The proposal to build the Baha Mar resort in the Bahamas was initially submitted in 2002 and over a decade has passed since then but the resort is yet to be completed and continues to be surrounded in controversy. The $3.5 billion mega-casino resort broke ground back in 2011 and was expected to be completed before the end of 2014 as developer Sarkis Izmirlian, the Export-Import Bank of China (EXIM), the Bahamas government and China Construction America were supposed to work together to complete this mega project.
This never happened and a series of unfortunate issues led to a bankruptcy filing and caused enormous pressure on all parties involved. EXIM, because the bank had invested $2.45 billion in the project, the Bahamas government because 2,000 local jobs were suddenly dropped and Izmirlian who has invested a lot of his personal finances into the project.
The Bahamas government dearly wants a new developer that is financially sound to take over the Baha Mar project and bring it to completion as the resort is expected to generate nearly 12 percent of the Island’s gross revenue. There are a number of wealthy Chinese investors who would be willing to jump in and take over the project but Beijing’s anti-corruption crackdown is a huge deterrent.
Chinese President Xi Jinping launched an anti-corruption crackdown in early 2014 targeting corrupt individuals, VIP gamblers and wealthy investors and the crackdown has continued into 2016. Consulting firm Providence Advisors has warned that Chinese investors will be reluctant to be involved in such a massive project because it will immediately put them in Beijing’s spotlight and the source of their earnings will come under scrutiny.
Providence Advisors’ also stated that EXIM will find it difficult to quickly exit the project and make a quick sale as it will have to recover its $2.45 billion investment and then ensure that if the new owner happens to be a Chinese company, all the paperwork and legal formalities will have to be done completely above board.
In a statement, Kenwood Kerr, the chief executive of Providence Advisors said “China’s slowing economy and current anti-corruption agenda, investigating all its lending agencies, has particular significance to us in the Bahamas, as the China Export-Import Bank is the principal lender to the legally embattled Baha Mar resort. This could be a real reason why the China Export-Import Bank has not been able to speed up any approvals of a buyer or a restructured loan facility on the Baha Mar project”.
Bahama’s Prime Minister Perry Christie will want to fix the Baha Mar project at the earliest as he will have to decide on the next election shortly and a failed project will have a huge impact on his political standing.