The Tribune

By Neil Hartnell

Tribune Business Editor

nhartnell@tribunemedia.net

A former Baha Mar director yesterday asserted that the settlement with China Construction America (CCA) has “vindicated” Sarkis Izmirlian by “clearing his name” and giving him “just rewards” for the wrongs he suffered when ousted from the project more than a decade ago.

Dionisio D’Aguilar, the ex-minister of tourism and aviation who sat on the Baha Mar Board prior to the development being plunged into Chapter 11 bankruptcy protection at end-May 2015, told Tribune Business that the deal struck with the Chinese state-owned contractor was a tribute to Mr Izmirlian’s “tenacity and doggedness” to pursue redress for the project’s missed opening.

While the compensation payout for Baha Mar’s original developer was not disclosed, and was ‘blacked out’ in legal documents, Mr D’Aguilar - who sat on the project’s Board prior to becoming a Cabinet minister in the Minnis administration - suggested that “calmer heads prevailed” at CCA and its affiliate entities after they realised Mr Izmirlian “wasn’t going to walk away until vindicated”.

He added that the $4.2bn Baha Mar development only exists today because of the original developer’s “vision” and “desire to build an incredible facility”, and argued that all the “naysayers”, critics and doubters who have attacked Mr Izmirlian over the failure to complete the project on time, and on budget, in March 2015 should now apologise following what was revealed in his New York court battle with CCA.

“It’s great news,” Mr D’Aguilar told this newspaper, after the settlement between Mr Izmirlian and CCA was unveiled yesterday. “I think it brings to a conclusion a very big and painful fight by Mr Izmirlian to vindicate himself for his actions and to receive his just rewards for the wrongs that were committed against him.

“I admire his tenacity and doggedness to seek vindication for what turned out to be very honourable conduct. He conducted himself honourably, ethically and morally during this entire process. I know this was a process that was very painful for him, and I’m sure he’s delighted to put this behind him. It’s great news to put this whole very unfortunate affair behind us and all parties can move on.”

Chester Cooper, deputy prime minister and minister of tourism, investments and aviation, also hailed the settlement between Mr Izmirkian and CCA. “I mean, I've not yet [been] briefed on it, but suffice to say, any settlement of a dispute in the tourism business is a is a good outcome, and would certainly have the support of the of the Government of the Bahamas,” he said. “I think disputes hold up progress, and if they're able to settle the matter amicably, I think that goes a long way for the economy and the Bahamian people.”

Mr D’Aguilar, meanwhile, said the settlement, which will halt all ongoing legal battles between Mr Izmirlian and CCA, also ends the threat potentially posed to the British Colonial and Margaritaville Beach Resort by the winding-up petition launched by Baha Mar’s developer against their immediate holding company.

That was due to be heard by the Supreme Court in less than two weeks’ time, from December 9-11, as Mr Izmirlian targeted CCA (Bahamas) and another affiliate which - together with the Chinese contractor’ US arm - were held jointly liable to pay the $1.642bn damages awarded to him by the New York State Supreme Court over his “fraud” and “breach of “contract claim.

“It also removes the uncertainty surrounding the British Colonial property and the Margaritaville property,” Mr D’Aguilar said of the settlement, which now has to be approved by the New Jersey federal bankruptcy court. “A settlement had to be worked out.

“I think everybody is delighted a settlement was worked out, and they can move on to the next stage of their lives without this hanging over them. What Mr Izmirlian was demonstrating was a persistent tenacity during this entire process. He demonstrated he clearly wasn’t going to go anywhere and he put so much time and effort and resources into this project that he simply wasn’t ever going to walk away until vindicated and a settlement reached.”

CCA’s US arm sought Chapter 11 bankruptcy protection last Christmas purely to prevent Mr Izmirlian from collecting on his $1.642bn damages award, which has now hit $1.8bn with 9 percent interest accruing daily. However, it was unable to escape Chapter 11 without coming to a deal with Mr Izmirlian, who held more than 99 percent of its debts.

The damages award stemmed from Baha Mar’s original developer winning his claim for ‘fraud’ and ‘breach of contract’ against CCA, over the project’s failed end-March 2015 opening, at the New York State Supreme Court level - which was then upheld on appeal. Mr D’Aguilar yesterday said the Chinese state-owned contractor likely realised it was better to settle than prolong the decade-long legal battle.

“I guess it took some time, but clearer heads on the other side prevailed and a settlement was reached as it should have been,” he added. “The guilty party knows what they did, and it took a legal process to show everyone what was done and the injustices that were committed against Mr Izmirlian. He had to have his day in court.

“It took a long time, but he was persistent and always felt he was right, they were wrong, and one must admire his wanting to, in essence, clear his name and prove for all to see he had indeed conducted himself honourably. Once that was demonstrated, and beyond any reasonable doubt, in the lower court and then the appeal court, it then boiled down to how it’s going to be settled.”

Mr D’Aguilar said CCA likely realised it did not need the dispute with Mr Izmirlian “hanging over our name, our US operation”, and added: “I’m sure it impacted their reputation globally.” CCA’s media spokespersons did not respond to requests for comment before press time last night, but the former Baha Mar director and ex-Cabinet minister argued that the Cable Beach strip’s transformation would not have happened without the original developer.

“No doubt about it,” Mr D’Aguilar told Tribune Business. “Sarkis Izmirlian contributed many years of the prime of his life to development of that project. That project operates in The Bahamas today because of him; his vision and desire to build an incredible facility that is enormously impacting the economy of The Bahamas.

“That’s really something he can be proud of. I think there were a lot of naysayers, and a lot of people said some not nice things about Mr Izmirlian. I think he’s proven them all wrong and it’s time that all he has done for The Bahamas, and all the lives he’s impacted, created an enormous amount of jobs and attracted millions in foreign arrivals, to be recognised.

“He was the genesis of using Bahamian artists throughout the property. That was him. It was not just jobs and impact but he wanted to create opportunities for Bahamian artists to show their works and hopefully improve their ability to make a living from their creations. That’s just one example of how he took that project and how it impacted many sections of the Bahamian community,” Mr D’Aguilar continued.

“It’s been a very painful process. I think that what was most disheartening was people believed Mr Izmirlian had done something wrong, and it took his tenacity, hard work and diligence to clear his good name, put on the record what actually happened, seek his just rewards and, clearly now, he has received his just rewards. I think everybody is ready to move on; I’m sure he is, and to put this whole sad episode behind them.

“When he drives past that property [Baha Mar], he can look at it with pride and know people know what he did beyond any reasonable doubt whatsoever. It would be nice if the naysayers acknowledged they were wrong, but I am sure that will never happen.”

CCA’s failure to complete Baha Mar on time, and on budget, at end-March 2015 triggered a financial and liquidity crisis for Baha Mar. Attempts to negotiate a resolution with the project’s financier, China Export-Import Bank, failed amid the total breakdown in trust between Mr Izmirlian and CCA.

Realising that the contractor and financier, both owned by the Beijing government, were likely to unite to squeeze and force him out, Mr Izmirlian filed for Chapter 11 bankruptcy protection in Delaware. This, though, angered the Christie administration who viewed the move as a betrayal of its efforts to broker a solution.

The Government, as a result, united with CCA and China Export-Import Bank to oppose recognition of the Chapter 11 process by the Supreme Court. This was likely done with one eye on the upcoming general election in 2017, and a belief that the Chinese were a better bet than Mr Izmirlian to complete the project before the vote.

The Delaware court ultimately ended the Chapter 11 protection in deference to the Bahamian courts resolving the Baha Mar dispute. Mr Izmirlian was ousted as developer as the Government secured the appointment of joint provisional liquidators, while China Export-Import Bank named Deloitte & Touche as its administrators for the project.

The accounting firm’s sales process failed to find a buyer, but the development was subsequently sold to Chow Tai Fook Enterprises (CTFE), the Hong Kong conglomerate that is its current owner. However, Mr Izmirlian had not exhausted all his legal options and, at Christmas 2017, initiated the New York action against CCA that led to yesterday’s settlement.