractors is so important.

“Groups show up, present themselves as good, bona fide contractors, and there’s no way to vet them before they get a Business Licence. This is exactly the situation that the public is potentially subject to in every instance. It happens a lot. I know from personal experience of people calling me and saying this person has ripped me off, that person has ripped me off.

“I say to them: You advocate to the Government that they appoint the Construction Contractors Board so that you can be protected in the future and your friends can be protected in the future. That’s the purpose of licensing.” Even if approved to operate in The Bahamas by the Government, Mr Sands said a foreign contractor would still need to be scrutinised and licensed by the Board once it is finally created.

The Board’s establishment remains the final, but critical, element to give the Construction Contractors Act full effect and enforcement powers, but successive administrations have cited concerns with its composition and/or nominated members as to why they have yet to appoint it almost seven years after the law was passed by Parliament on May 8, 2016.

Without the Board, there is no way of licensing contractors according to their ability, plus scale and complexity of work they can perform, or ability for consumers to seek proper redress for shoddy workmanship or fraudulent conduct. Mr Sands said the Board would also be able to vet joint ventures between foreign and Bahamian contractors, including determining whether the local side has majority ownership and control.

“There’s control on who gets to practice in construction through the Board,” the BCA president told this newspaper. “Foreign contractors would still have to get a licence from the Board. The Board is the only licensing authority. They would still fall under the Construction Contractors Board or they would be acting ultra vires to the Act.

“That’s why the Act is so powerful. In my opinion, the reason why it’s not been brought into force yet is that it takes away from Cabinet the power to determine who gets to do work and rests it in the hands of a ten-member Board who are not political, appointed by the responsible minister, and come from the relevant professions and associations to licence and regulate construction.”

Besides finally appointing and confirming the Board, Mr Sands said the Government also needs to introduce a new ‘grandfathering in’ period for all existing contractors to be licensed as the initial two-year duration expired in 2018. Once that period expires, they will then have to reapply to be licensed under the Act’s terms and conditions.

“The Act does not have the instrument from which it has its power because the Board has not been appointed,” he added. “Until we have the Board appointed no contractor can make an application to be registered and licensed because there is no one to make the application to. I strongly urge the minister to take whatever steps are necessary to appoint the Construction Contractors Board....

“It’s sad to hear about what’s happened [with Endeavor] but that’s only the tip of the iceberg and just one of many more. That $10m is a drop in the bucket.” Mr Sands also warned that the lack of construction industry regulation could deter hotel and real estate-related foreign direct investment, while also costing Bahamian contractors, sub-contractors and their workers income from lost opportunities.

Schumacher Homes, in its complaint, alleged that it signed a construction services contract with Endeavor Development International to construct a home at Baker’s Bay on August 22, 2021. The contractor’s profit margin was fixed at 15 percent, and the contract governed by Bahamian law.

However, it claimed that funds were paid for work that was never performed, and building materials that were never paid for, with monies “falsely charged” and “embezzled” by Dickens and Endeavor Development International.

“Schumacher Homes also paid monthly fixed costs for its share of the construction worker camp that includes housing and meals for contractors, in addition to providing dumpster, porta-restrooms and ferry service for contractors and construction workers,” the lawsuit alleged. “Endeavor Development International failed to pay Baker’s Bay Golf and Ocean Club for Schumacher Homes’ share due for these items.”

Endeavor Development International had previously billed itself as “fast becoming the go-to” builder at Baker’s Bay. But that was before Robert Farquharson, the Government’s director of labour, told Tribune Business his department is conducting a probe into claims that some workers had not been paid dating back to September 2022.

A government press release, dated November 30, 2021, had hailed the company for creating “sustainable employment and an economic shot in the arm for Abaco” as it met Keith Bell, minister of labour and Immigration, at his East Bay Street offices.

“The Endeavor team spoke of [their] ongoing commitment to build high end and luxurious homes on Abaco, and recruiting efforts to have talented and highly-qualified Bahamians join the world class company,” said the release, which is still available on the Government’s website.

“Minister Bell commended Endeavor for its demonstrated confidence in the Bahamian economy and relentless pursuit to train and engage Bahamians at all levels. Endeavor’s delivery of an excellent product that continues to place Abaco on the world stage as a second home mecca has created sustainable employment and an economic shot in the arm for Abaco.”

Endeavor’s website said of the company: “Endeavor is a general contracting firm that specialises in the construction and renovation of new luxury homes, hospitality and commercial projects. Endeavor’s combined experience of over 50 years has included the completion of hundreds of projects from $500,000 to $15m in project value.

“Endeavor projects have included custom luxury homes in the continental US, as well as Caribbean islands, such as The Bahamas and Cat Cay. Hospitality projects have included select and full service properties such as Hampton Inn, Marriott, Hilton, Springhill Suites, Hyatt, LaQuinta, Homewood Suites, Home2 and other major brands.”

As to the present, the website added: “Endeavor’s ability to overcome the challenges of working in an international market has made us a well-regarded and in-demand contractor. We are able to compete with other contractors, and we are fast becoming the go-to contractor in Baker’s Bay, Bahamas. Our performance in getting our crews mobilised and materials in these remote locations exceeds our clients’ expectations.”

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