Concluding an 11-day bench trial, New York Supreme Court Justice Andrew Borrok found that CCA deliberately scammed BMLP during the development of Baha Mar in Nassau, essentially forcing the company into bankruptcy.
In an 18 October ruling, Borrok called CCA’s actions an “absolute sham and shakedown” of BMLP chairman and CEO Sarkis Izmirlian. He awarded the Swiss developer $1.6 billion (£1.2 billion/€1.5 billion). That is $845 million in fraud damages, plus interest accrued from May 2014.
But the war is far from over, as CCA and some Bahamian officials push back against the verdict.
‘Outright sabotage,’ with help from Bahamas
In 2011, Izmirlian retained CCA to build the lavish beachfront resort, which was scheduled to open in early 2015. According to BMLP counsel, starting in 2014, CCA began to deliberately mislead BMLP about its ability to complete the project on time.
In fact, the judge found that CCA engaged in “outright sabotage” of the development. The judge said the company diverted money and manpower from Baha Mar to unrelated projects in Nassau and Panama. Then the US arm of China’s largest construction firm “tried to shake down Mr. Izmirlian for more money before they would even discuss completion.”
Borrok said CCA was “entirely at fault” for the liquidity crisis that forced BMLP into Chapter 11 bankruptcy in June 2015.
What’s more, BMLP counsel said the Bahamian government played a role in the deception, “[ousting Izmirlian] and the Baha Mar management team to the detriment of the Bahamas.”
That claim has some government officials up in arms.
Allegations of influence peddling
CCA consultant Leslie Bethel, son of a top advisor to then-Prime Minister Perry Christie, purportedly used his father’s influence to help undermine BMLP.
CCA paid $2.3 million to Leslie Bethel’s company, Notarc Management Group. Borrok determined the payment was meant to “curry favour” with the Christie administration and “gain access” to government leaders.
In comments this week, former Bahamas tourism minister Dionisio D’Aguilar agreed that the payment, made in installments from 2014-16, “reeks of impropriety.”
“The evidence is the government ultimately sided with the party that breached the contract and ultimately stole Baha Mar through fraudulent means,” said D’Aguilar. “That doesn’t reflect kindly on our government. Then you have the question ringing in Bahamian minds: Why did the government side with the Chinese?”
D’Aguilar, who was a Baha Mar board member under its original owners, told Tribune Business, “The first question everyone wants to know is what happened to this $2.3 million.”
Government officials fight back
On Wednesday, Bahamas Minister of Foreign Affairs Fred Mitchell accused Izmirlian of “seeking to tell a narrative which does not line up with the facts.”
Mitchell has been critical of Izmirlian in the past. When Baha Mar filed for bankruptcy in 2015, Mitchell invited the developer “to live elsewhere if he does not wish to conform with the mores of conduct of those who are economic guests in our country.”
Former Supreme Court Justice Jeanne Thompson said Mitchell’s latest comments show a “total lack of diplomatic behavior.”
“I have no problem with the chairman rising to the defence of party officials, family and friends,” she said. “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.”
CCA called Borrok’s judgment “deeply flawed” and said it would appeal. A spokesperson cited “indisputable evidence” that BMLP “overborrowed, overspent and overextended itself and then drove the project into a wrongful, secret bankruptcy … to eliminate its obligations at the expense of other stakeholders.”
MP Michael Pintard added that allegations of influence-peddling may damage the Bahamas’ reputation as a place to do business.
As for Izmirlian’s dream resort, in 2016, Hong Kong-based conglomerate Chow Tai Fook Enterprises bought Baha Mar from an original lender, the Export-Import Bank of China, for an undisclosed sum. The $4.2bn 1,000-acre destination, home of the Bahamas’ largest casino, opened in 2017.
Original article: https://igamingbusiness.com/casino/integrated-resorts/baha-mar-developer-bags-billion-dollar-award/
