By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Baha Mar’s contractor was allegedly so busy pursing work on other Caribbean mega resort projects that it failed to focus on the $3.5 billion development “at a crucial time”, bringing it to the “point of failure”.

Thomas Dunlap, the developer’s former president, in an affidavit sworn yesterday, said CCA correspondence dated in mid to late-2014 suggests the Chinese contractor was “insufficiently focused” on Baha Mar’s construction just as the project began its race to meet the completion deadline.

His affidavit cites two letters written by CCA’s senior vice-president, Daniel Liu, in which he expresses the company’s interest in serving as general contractor for two other mega resort projects - one proposed for the Bahamas, the other Cuba.

In one correspondence, Mr Liu even holds up Baha Mar as a ‘model’ of what CCA can do, inviting the potential developer to visit the construction site in the Bahamas - an irony that will not be lost on many Bahamians, given subsequent events.

The latest Supreme Court filing by Baha Mar’s original developer, Sarkis Izmirlian, and his former executive team appears designed to further increase the pressure on CCA, while simultaneously strengthening its case over the $192 million claim filed against the contractor’s Beijing parent in the UK High Court.

Tribune Business exclusively revealed how Mr Izmirlian’s Granite Ventures vehicle is accusing Baha Mar’s receivers of “failing to properly pursue” the company’s $192 million damages claim against China State Construction Engineering Corporation (CSCEC).

He is alleging that Deloitte & Touche is neglecting to chase one of the most valuable potential recovery sources for the project’s creditors, who include Bahamian contractors, vendors and Baha Mar’s former employees.

As a result, Granite Ventures is petitioning the Bahamian Supreme Court to approve a process whereby the $192 million action can be pursued in the UK High Court without the involvement of Baha Mar’s financiers or Deloitte & Touche.

Mr Dunlap’s affidavit, filed yesterday, is intended to strengthen Mr Izmirlian’s case by alleging that the China Export-Import Bank appears “reluctant to pursue” the guarantees and indemnification that it itself received from CSCEC.

Describing the two guarantees as “generous”, Mr Dunlap alleged that the China Export-Import Bank had failed to enforce any of its rights under them. These include clauses which allow Baha Mar’s financier to force CCA to complete the $3.5 billion development.

This again strikes at the relationship that exists between the China Export-Import Bank, as $2.45 billion project financier, and CSCEC as parent to its general contractor.

Given that both have the same owner in the Beijing government, the China Export-Import Bank will be reluctant to pursue any major legal claim against what is an affiliate, especially given that it will want - and be reliant upon - CSCEC to complete Baha Mar’s construction.

Mr Dunlap, though, alleged yesterday that the CCA correspondence uncovered by Mr Izmirlian and his former team sheds new light on the contractor’s inability to meet the March 27, 2015, target opening date.

“CCA executives from late 2014 and through early 2015 were actively pursuing alternative projects in the Bahamas, in the leisure sector and, in one case, both,” Mr Dunlap alleged.

He cited an August 29, 2014, letter written to the Canadian-based 360 Vox Corporation, a real estate company specialising in high-end hospitality and residential developments, as “pitching for a construction project in Cuba”.

Mr Liu’s letter, which is attached to Mr Dunlap’s affidavit, touts CCA’s expertise and financial strength, before telling 360 Vox: “CCA is interested in your Cuba projects, and we would like to invite your top executives to visit our Bahamas project in September [2014], a $3.5 billion resort and casino development financed by a Chinese bank and built by us.”

Mr Liu’s second letter, dated December 29, 2014, was written after Baha Mar’s first planned opening deadline had been missed that same month,and in the run-up to the failed March 27, 2015, target.

He tells a Mr Evans that CCA is “interested to be a construction manager or general contractor” for a 3,800-acre project at Rock Sound, Eleuthera, featuring a casino and Hilton and Waldorf-branded hotels.

Tribune Business sources have previously expressed grave doubts that this project was feasible, and whether it would ever have gone ahead.

Nevertheless, Mr Dunlap alleged that Mr Liu’s second letter showed CCA was eager to work on a project that would have been “in direct competition” with Baha Mar.

Referring to BMD Holdings, another Izmirlian-controlled company, the ex-Baha Mar president alleged: “BMD believes that this correspondence illustrates that CCA was insufficiently focused on completing the project, and was instead prioritising other work at a crucial time when (despite the assurance to the contrary from CCA) the project was on the point of failing because of CCA’s failure to complete.”

Mr Dunlap then targeted “the generous guarantee and indemnity provisions” given by CCA’s parent in favour of its fellow state-owned company, the China Export-Import Bank. Both documents were dated May 12, 2011.

Mr Dunlap said that under the first, CSCEC “guaranteed the due and punctual performance” by CCA under the main construction contract - the guarantee upon which the $192 million claim is based.

This guarantee was given to both Baha Mar and the China Export-Import Bank, with the latter also “indemnified for losses incurred as a result of CCA’s breaches of the main construction contract”.

The second guarantee required CSCEC to do certain things if requested by the China Export-Import Bank, including agreeing to an extended completion date for Baha Mar “and ensuring that date was met”.

Baha Mar’s financier could also have required the contractor’s parent to help in the project’s operation and management; “procured” that CCA would continue to perform; and, perhaps most crucially, forced CSCEC to “contribute to certain cost overruns” (with the Export-Import Bank to fund the balance”.

Mr Dunlap alleged: “So far as I am aware, China Export-Import Bank has not taken any steps to enforce its rights (either directly or through Citibank) under the two completion guarantees.

“BMD considers that China Export-Import Bank should have exercised its rights under the second completion guarantee to bring the project to completion in the interest of all stakeholders, including Bahamian and other unsecured creditors, China Export-Import Bank itself, and equity holders.”

Mr Dunlap alleged that the situation strengthened Mr Izmirlian’s/Granite’s case over the $192 million claim.

The latter has provided the court with two options that it says will result in ‘monetising’ the value of Baha Mar’s claim against its contractor for the benefit of all creditors, including itself.

Granite Ventures is seeking an Order that will place “custody and control” of the CSCEC action into the hands of either a Baha Mar creditors’ committee or the project’s joint provisional liquidators.

Whichever party is chosen, Granite Ventures’ summons for directions proposes that they must obtain an independent valuation of the CSCEC claim within one month of the Supreme Court granting the Order.

The creditors committee or joint provisional liquidators (Bahamian accountant Ed Rahming, and the UK duo of Alastair Beveridge and Nicholas Cropper) will then have another month to complete a tender process to sell the rights to Baha Mar’s legal claim.

The sale, according to Granite Ventures’ proposed Order, must be completed within six weeks of the tender’s end, although Deloitte & Touche - as Baha Mar’s receivers - will be allowed to object and attempt to block any sale via the courts.

The $192 million claim against CSCEC was filed in the UK High Court on June 30, 2015, one day after Baha Mar sought Chapter 11 bankruptcy protection - a move that was ultimately defeated in the Bahamian and Delaware courts.