‘Bad decision on Baha Mar’

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Former Prime Minister Hubert Ingraham said yesterday it was a “fundamentally bad decision” for the government to put Baha Mar into liquidation, and revealed that around the time the decision was being made, he wrote Prime Minister Perry Christie twice and warned him this was a bad idea.

Ingraham also said it would have made sense for the government to provide an undertaking with respect to the $100 million that once separated Baha Mar principals and their Chinese partners from reaching an agreement.

In an interview at his West Bay Street office, Ingraham said he was disappointed with the government’s decision, noting that the project would have been much further ahead had the government allowed Baha Mar developer Sarkis Izmirlian to seek Chapter 11 bankruptcy protection in the United States.

“I think it was a bad and wrong decision, and the consequences of that are being felt up to now because all the people lost their jobs, people have not been paid and we have had serious reputational damage in terms of investment in The Bahamas over the Baha Mar ordeal,” Ingraham said.

“The government was wrong-headed when it

decided to put Baha Mar in liquidation.

“It was nonsense, quite [nonsensical] to say because they were having a matter dealt with in a court in Delaware that, that was against the sovereign interest of The Bahamas.

“In fact, you know, Resorts International, Paradise Island, was in Chapter 11 in America when Kerzner bought the property in 1994.

“So, we’ve had experience with a major property being in Chapter 11 in the United States before.

“It made sense for Mr. Sarkis Izmirlian and the Chinese bank and construction company to be able to argue their case and stand on their own feet with the government of The Bahamas being right here because the government had to decide at the end of the day to approve or disapprove whatever was determined.

“And so, the government should not have tilted in favor of the construction company. It made a mistake and now it is stuck with a very bad decision because it is the government that put Baha Mar in liquidation.

“The people who are owed money by Baha Mar are not likely to be paid by the Chinese authorities because the company is in liquidation.

“They also are going to be making all kinds of demands on the Bahamas government as to what kind of foreign labor content they are going to have.

“And so, we have suffered tremendous losses as a result of the government’s decision.”

Ingraham said, “I told Mr. Christie for instance that at one stage there was $100 million separating Baha Mar principals and the Chinese authorities. Well, under those circumstances, it would have made sense for the government of The Bahamas to give an undertaking of the $100 million because we would make it back in taxes many times more in less than a year.

“And we would have been much further ahead and we would have had employment up, etc.

“But no, we are seeing the result of a fundamentally bad decision, fundamentally bad.

“I took the opportunity to write Perry Christie two notes and signed them as an outsider to tell him what my view was at the time.

“I felt very strongly about it and as a Bahamian, and someone who has been involved in politics in The Bahamas, etc. I did not want to see that happen because I knew once you put that company in liquidation…”

Izmirlian filed for Chapter 11 protection in Delaware on June 29, 2015.

The government made a counter move in Bahamian courts.

All of the Chapter 11 cases have since been dismissed.

In July 2015, Izmirlian intended to use a $400 million financing package to complete the project.

But negotiations surrounding that deal fell through, which the Bahamian government attributed to Baha Mar Ltd.’s refusal to meet a $100 million personal guarantee.

After months of failed negotiations, the Supreme Court appointed joint provisional liquidators in September as part of the government’s winding up petition.

In October 2015, the Export-Import Bank of China (CEXIM) sent Baha Mar into receivership where it remains.

The prime minister has repeatedly said the stakeholders were close to reaching an agreement to get the Cable Beach project completed and open.

Since then, one of Izmirlian’s holding companies, Granite Ventures, has applied to the Supreme Court to fully liquidate Baha Mar, charging that the joint provisional liquidators are powerless and have dragged their feet in bringing about a resolution.

Ingraham said Baha Mar is critical to The Bahamas.

 

Whipped 

Ingraham accused the government of allowing itself to be “whipped into a frenzy”.

“They were cursing Sarkis Izmirlian and said his head needs to be examined and threatened to put him out of the country etc. rather than focusing on what was good for The Bahamas, and what was good for The Bahamas was [to] let the Izmirlians, the construction company and the bank, let them argue their case wherever they wanted to argue it,” Ingraham said.

“Keep the project going. Keep the project going.”

In the wake of the chapter 11 filing debacle, Izmirlian accused the Christie administration of “concocting a sideshow for its own purposes”.

In response, Foreign Affairs Minister Fred Mitchell warned that Izmirlian was not the only one who could “play crazy”.

He also suggested that Izmirlian’s permanent residency could be revoked.

Labour Minister Shane Gibson said it may be a good idea to carry out psychological evaluations on future investors, saying investors cannot come into The Bahamas and disrespect the government.

Similar sentiments were expressed by other Cabinet ministers, though Christie claimed his government never intended to be in a “fight” with the Baha Mar developer.

He claimed his ministers were airing their own personal feelings, and only he can speak for the government on the matter.

Baha Mar’s full liquidation application is expected to be heard at the September winding up hearing.

 

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