The crisis surrounding Baha Mar – a bankrupt casino-resort project in the Bahamas that is being dubbed “the world’s biggest white elephant” – took a turn when local media published details of a memo it said suggested the resort’s main contractor, China Construction America CCA, had misled both Bahamian Prime Minister Perry Christie and Baha Mar’s Chairman and CEO Sarkis Izmirlian into believing it could meet the 27 March 2015 opening deadline.
The internal memo warns CCA’s Beijing parent China State Construction Engineering Corporation (CSCEC) of severe difficulties in meeting the deadline due to inadequate staffing. CCA issued it two weeks after CSCEC and the project’s main financer, Export-Import Bank of China, sat down with Izmirlian and Christie in Beijing in January last year to assure them Baha Mar was on schedule. Izmirlian went ahead after the meeting to hire over 2,000 staff for the resort, at a cost of US$4 million per month, and launch a global advertising campaign. After CCA missed its deadline and Izmirlian tried, unsuccessfully, to file for bankruptcy in the US, Baha Mar became the property of the Chinese state-owned lender.
Izmirlian, who has lost the US$900 million he sank into the project, is suing for breach of contract, alleging CCA failed to deploy sufficient contractors and resources. CCA says Izmirlian’s numerous design changes caused the delay. Christie, meanwhile, has been meeting potential investors in Europe, with Malaysia’s Genting Group named as a possible buyer.
Export-Import Bank says it wants to recover the US$2.45 billion it lent for Baha Mar, but critics say this is unrealistic given deterioration and an estimated US$600 million needed to bring Baha Mar to completion. Given the project’s scale, some have accused China of deliberately stalling in order to achieve colonialstyle control over the Bahamas. Baha Mar was supposed to generate 12% of GDP and US$74 million is owed to local contractors. Delays have already caused one downgrading of national debt by ratings agency Standard & Poors. If another follows, commentators say increased borrowing costs could bankrupt the nation.
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