By TYLER MCKENZIE
OVER the past week, the story of what happened at Baha Mar in the dispute between developer Sarkis Izmirlian and contractor China Construction America (CCA) have hogged the headlines.
In broad terms, Mr Izmirlian won across the board, with Justice Andrew Borrok, sitting in the New York Supreme Court, ruling on Friday, October 19, that Mr Izmirlian had proven his fraud claim against CCA “beyond doubt”. Judge Borrok awarded Mr Izmirlian more than $1.6bn in damages as a result – the $845m of Mr Izmirlian’s equity contribution to the development, plus interest.
There are two strands to the outcome here – one directly dealing with the court case itself, and the other with the political fallout from the saga.
We’ll get to the political later, but first what happened to get us here.
A revised opening date for Bahamas Mar had been set for March 27, 2015, but Judge Borrok ruling that the contractor had “knowingly and falsely” promised it would meet the date – while concealing from the developer that this was unlikely to happen.
The judge cited “at least four instances of fraud” in his ruling. Among the astonishing details in the case is that CCA demanded $54m in November 2014 from the developer to progress the project, but rather than paying the project’s sub-contractors, the contractor bought downtown Nassau’s British Colonial resort instead.
The judge concluded that CCA “ordered or condoned the slowing or stopping” of construction work in the months leading up to the missed opening date to “further its commercial interests”.
The upshot of all the delays was that the deadline was missed and a liquidity crisis occurred, “pushing BML Properties out of its $845m investment”.
The judge dismissed CCA’s case, finding for Mr Izmirlian and his BML Properties vehicle on all the key points.
It should be noted that CCA has announced it intends to appeal – but that doesn’t matter a damn until an appeal is actually filed, and indeed heard and ruled on. Anyone who has spent any time in courtrooms knows people often say they will appeal – it does not necessarily mean that they will. What the basis of that appeal would be has also yet to be explained.
So what does all that mean for you, me and the rest of the country? High-level businesses fighting it out, why does that matter for the rest of us?
Here’s where the political dimension comes into play.
Among the other pieces of information to emerge from the case were details of how the government of the day, led by Prime Minister Perry Christie, had some level of involvement with the whole affair.
Indeed, Mr Christie himself was reportedly told that the slowdown in construction was deliberate.
CCA did not dispute in the case that CCA’s top Bahamas-based executive admitted in the presence of Mr Christie, Mr Izmirlian and the Chinese ambassador that the contractor was “deliberately slowing the work”.
The moment, during a meeting on April 7, 2015, prompted Mr Izmirlian to say: “It was one of those moments you felt like you were in a movie. It was dead silence in the room. The Prime Minister is looking at me. The ambassador is looking at me.
“I’m looking at them, going did he just say what we think he said?’ So, the Prime Minister asked him again and he admitted they had been deliberately slowing down the project for their commercial benefit.”
The claim comes from testimony by Mr Izmirlian – but CCA did not challenge it during the case.
The judge went on to say that slowing down the work was a breach of an obligation to act in Baha Mar’s best interests and there were “numerous other examples” of threats or suggestions of work stoppages.
For such a suggestion to have been made in front of the Prime Minister at the time is shocking – for it to take a court case to bring that information out rather than action being taken at the time is worse still.
The judge also ruled that $2.3m in payments made to a company run by Leslie Bethel were done to help “gain access” to his father, Sir Baltron Bethel, who was Mr Christie’s senior policy advisor at the time – and the point man in dealing with the Baha Mar dispute. Both father and son have said previously they have done nothing wrong.
You would think that putting these things together would be enough to raise concern over whether there was an even-handed approach to the whole affair – so what has the current administration done in response?
Well, the right thing. At first. For all of a day. A statement was issued saying that Prime Minister Philip Davis had instructed Attorney General Ryan Pinder to review the court ruling and that there would be no further comment or decisions until the outcome of that review. Like it or not, that’s actually pretty fair – take the time to digest the court case and then respond. You might well say sure, but they knew this ruling was coming, one way or the other, why not be ready to respond when it happened? But a considered response is not unfair.
And then Fred Mitchell weighed in. The Foreign Affairs Minister did not wait for the review from the attorney general, but rather said that “all of the salacious stuff which came out of the developer’s statement about how there was a collusion with corrupt behaviour official, there is no evidence of that either”. He insisted that “the main issue for us is The Bahamas government has no liability which arises out of this”.
His comments prompted a condemnation from a former Bahamas Supreme Court Justice, Jeanne Thompson saying that he showed a “total lack of diplomatic behaviour”. She said: “Anyone who could not see the obvious conflict of interest in a minister of government simultaneously holding the position of chairman of the governing party should have had the beam cast from his or her eyes following the intemperate remarks made by our minister of foreign affairs on the judgement of a New York court in the matter involving Bahama Mar.
“I have no problem with the chairman rising to the defense of party officials, family and friends. However, I take strong exception to the minister of foreign affairs of our nation lambasting the judge of a friendly country because he did not like his ruling, and vilifying a foreign resident and investor because he dared to bring an action to secure his rights and succeeded.”
So here’s where it all affects us – the government of the time seems to have been aware of a slowdown that worked against the interests of the developer, according to the judge’s ruling.
Also, according to that ruling, the contractor seemed to think there was value in paying the son of a senior advisor to the prime minister to gain access.
Why would they think that? You don’t give money for nothing, right?
So is this an isolated incident? Was this only Baha Mar and nothing else in our country, no other such deals? Are there any other such payments?
And where does this leave our government’s relationship with CCA with regard to other projects in the country?
By rights, there should be a full investigation – and it is no surprise that the FNM has called for a commission of inquiry. Though I do not think they have as yet committed to hold one when they come to office if the current administration does not do so.
But can a developer really be ousted from a project just because a contractor decides it’s going to slow things down and force them out? Can payments to family members really be ignored completely if done to “curry favour” as the judge ruled?
The purpose of an investigation is twofold – one, to find out if any wrongdoing took place and two, to make sure we learn lessons so it does not happen again.
If you were a developer, would you commit to a project in The Bahamas knowing what had taken place in this case? Or would you want greater assurances before you gave any such project a green light?
At the ground level, that means jobs, salary, visitors, income to the country. It’s not just a game between big businesses. It really does affect you and me.
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Publish date : 2024-10-28 05:49:00
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