By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The FNM’s deputy leader yesterday warned that Baha Mar’s ongoing woes threaten to throw the Bahamas back into a recession, and said: “It is the day we feared.”

Reacting to Baha Mar’s decision to file for Chapter 11 bankruptcy protection, K P Turnquest told Tribune Business: “This is the worst news we could have at this time.”

He added that the absence of a solution to Baha Mar’s dispute with its Chinese partners had created “a very significant problem” for the Government, which was relying on the $3.5 billion project to revive both the economy and employment situation.

Expressing concern for the 2,400 persons already hired by Baha Mar for its new development (almost 50 per cent of the 5,000 jobs projected to be created), Mr Turnquest said the latest developments raised numerous questions and “no good answers” for Bahamians.

He added that yesterday’s events had also left Prime Minister Perry Christie, and minister of foreign affairs, Fred Mitchell, looking foolish following their recent claims that a Baha Mar solution was effectively in sight.

The Opposition’s deputy leader suggested both men had been left with egg on their face. The Prime Minister announced almost two weeks ago in the House of Assembly that he had received “good news” on Baha Mar, while Mr Mitchell announced on the radio on Sunday that a solution was ‘on the table’ and was waiting for acceptance by the developer’s principal, Sarkis Izmirlian.

Yesterday’s move by Baha Mar hardly reflects the pronouncements by either man, and it remains to be seen whether the Chapter 11 filings has opened the path to a Cable Beach resolution and represents the ‘beginning of the end’ for this particular chapter.

However, one source close to Baha Mar praised the Prime Minister for “going out of his way” to broker a solution between Baha Mar on one side, and China Construction America and the China Export-Import Bank on the other.

“He really made a good faith effort to make things happen,” the source said, adding that Mr Christie’s efforts failed due to a lack of responsiveness by the Chinese.

The source also revealed that the China Export-Import Bank blocked the Government’s move to pay $21 million of the disputed ‘roads re-routing’ to Baha Mar to help it with payroll, simply arguing that the funds were not to be used for that purpose.

Mr Christie’s previously uttered concerns over Baha Mar’s ability to pay its staff are now in sharp focus, as the Chapter 11 filing was prompted by the developer running out of cash.

“It’s obviously very concerning,” Mr Turnquest told Tribune Business of the Baha Mar situation. “It means the project is in serious trouble, and they’ve not been able to see their way clear in terms of the additional financing they need to complete.

“It doesn’t appear they have a solution at the moment, and they pleaded for this protection while they draw up a plan.”

He added: “This is tremendously bad news for the Bahamian public, those thousands that had left their jobs and bought into the dream of Baha Mar to take employment there.

“It is obviously a very significant problem for the Government and its hope for the turnaround of the employment situation and the economy. It threatens to put us back into recession, and it sets back in terms of government revenue projections as a whole.”

Mr Turnquest said the Chapter 11 filing placed “a big question mark” over Baha Mar’s completion, including what was left to construct and whether the Chinese would “stay around to see the project through”.

“There are a lot of questions and no good answers for the Bahamian people,” Mr Turnquest told Tribune Business, adding that the debts owed to local businesses represented “a significant exposure”.

“The knock-on effect on the economy and jobs threatens to be significant,” he said. “This is going to be another brick on the heads of Bahamian companies.”

Mr Turnquest added that Baha Mar’s actions yesterday “absolutely contradict” the comments by the Prime Minister and Mr Mitchell.

“This is a big problem with this government,” he told Tribune Business. “They’ve always made statements and claims without any substance behind them, as if a PR exercise is going to paper over everything.

“The Prime Minister said he had good news. One has to question: Is this good news? The Government owes it to us to come clean and tell us what is going on with that project, and say if there’s going to be some resolution to it.

“It certainly doesn’t look like it’s on a good track at the moment.”

Mr Turnquest also questioned whether successive governments should have pushed Baha Mar to do its development in stages, like Kerzner International did with Atlantis, when it became obvious there were problems with the construction.

“I wasn’t sitting at the table to make those kinds of decisions,” Mr Turnquest added.