30 de junio de 2015 / 19:06 / en 2 años

China's big ambitions stumble at Bahamas resort

8 MIN. DE LECTURA

Nassau, Bahamas/Beijing June 30 (Reuters) - China's push to extend its influence in the Western Hemisphere has hit an embarrassing setback at an unfinished, $3.5 billion resort and casino project in the Bahamas.

A series of construction delays, funding squabbles, lagging inspections and faulty work at the Baha Mar resort in Nassau have led to contention and finger-pointing in recent months among the local developer, a Chinese state-backed contractor and China's export finance bank.

And on Monday, Baha Mar Ltd, developer of the 2,323 room resort located along Cable Beach near downtown Nassau, filed for voluntary bankruptcy protection in a Delaware court, saying that China State Construction Engineering Corp, the project's general contractor, had ceased "all material work." [ID: nL2N0ZF2DX]

The turmoil and internal squabbles over Baha Mar have roiled the Caribbean nation's fragile economy, while aggravating would-be tourists and idling thousands of workers amid sky-high Bahamian unemployment and slack revenue growth.

For China, which backed the project with a $2.45 billion concessionary loan and supplied a government-owned construction firm to build the resort, the fiasco represents a formidable hurdle to the country's billion-dollar aspirations to deepen ties to Latin America.

"For the Caribbean and Central America, this is a cautionary lesson in the view that Chinese state-sponsored investment in tourism or other areas is in any way assured to be well-run or efficient," said Matt Ferchen, an expert on China-Latin America relations at the Carnegie-Tsinghua Central for Global Policy in Beijing.

Buildings at the sprawling resort, which includes a Las Vegas-style casino along with Grand Hyatt and Rosewood hotels, appears near completion from the outside, and at least some rooms have been readied. A well-manicured Jack Nicklaus Signature 18-hole golf course stands waiting, though landscaping, a parking garage and tennis courts on the resort grounds remain unfinished.

Baha Mar was originally scheduled to open in December, but that deadline was missed, as was an end-of-March deadline. The second delay proved "devastating" to Baha Mar Ltd, which had hired more than 2,000 hotel and casino workers to staff the opening, the developer said in its court filing.

Interviews by Reuters with more than 20 contractors, inspectors, Bahamian government officials and executives who have worked on the project revealed shortcomings in the resort's construction and planning.

On-site inspectors, who requested anonymity because they were not authorized to speak, said China Construction, after falling behind, rushed to schedule inspections as they completed various phases of the project. The company did not return several messages seeking comment.

Earlier this year, a pipe burst when an interior water system at the resort was tested, said Colin Higgs, permanent secretary of the Bahamas Ministry of Works and Urban Development. Inspectors and contractors said the broken pipe caused flooding in a fully furnished restaurant at the resort. Higgs also said inspections on several miles of electrical wiring were not yet completed.

Project developer Sarkis Izmirlian, whose group has invested $850 million in the project, blamed China State Construction's wholly-owned subsidiary China Construction America (CCA) for "missed construction deadlines" in a statement released on Monday. Through a spokeswoman, he declined several interview requests.

"Unable to open, the resort has been left without a sufficient source of revenue to continue our existing business," Izmirlian said in a statement. According to the bankruptcy filing, Baha Mar sent teams to Beijing three times over the last two months in attempts to salvage an agreement.

The bankruptcy filing represents the latest setback for China State Construction, which was banned from participating in World Bank-funded projects for six years starting in January 2009, after the multilateral agency found that China State Construction had colluded in rigging bids for a Philippines road project.

According to the bankruptcy filing, CCA claims that Baha Mar Ltd has withheld $140 million in funds it is owed, an assertion Baha Mar disputes. The Export-Import Bank of China, according to the filing, has refused to release approximately $112 million remaining in the $2.45 billion loan it extended for the project.

The Bahamas, a country of about 353,000 people, has an economy heavily dependent on tourism, and Baha Mar was expected to create 5,000 new jobs when fully operational. The resort's projected annual payroll of $130 million would represent about 12 percent of the country's gross domestic product, the developer said in its court filing.

It's an absolute disaster," said Robert Myers, president of Caribbean Landscape Ltd., one of many local contractors on the project still awaiting full payment for work performed. "We desperately need this project to be successful as an ongoing part of our economy."

Izmirlian, the developer and son of Armenian billionaire and peanut tycoon Dikran Izmirlian, imagined the resort as a mechanism to revitalize Nassau's once coveted Cable Beach area.

The project first ran into serious trouble in 2008, when Harrah's Entertainment Inc. and Starwood Hotels & Resorts withdrew from the project at the height of the global financial crisis. China Export-Import Bank was seen as a savior in 2010 when it agreed to put up a $2.45 billion financing package. The ambitious integrated resort was to be completed in a single phase over 44 months, with a targeted opening date of November, 2014.

China State Construction, operating through CCA, agreed to hire two dozen top-level personnel from Las Vegas, but brought in fewer than a dozen experts, according to bankruptcy papers, and although the Bahamas government issued 5,000 permits to allow CCA bring in Chinese workers, the work force never reached that level.

Successive agreements between Izmirlian's group and China State Construction repeatedly failed, according to the court filing. Discussions dragged on through the end of last year, culminating in a January meeting in Beijing attended by Prime Minister Christie, China ExIm, and CCA.

A Beijing-based spokesman for China ExIm declined to comment, and China State Construction in Beijing declined repeated interview requests.

Baha Mar is unlike any investment China has attempted since President Xi Jinping made Latin America and the Caribbean a foreign policy priority. Xi projected in January that China's direct investment in the region would reach $250 billion in the coming decade, helping to boost trade to $500 billion between China and Latin America and Caribbean nations.

Over the last decade, China has provided more than $119 billion in financing to Latin American countries and firms, according to Inter-American Dialogue, a Washington D.C.-based policy group. Most of the financing has been for energy and public works projects.

"It's been a wake-up call," said Stephen Wrinkle, a builder and past president of the Bahamian Contractors' Association. "It pains us to watch this happen. The delays have had a substantial effect on the nation's economy." (Reporting and writing by Matthew Miller in Beijing and Tim McLaughlin in Nassau; Additional reporting by Shu Zhang and Michael Martina in China and David Adams in Miami.; Editing by Sue Horton)

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