Chinese contractor strikes back at Bahamas megaresort developer

Nassau, Bahamas — Baha Mar’s contractor, China Construction America (CCA), said in a statement that the Bahamas megaresort’s decision to file for bankruptcy protection in Delaware is the direct result of its failure to secure adequate financing and its mismanagement of the design of the resort project at Cable Beach.

This mismanagement includes replacing the principal architect after construction had commenced, the late and incomplete delivery of design packages and over 1,300 construction change directives.

CCA said the vast majority of the Baha Mar debtors are organized under the laws of The Bahamas, the Baha Mar project is located in The Bahamas, and the Bahamian people are deeply invested in the future of the project.

It said Baha Mar’s decision to file for bankruptcy protection in the United States was, therefore, misplaced and calculated to benefit the project’s developer over the interests of The Bahamas and its people.

“Baha Mar Ltd’s recent public attempt to shift responsibility away from itself and blame CCA Bahamas and our subcontractors for the delays in the project’s completion is misleading and dishonest,” CCA said.

“It is insulting to the many talented and hardworking employees and subcontractors that work for CCA Bahamas and harms the interests of the people and government of The Bahamas that are represented by this landmark project.

“Since February 2015, CCA Bahamas and our subcontractors have performed nearly $72 million of contract work for which we have received no payment.

“Our aggregate investment in and commitment to the project, including money advanced by CSCEC (China State Construction Engineering Corporation) on behalf of the developer, approximates $220 million. We have continually acted in good faith in the performance of this work reliant upon the belief that Baha Mar Ltd would fulfill its responsibilities as the owner.

“CCA Bahamas is committed to holding Baha Mar Ltd accountable for its improper actions and failed commitments to the Bahamian government, the people of The Bahamas, and all of its creditors.

“We look forward to working with the financial community and the Bahamian government in order to complete this important project.”

Meanwhile, after the failure of the Bahamas government to pay the salaries of Baha Mar workers for yet another day, Baha Mar on Monday night sent out a statement attacking the Christie administration’s actions as “disgraceful”.

Baha Mar also slammed the government’s behaviour as “unconscionable and disappointing”, accusing the administration of “concocting a sideshow for its own purposes”.

The ministry of finance initially said Baha Mar’s employees would be paid by last Friday, but after workers were still not paid on Monday, the ministry claimed “delays in obtaining payroll particulars from Baha Mar” were behind the failure to pay and promised employees would be paid on Tuesday.

In response, Baha Mar said the government’s behaviour has “sown confusion and doubt about the future of the project”.

Baha Mar filed for Chapter 11 bankruptcy in Delaware last Monday. The following day, in the UK, it sued China State Construction Engineering Corporation for $192 million in damages.

“The delay in Baha Mar citizens being paid is a government of The Bahamas issue, not a Baha Mar issue,” Baha Mar said.

“Baha Mar essentially provided the government over five days ago the information the government requested.

“Subsequently, the government has kept coming back to Baha Mar continually for more information, even as the government announced in the newspapers [Monday] morning that it had made arrangements for prompt payment.

“Each time Baha Mar has provided as quickly as possible the requested information.

“Baha Mar finds it disgraceful that the salaries due Baha Mar employees have not yet been paid. Baha Mar was fully prepared to pay these salaries in a timely manner having received approval from the US court under chapter 11 to do so.

“The government however saw fit, apparently for its own reasons, to participate in the obstruction of this process and has to date been unable to deliver on its promise regarding Baha Mar citizens.

“We urge the government to fulfill this obligation, which it said it was assuming for this pay period.”

The company refers to its employees as citizens.

The Guardian understands that the ministry of finance did not receive full employee payroll information from Baha Mar until 11:25 a.m. on Monday, leading to processing issues at the Royal Bank of Canada.

Payment information was reportedly processed at the bank on Monday, except for 40 employees who do not have bank accounts. Those employees will receive checks issued by Financial Secretary John Rolle, The Guardian understands.

Last Thursday, Attorney General Allyson Maynard-Gibson committed that the government would pay out $7.5 million this month to cover the salaries of 2,400 Baha Mar workers.

She said paying the employees without conditions attached would allow negotiations to continue.

She charged that the employees should not be used as “pawns in negotiations about the future of the project”.

In a statement on Monday, the government said it would be unable to pay Baha Mar employees until Tuesday.

“The Ministry of Finance has announced that due to the delays in obtaining payroll particulars from Baha Mar, salary payments to Baha Mar employees will be made on Tuesday, July 7, 2015,” the government said in a statement.

On Friday, the government said it had made a payment of $2 million to cover Baha Mar salaries.

But Baha Mar said on MOnday, “It is unconscionable and disappointing that Baha Mar should be forced to divert time and resources away from the critical task of completing construction and opening Baha Mar successfully as a result of the government concocting a sideshow for its own purposes.

“One truly has to wonder why the government is not fully supporting the one investor — the project’s developer — which, along with the people of The Bahamas, have been victimized by the repeated failures of the general contractor to complete construction on schedule and as promised.”

When attorney Roy Sweeting appeared before Justice Ian Winder last Thursday in an attempt to get US court orders approved in The Bahamas, he met opposition from the government and the Export-Import Bank of China, Baha Mar’s major lender.

The approvals would have given Baha Mar access to $30 million in debtor in possession funds to “keep the lights on”.

However, Minister of State for Legal Affairs Damian Gomez said in court that the government is prepared to pay “each and every Baha Mar employee”.

The company later responded that the move was “unorthodox” and unnecessary, as it had already secured the DIP funding to pay for salaries, among other things.

“Seven and half million dollars to make this payroll does not solve all of our problems,” Sweeting said in court.

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