Baha Mar Developer's Suit Seeks $2B From China Construction
More than two years after losing control of its $3.5-billion Baha Mar resort project, the Bahamas-based developer is suing the project’s contractor. The lawsuit by BML Properties, filed in December in New York state Supreme Court, alleges “massive fraud” and seeks more than $2 billion from China Construction America (CCA).
BML’s 268-page filing of Dec. 26 alleges “one of the largest construction-based frauds in this hemisphere.” It states, “The scheme was based on CCA’s efforts to falsely create the appearance that it was working toward an on-time and on-budget opening in December 2014 while knowingly and fraudulently concealing its real intent not to construct the project on time and on budget and in the process extort more money than it earned and was due.”
The recent court filing relates to the legal dispute that erupted in summer 2015, shortly after the contractor’s subsidiary, CCA Bahamas, halted construction work on the 3.3-million-sq-ft resort—then estimated to be 97% complete— while alleging it was due $72 million from Baha Mar Ltd. After U.S. courts rejected the developer’s legal case for bankruptcy protection, the Bahamian government initiated a “winding-down” legal proceeding. The resort, which opened in 2017, now is owned by Hong Kong-based Chow Tai Fook Enterprises.
Headed by Sarkis Izmirlian, Baha Mar Ltd. hired CCA to build the resort after obtaining a $2.45-billion secured-debt facility from the Export-Import Bank of China, as revealed in its 2015 bankruptcy filings. Additionally, the contractor—a subsidiary of China State Construction Engineering Corp. Ltd., a state-owned enterprise—provided a $150-million preferred-equity commitment.
Responding to BML’s recent lawsuit, CCA stated, “The lawsuit filed by Mr. Izmirlian is a vindictive and baseless attempt to redeem his own failures to properly manage his companies and their investment in the Baha Mar resort project.
Mr. Izmirlian’s scattershot allegations are totally false and constitute a gross abuse of the American judicial system. CCA Bahamas will vigorously defend these unfounded claims.”
Contacted by ENR, representatives of both China Construction America and BML Properties declined to comment for this story.