A newly-released ruling by a New York court meticulously details unscrupulous and fraudulent actions by China Construction America (CCA) to snatch Baha Mar from developer Sarkis Izmirlian, and highlights how the senior advisor to then-Prime Minister Perry Christie was used in an effort to support this scandalous action.
With the suggestion that government personalities may have been doing the bidding of CCA, this ruling potentially casts a shadow over The Bahamas as a place for prudent, transparent and legitimate investments.
Izmirlian’s BML Properties Limited (BMLP) was awarded a $1.6 billion judgment against China Construction America and affiliated companies, with the judge finding that China State Construction Engineering Corporation Bahamas (CSCECB) committed material breaches of the parties’ investors agreement by requesting $54 million from BMLP to pay subcontractors, but instead used it to purchase the Hilton hotel in Downtown Nassau.
Justice Andrew Borrok found that at trial BML Properties Ltd. more than met its burden in proving (i) by a preponderance of the evidence that the CSCECB board member breached the Best Interests Obligation set forth in the Investors Agreement no fewer than six times and (ii) by clear and convincing evidence committed at least four instances of fraud, and that as a direct and proximate cause of such conduct, BMLP suffered damages in the amount of its entire $845 million investment.
The judge found that throughout his company’s arrangements with CCA and The Export-Import Bank of China, Izmirlian acted credibly and honorably, but was shafted.
“… BMLP’s witnesses’ testimony was credible and consistent with the contemporary documents. The defendants’ witnesses’ testimony by contrast was often inconsistent with their own internal communications or otherwise confirmed their many instances of breach and fraud,” the judge said.
Izmirlian, facing a liquidity crisis in June 2015, filed for Chapter 11 bankruptcy in the United States. Significant numbers of Bahamians lost their jobs and the project’s initial failure reverberated throughout the Bahamian economy.
Izmirlian was on the outside looking in, after conceiving of Baha Mar over 20 years ago, and after acting in good faith to try to drive the project to conclusion.
The ruling details a troubling set of dishonorable and fraudulent events on the part of Izmirlian’s Chinese partners.
Equally troubling was the inference that some in the Bahamas government colluded with the Chinese entities to push Izmirlian out.
Leslie Bethel, the son of Sir Baltron Bethel, was a CCA consultant whose company was paid approximately $2.3 million, purportedly for consulting services related to business opportunities in Panama, the ruling states.
Leslie Bethel had assured Daniel Liu, senior vice president of both CCA Inc. and CCAB and lead negotiator for the purchase of the Hilton, that “Sir B is one of CCA’s biggest supporters”.
“The record evidence establishes, at the very least, that (i) the defendants relied on their business relationship with Leslie Bethel to gain access to Sir Baltron Bethel and by extension the Bahamian government …” the court said.
The ruling includes an email from Sir Baltron suggesting to the Chinese entities that an additional equity partner be brought on but said that such a suggestion should preferably come from the bank and not government to prevent Baha Mar taking the position government is trying to push lzmirlian out.
The revelations in the ruling are cause for deep concern among the Bahamian people. The clear suggestion that elements of government may have colluded with CCA in facilitating its fraudulent acts places a stain on the reputation of the Bahamas government and how it deals with investors.
Consideration should be given to a more transparent and formalized investment regime with more involvement of professionals tasked with following a specified set of agreed guidelines in investment approvals, and a less intimate approach by policymakers.
This debacle also underscores the need for clearly articulated statutory ethical guidelines for public officials and an Integrity Commission to investigate claims of public malfeasance at arms length, away from the political process.
Though Prime Minister Philip Davis has said he has turned over the ruling to the attorney general for review, it would be difficult to view the attorney general, who sits in Cabinet, as being independent in such matters with potentially huge political fallout if it comes to any probe being conducted.
The official opposition has called for an investigation into the reported involvement of then-government officials in facilitating fraudulent acts against an investor. There is merit in such a call, though we would not hold our breath for action in this regard.
What happened to Izmirlian, his company and his family was a grave injustice, according to the evidence articulated in the ruling.
He has finally been vindicated.
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Publish date : 2024-10-21 00:34:00
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