China Construction America (CCA), the US subsidiary of Chinese state-owned construction giant China State Construction Engineering, has confirmed to Inside Asian Gaming its intention to appeal a decision by a New York court that found it engaged in “many acts of fraud” in relation to Bahamas integrated resort Baha Mar.
It has also accused the plaintiff, original Baha Mar investor BML Properties, of deliberately running the property into the ground to avoid honoring its obligations.
In a statement sent to IAG in the wake of the courtroom decision, which orders CCA to pay US$1.6 billion to BML Properties, the company said, “CCA Construction Inc was neither the contractor for nor an investor in the Baha Mar project, and, like its co-defendants, it intends to appeal the court’s decision, which is deeply flawed under well-settled principles of New York law.
“The decision ignores indisputable evidence that BML Properties overborrowed, overspent and overextended itself and then drove the project into a wrongful, secret bankruptcy to eliminate its obligations at the expense of other stakeholders, including minority investor CSCEC Bahamas and construction manager CCA Bahamas, which made tireless efforts to complete the Baha Mar project on time and within budget.”
The dispute between CCA and BML Properties, owned by Sarkis Izmirlian, stems from Izmirlian’s decision to seek funding for Baha Mar – first envisioned two decades ago – via China during the midst of the global financial crisis in 2008. He found success to the tune of US$2.45 billion through China’s Exim Bank, however the bank also stipulated that CCA must be general contractor and with the right to import up to 8,000 Chinese construction workers, providing in the process a significant boost to China’s domestic economy. On top of Exim Bank’s contribution, it was reported at the time that CCA chipped in US$150 million and BML Properties US$845 million.
The resort had initially been slated to open in December 2014, but after missing the opening and a series of later dates throughout 2015, BML filed for bankruptcy in June 2015 while blaming CCA for allegedly deliberate poor craftmanship. Baha Mar was said to be 97% complete at that point.
While Izmirlian had hoped to retain control and bring in a different contractor, the Bahamian government – which saw Baha Mar as a key national project – had other ideas and the property was instead handed over to a liquidator. Construction ultimately halted for more than a year before the government announced it had reached a deal with CCA to resume construction while it looked for a buyer.
That buyer proved to be Chow Tai Fook Enterprises, the Hong Kong jewelry giant whose controlling Cheng family has long held close ties with Beijing, and Baha Mar finally opened its doors in April 2017.
Chow Tai Fook also holds interests in Australia’s Star Entertainment Group and Vietnam’s Hoiana, and has links to Macau via chairman Henry Cheng’s 10% stake in STDM, the controlling shareholder in SJM Resorts.
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