by Adrian Gibson
THE Chinese Government, the China Export-Import Bank (CEXIM) and their co-conspirators, the Bahamian Government, all appear to have “gooseyed” Baha Mar developer Sarkis Izmirlian, ripping his brainchild from his hands and ignoring him like the rude child in the room.
Mr Izmirlian was walked down the investment aisle by his onetime friend Prime Minister Perry Christie only to find that no bride awaited him.
I always thought that Baha Mar was a white elephant. I viewed it as a grandiose concept that was too large and farfetched. The resort should have been developed in phases, but that seemingly did not fit the developer’s plans.
The fact is that the Baha Mar development is the largest offshore real estate investment of the Chinese. As it stands, it is clear that the Chinese have got a hold of Baha Mar. The governing Progressive Liberal Party has overseen the loss of a major part of our economy to a foreign power. The Chinese government will never sell Baha Mar to local investors, Americans or anyone who is not a Chinese tycoon who is a government puppet. Barring selling Baha Mar to another Chinese investor, the Chinese government will retain that investment via various legal structures and special purpose vehicles.
I have always wanted to see the Heads of Agreement signed between our government and Baha Mar and also the agreement involving the Chinese Export Import Bank, particularly as it relates to government concessions. With Mr Christie’s recent announcement that Baha Mar has been sold, and the fact that the court sealed the agreement, I am curious about the details; what of our national patrimony was given away and how we were betrayed by an overzealous government desperate to trade off the resort for a second consecutive term in office. This is, yet again, one of the reasons why a Freedom of Information Act is so vital in a modern Bahamas.
In August, Prime Minister Perry Christie announced that the government and CEXIM entered into an agreement to have Baha Mar completed and sold to a “world-class hotel and casino operator.”
Last month, Mr Christie and a government delegation that travelled to London, England, to meet with investors were informed about the identity of the anticipated buyer for the beleaguered Baha Mar resort. However, he said he could not name the group because of the delicate stage of negotiations.
In a letter dated October 10, Mr Izmirlian made an offer to purchase the stalled $3.5 billion resort “at a price in excess” of the current undisclosed bid. Mr Izmirlian said that his BMD Holdings is prepared to pay 100 per cent of all “substantiated” Bahamian claims and all money owed to Bahamians and foreign employees.
Previously, he pledged that BMD Holdings would drop “all of our appeals and legal actions in effect within the Bahamian courts” upon acceptance of the offer.
One week after the proposal, Prime Minister Perry Christie urged Mr Izmirlian to work with Perfect Luck Holdings Limited, if the resort developer is in a position to make a “credible proposal” to buy the property as he has suggested.
In a press release, the Office of the Prime Minister said that the sale of Baha Mar to Perfect Luck “followed a lengthy marketing process by the receivers, and that process and the resulting sale of the assets to Perfect Luck were overseen and approved by the Bahamas Supreme Court”.
While promising to provide information on Perfect Luck and the sale of Baha Mar—both of which has been shrouded in secrecy—Prime Minister Christie told The Nassau Guardian that he has “to have a meeting. Not even the Cabinet has been spoken to about this.”
How could Mr Christie oversee the sale of the assets of Baha Mar without consulting the Cabinet?
What about collective ministerial responsibility?
Article 72 (1) of the Constitution states:
“There shall be a Cabinet for The Bahamas which shall have the general direction and control of the government of The Bahamas and shall be collectively responsible thereof to Parliament.” So, did the Prime Minister—who is merely first among equals—make a decision without consulting his Cabinet?
The Manual of Cabinet and Ministry Procedure, under the heading ‘collective responsibility’, states:
“2 All major decisions of policy must be made by Cabinet.
3 A fundamental principle of “Cabinet Government” is unity. It is important to present a united front to the public; if any Minister feels conscientiously unable to support a decision taken by Cabinet, he has one course open to him and that is to resign his office
4 This principle is not affected by the assignment of responsibility to individual Ministers. Decisions made by a Minister about any matter in his portfolio, when it is not within policy already decided by Cabinet, must always be such as could, without doubt, be defended and supported by Cabinet.
5 All major matters of policy, and matters on which there may be doubt regarding the attitude of other members of Cabinet, and all subjects on which there is unresolved difference of opinion between Ministries, should be put before Cabinet. Moreover, should any Minister not agree with an action taken by a fellow Minister without prior consultation with Cabinet, Cabinet will decide whether or not the action should be upheld.”
So, given the above, how did Mr Christie engage the Chinese government whilst admittedly not consulting with the Cabinet? Mr Christie, by his utterances, has demonstrably breached Cabinet procedure.
If I were representing Sarkis Izmirlian, I would explore this in more detail. His attorneys should.
Frankly, I commiserate with Mr Izmirlian. Notwithstanding that, I view his open letters and sudden unearthing of funding as a pie-in-the-sky attempt to hold on to his development. I cannot fault him for seeking to retain Baha Mar but I am uncertain about whether he is “selling dreams” and merely mounting a public relations gimmick for sympathy.
Surely, Mr Izmirlian ought to know that ever since he “embarrassed” Mr Christie by filing for bankruptcy in June 2015, he was in the governing party’s black book. Yes, I am reliably informed that his legal manoeuvres were taken, by the Prime Minister and others in the Cabinet, as humiliating. Mr. Izmirlian, the onetime golden boy of the PLP has now been cast aside and their once big-brother-little-brother relationship is in tatters. To use the PLP’s slogan, there is no turning back.
According to one Peter Amsel, a reporter for CalvinAyre.com (a gambling and casino news website):
“Perfect Luck turns out to be a special purpose vehicle (SPV) set up by Baha Mar’s primary creditor, the Export-Import Bank of China (EXIM). The bank reportedly opted to sell Baha Mar to Perfect Luck after none of the bidders came close to ensuring EXIM would recoup the full $2.45b it has contributed toward the project. The sale may also allow EXIM to temporarily offload its Baha Mar losses onto another company’s balance sheet until the ultimate sale concludes.”
This is incestuous! It appears that CEXIM is selling Baha Mar to its subsidiaries which means that the Chinese government is the owner of Baha Mar and now owns a prime piece of Bahamian real estate and has a controlling interest in our economy. What a disgrace!
Indeed, Perfect Luck is nothing short of an “intricate fabrication.”
It is clear that neither the Bahamas’ government nor the Chinese want anything to do with Sarkis Izmirlian. He could continue to fight in the courts or he “could give up the ghost.” If I were him, I would fight tooth and nail, until the fat lady sings….and even after the song is over.
That said, the public has lost faith in Sarkis Izmirlian.
Perhaps, Baha Mar should be sold off — one hotel at a time — to different owners. In Las Vegas, different hotels owned by different people are in close proximity just like the hotels that comprise Baha Mar. These hotels could all have relationships with the other; just look at Comfort Suites and Atlantis.
When Mr Izmirlian was at the helm of Baha Mar, they were given significant concessions by the government. According to documents filed with the Delaware Bankruptcy Court, though its debt to government is pegged at $20m, Baha Mar would have enjoyed at least $11.5m in tax write-offs if the development was ever completed. At that time, they asserted that:
1 The government would’ve written off $7.5m worth of real property taxes and $4m in gaming “win” taxes owed by the former Crystal Palace casino, once Baha Mar opens its doors;
2 Baha Mar enjoyed “a six-month deferral” on its “input” Value-Added Tax (VAT) obligations and intends to request a further deferral from the Ministry of Finance if any net sum remains outstanding;
3 Baha Mar owed the government $2.73m in unpaid Stamp Duty on real estate transactions. Some $1.2m of this sum relates to land transfers to SuperClubs Breezes;
4 There was $16.35m in gaming “win” taxes that were due to be paid when the Baha Mar Hotel and Casino opens. In return, once this payment had been made, the Gaming Board would have forgiven the $4m in tax owed by the Crystal Palace Casino;
5 The government was owed $2m via a combination of unpaid casino, hotel and Business Licence fees;
6 Apart from writing off $7.5m in real property tax, some $5.9m of which was past due, the government was giving Baha Mar a “20-year moratorium” on real property taxes from February 2011;
7 Baha Mar owed $920,000 in hotel licence fees for both the Melia Nassau Beach Resort and the now-closed Wyndham;
8 Baha Mar owed some $650,000 in Business Licence fees; and
9 Baha Mar owed a $250,000 annual casino licence fee.
If these concessions were given to Mr Izmirlian, what did the Chinese ask for? What did you give the Chinese, Mr Christie? I cannot ask your Cabinet because you admitted that they are in the dark. So, Mr Christie….what did you do, sir?
Did the Chinese pay the millions owed by Baha Mar—in its original and current incarnations—that were/are owed to BEC, the Water & Sewerage Corporation, Cable Bahamas and the Bahamas Telecommunications Company?
On a slightly different note, I have a final set of questions for Prime Minister Christie:
Given all that has happened at Baha Mar and the fact that Royal Bahamas Defence Force Commodore Tellis Bethel is still “acting” in the post, is former Commodore Roderick Bowe considering a return to the frontlines of the RBDF? Is he still on the government’s payroll or has he retired altogether? Is he still on pre-retirement leave?
The government needs to address the issue of Roderick Bowe, who was/is the Director of Security at Baha Mar and, at that time, remained the de facto Commodore of the Royal Bahamas Defence Force (RBDF).
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First published in the The Tribune under the byline, Young Man's View, here…
View Adrian Gibson's archive here…
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