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TUESDAY, DECEMBER 20, 2022
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Sarkis loss ‘over $3bn’ if Baha Mar hit targets By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net SARKIS Izmirlian would so far have “lost more than $3bn” in potential profits alone if the Baha Mar resort from which he was ousted hit his financial projections, an analyst’s report has calculated. David Bones, the HKA partner and co-lead of its commercial damages practice, in an analysis filed with the New York State Supreme Court on Saturday revealed that he used more “conservative” indicators
to calculate the loss of profits and damages suffered by the Cable Beach mega resort’s developer after he was removed from the project in late 2015. Determining the impact dating back from year-end 2022 to April 1, 2015, which was just days after Baha Mar’s calamitous missed opening, he calculated Mr Izmirlian’s profit loss at $1.311bn while damages and “out-of-pocket costs” were pegged at $1.435bn. The latter relates to the loss of the developer’s $845m equity investment, including cash, land and other assets, plus pre-judgment through to year-end 2022.
The combined $2.746bn financial blow was described as “massive” by Mr Izmirlian and his Baha Mar Properties vehicle in December 17, 2022, legal filings related to the latest round of their $2.25bn fraud and breach of contract claim against China Construction America (CCA), Baha Mar’s contractor. They cited it as evidence of just how much their removal from a project they conceived has cost them. However, the Chinese state-owned contractor has also produced analysis asserting that it has suffered a
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BAHA MAR RESORT
• Analyst pegs lost profits at ‘conservative’ $1.3bn • $1.4bn investment wipeout puts total at $2.7bn • CCA counters with $357m preference loss claim
Insurers: ‘Light at end CCA: Sarkis ‘inflaming anti-Chinese sentiment’ of tunnel’ over taxation By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net BAHAMIAN insurers yesterday voiced relief that there is “light at the end of the tunnel” after the Government said it would drop plans to move the industry to a Business Licence fee taxation regime. Anton Saunders, RoyalStar Assurance’s managing director, told Tribune Business that both sides have made “significant progress” in resolving concerns stemming from the May Budget announcement that the Davis administration planned to ditch the existing 3 percent premium tax in favour of a switching to a 2.25 percent Business Licence. Following a recent meeting between the sector and Prime Minister Philip Davis and his officials, the Government has now decided to ditch the Business Licence move and retain the existing premium tax regime. However, it will now introduce a new levy on what is being termed “other income” earned by insurers. Mr Saunders, who told this newspaper that the industry has “no issue with paying more taxes”, said it was now awaiting clarification from Simon Wilson, the Ministry of Finance’s financial secretary, on how the Government plans to define “other income” and what will be included in the base that determines the
amount of taxation to be paid. He added, though, that the key issue for the industry was to retain the existing premium tax regime as the switch to a Business Licence fee regime would have forced insurers “to change their business model”. The RoyalStar chief told Tribune Business: “The industry met with the Prime Minster, and I think we have light at the end of the tunnel on the premium tax matter. We met with the Prime Minister and his team, and there’s been significant progress on the matter. “At least the industry knows what they require. There are still some areas where we are working with the financial secretary on clarifying, but this matter I believe is substantially behind us. What’s to be clarified is that they’re going to keep the premium tax regime in place but they also want a tax on ‘other income’, so we just want a clarification on what they mean by ‘other income’.” Mr Saunders said insurers wanted to know whether this definition included investment income and earnings from stocks, as well as realised and unrealised gains in the value of assets in their balance sheets. He added, though, that the key issue of retaining the premium tax structure had been settled after almost seven months of uncertainty,
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BAHA Mar’s main contractor has accused Sarkis Izmirlian of “a nakedly xenophobic attempt to inflame anti-Chinese sentiment” while asserting there is “no evidence” it misused $54m to acquire the then-British Colonial Hilton. China Construction America (CCA) and its affiliates, blasting back at allegations by Baha Mar’s original developer that it conspired with other Beijing-owned entities to seize control of the multibillion project, accused him of implying that the Bahamian court proceedings that oversaw the mega resort’s emergence from receivership “were improper or tainted”. And it also dismissed Mr Izmirlian’s accusations that it “diverted” $54.6m
in “emergency funding” intended to speed up, and secure, Baha Mar’s timely construction completion to instead acquire downtown Nassau’s British Colonial resort and the adjacent six-acre land parcel that has now become The Pointe complex and Margaritaville resort. A report commissioned by Mr Izmirlian from Paul Pocalyko, a certified financial forensics and fraud examiner with the HKA advisory firm, found that the $54.6m - intended to pay debts owed to CCA’s Bahamian and foreign sub-contractors - hit the Chinese state-owned company’s bank accounts just 18 days before it withdrew “at least $57m” to pay for the British Colonial acquisition. However, in its Friday legal filings in the New York State Supreme Court, CCA asserted that
FTX shows Bahamas can’t ‘live or die’ by one investor By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net GOVERNANCE reformers are arguing that FTX’s implosion further reinforces that there is “no silver bullet to solve our economic growth issues coming out of Dorian and COVID-19”.
Matt Aubry, the Organisation for Responsible Governance’s (ORG) executive director, told Tribune Business that the crypto currency exchange’s spectacular collapse again showed the danger for The Bahamas in relying upon one major foreign investor to serve as “a game changer”. Speaking before Sam Bankman-Fried, FTX’s embattled founder, waived
Skills transfer woe still a ‘sad reality’ By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net THE Bahamas must change “the sad reality” that key skills and knowledge are not being passed on to local workers by expatriate work permit holders, a prominent contractor argued yesterday. Leonard Sands, the Bahamian Contractors Association’s (BCA) president, told Tribune Business
this is “the component of the work permit” process where the country falls down as it results in the repeated importation of skilled expatriates because Bahamians have not been properly trained to full these posts. Speaking after The Pointe’s supposed 70:30 construction workforce split in favour of Bahamians reared up again, he argued that better enforcement of such Heads of Agreement
terms and a stronger partnership between the Government and local construction industry when negotiating such deals was needed. Calling for more emphasis to be placed on skills and knowledge transfer to Bahamians, Mr Sands told this newspaper: “If every time you’re going to bring in skills from outside the country you’re never going
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LEONARD SANDS
THE POINTE
• Says no Chinese ‘conspiracy’ to seize Baha Mar • And ‘no evidence” $54.6m misused for Hilton deal • Same bank account already held ‘twice’ the price his right to fight extradition to the US after a court hearing that some foreign media described as “a farce”, the ORG chief argued that this nation should have learnt
there is nothing to prove that the financing destined for Baha Mar was switched to its own Nassau resort interests. It argued that the bank account which received the $54.6m already held some $106.8m, taking the total sum on deposit to $161.4m. As a result, the contractor said it already possessed “more than double” the sum required to acquire the now-closed British
SEE PAGE B5 that lesson when Baha Mar fell into Chapter 11 bankruptcy protection and subsequent Bahamian legal proceedings that delayed its
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