sarkis izmirlian yacht

How a $3.5 billion resort went bust before it opened

Beyond the tropical waters, across palm-fringed sands and behind locked gates, looms Baha Mar — the largest and, at $3.5 billion, priciest resort in the Caribbean.

Here, no one frolics pool-side, pina colada in hand, or hits irons on the Jack Nicklaus golf course. No slot machines jingle-jangle in the casino. The Flamingo Bar, the Brasserie des Arts and the Cartier boutique lie dark. On this bright October morning in the Bahamas, all 2,200 guest rooms are empty.

The quiet is almost spooky here on the outskirts of Nassau, where the waterscape frills of nearby Paradise Island give way to the vast ghost-resort that is Baha Mar.

Just how the place ended up like this — in a bankruptcy so colossal that it’s jeopardizing the Bahamas’s credit rating — is the biggest business story to hit this Caribbean nation for as long as anyone here can remember. It stretches far beyond the white beaches and across time zones, to none other than the State Council of China.

‘Big Boys in the Room’

Turns out that even in paradise, local aspirations can collide with China’s global ambitions. Baha Mar may have been dreamed up in the vacationland of the Bahamas, but the central government in Beijing controls the development bank and construction giant that will determine its fate. And China, some Bahamians say, is playing tough as its state-run enterprises project money and influence around the world, including to this small island 180 miles off the coast of Miami.

“Their attitude is, ‘We’re the big boys in the room, we’ve got the money — so you do what we say,’” says Dionisio D’Aguilar, a prominent businessman and former Baha Mar Ltd. director.

Time is short. Bahamian officials have been counting on Baha Mar to invigorate the tourist economy. The developers claimed the resort could single-handedly generate 12 percent of the country’s gross domestic product — provided it ever opens.

Understanding the island’s predicament requires going back more than a decade to 2005, when Prime Minister Perry Christie reached an agreement with a local businessman named Sarkis Izmirlian to help revitalize Cable Beach, the most popular beachfront destination on New Providence Island.

Izmirlian, then just 32, seemed a natural choice. He’s from a wealthy family — his father is Armenian peanut tycoon Dikran Izmirlian — and lives on nearby Lyford Cay, a billionaire enclave. Izmirlian sank nearly $900 million into Baha Mar and recruited marquee-name partners like a Caesars Resort hotel.

Then the 2008 financial crisis hit, and would-be partners balked. When China State Construction Engineering Corp., the world’s second-largest contractor, approached Izmirlian about stepping in, he said yes. The company directed him to Export-Import Bank of China, or Exim, which promotes trade and investment under the direction of Beijing.

Seeing a way into U.S. markets, China State Construction promptly invested $150 million. Exim kicked in $2.45 billion in construction loans — with the proviso that Izmirlian could never fire the Chinese builder, no matter what, and that workers from China would do the job. Flush with Chinese money, Izmirlian declared four Baha Mar hotels would open by 2014.

All this was documented in court filings, and supported by interviews with Christie and other Bahamians. The Chinese and Izmirlian declined interview requests.

Endless haggling complicated by language barriers ensued — about payments, invoices, workmanship, on and on. Deadlines were set and promptly broken. Emails flew back and forth to Beijing.

Burst pipes

In May 2014, Izmirlian appealed to an independent mediation service based in Washington, D.C., but the troubles multiplied. Pipes burst when inspectors tested the fire sprinklers and faulty balcony railings had to be reinforced, people with knowledge of the construction said. When Izmirlian complained, China delayed its money, one said.

As construction dragged on, Izmirlian and Christie flew to Beijing. There, officials assured them the resort would be ready to open on March 27. Upon his return, the developer hired 2,070 hotel workers, ran a global ad campaign and stocked the casino with $4.5 million in cash.

For Izmirlian the affair was becoming the ultimate contractor nightmare. He was spending an additional $4 million a month to pay staff for a hotel with no guests. Concerned that China State Construction might gain a tactical advantage by filing first, he secretly planned to have Baha Mar declare bankruptcy in the U.S. rather than the Bahamas, whose laws would make liquidation all but inevitable.

He didn’t even alert the prime minister for fear he would tip off the Chinese, says D’Aguilar, the former resort director.

Baha Mar Ltd. filed for bankruptcy in Delaware on June 29 — and all hell broke loose. China State Construction accused Izmirlian of disrupting the project with endless design changes.

“Baha Mar Ltd.’s decision to file for bankruptcy is the direct result of its failure to secure adequate financing and its mismanagement,” the Chinese company told the court.

Christie’s foreign minister, Fred Mitchell, spoke out in an August speech celebrating the end of slavery on the island, saying “the attempt to keep us bondsmen and slaves does not and has not stopped.”

At the Emancipation Day Service, Mitchell continued, saying: “It is therefore no surprise then that an investor — because he has the word billionaire behind his name — would think, would have the temerity to believe, that he can challenge the leader of our country.”

As the dispute dragged into September, a Delaware judge dismissed the U.S. bankruptcy and a Bahamian judge put provisional liquidators in charge, rendering Izmirlian’s $900 million investment nearly worthless. In October, they hosted negotiations at a nearby hotel. It was a bizarre scene, with Bahamian dancers gyrating in hot pants in the lobby as Chinese men in black suits hunched over laptops.

Still negotiating

In November, Izmirlian said he was still negotiating with Exim and hoped to remain involved. Failing that, he’s also sued in the U.K., claiming about $192 million in damages for a breach of contract, a figure that could grow as another winter tourist season passes with the resort still in limbo.

How it’ll end is anyone’s guess. Fernando Menendez, a senior fellow at Washington think tank Center for a Secure Free Society, says the episode says less about the Bahamas or Izmirlian than it does about China and its state-owned enterprises.

China Exim wielded billions to guarantee work for one of its biggest customers, China State Construction. How and when that work got done didn’t really matter: Exim made sure the state-run company could never be fired.

“State-owned enterprises don’t function as competitive entities,” Menendez says. “They’re protected from failure.”

Sitting unfinished

Christie says he’s still optimistic the resort can open. In December, Exim said a number of potential investors had expressed interest. These include Guo Guangchang, chairman of a non-state Chinese conglomerate called Fosun Group, people familiar with the situation say. Fosun already owns stakes in Club Mediterranee SA and Cirque Du Soleil Group.

Back in Nassau, people worry that even with new investors, the promised economic boost will take time. It could be 2018 before Baha Mar makes a meaningful contribution to the economy, according to Standard & Poor’s, which lowered its Bahamas rating to BBB- and warned it could be heading for junk.

For now, Baha Mar faces mold and corrosion as it bakes in the tropical heat. Its pink and cream towers are ringed by a chain-link fence and blue tarps cover unused supplies. At night, lights pop on in several rooms — a move the Bahamians hope will ward of the desolate air of this Caribbean ghost.

Sarkis wins: US Supreme Court dismisses CCA counterclaim

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NASSAU, BAHAMAS — Sarkis Izmirlian, Baha Mar’s original developer has secured another victory in a US Supreme Court after a judge dismissed a counter claim by the mega resort’s main contractor for shareholder oppression.

Izmirlian’s BML Properties vehicle successfully persuaded the New York State Supreme Court to dismiss China Construction America’s counterclaim for shareholder oppression.

Justice Saliann Scarpulla also agreed to the motion by BML Properties Ltd to strike the demand in the counterclaims for punitive damages.

A summation of the dispute noted that CSCEC, CCA’s parent had agreed to invest $150 million into the Baha Mar development project in exchange for 150,000 Series A shares.

The Baha Mar development project was projected to be completed by 2015. The parties did not meet the 2015 deadline and the development project was halted.

In June 2015, Baha Mar Ltd. began bankruptcy proceedings in the United States Bankruptcy Court for the District of Delaware. In July 2015, the Government of the Bahamas filed a “winding up” action against Baha Mar Ltd. and affiliates, including BML.

BML subsequently commenced legal action against CSCEC and CCA for fraud, breach of contract, and breach of the implied covenant of good faith and fair dealing. CSCEC countered for breach of contract, breach of the implied covenant of good faith and fair dealing, and shareholder oppression under the Bahamas Companies Act.  

In its request for relief, CSCEC sought monetary damages, costs and attorneys’ fees, and punitive damages. BML moved to dismiss CSCEC’s counterclaim for shareholder oppression on the ground, among others, that was not viable under New York law and sought to strike the punitive damages demand as unwarranted.

CSCEC had alleged that BML took actions that were oppressive to the company, such as diverting money to entities controlled by BML, for purposes unrelated to the development project, and that BML withheld material information from CSCEC relating to the project’s design and finances.

BML argued that the shareholder oppression counterclaim was based on a Bahamian statute, the Bahamas Companies Act, which is not the law applicable to the parties’ relationship. BML also argued that the parties are subject to New York Law pursuant to a governing law provision in the Investors Agreement, and that CSCEC’s shareholder oppression counterclaim could not survive a motion to dismiss pursuant to New York law.

CSCEC contended that the Investors Agreement did not mandate the application of New York law to all causes of action that may arise as a result of the parties’ relationship.

CSCEC claimed that the New York choice of law provision should be narrowly applied only to the interpretation of the Investor Agreement itself.

CSCEC further argued that, because its shareholder oppression counterclaim was not based on the Investor Agreement, but instead based on a Bahamian statute, the governing law clause in the Investor Agreement was inapplicable.

Judge Scarpulla however determined that New York law applied to the counterclaim alleging shareholder oppression. He had ruled similarly in a previous decision denying CCA’s motion to arbitration and dismissal of the proceedings for lack of jurisdiction.

He noted that the parties had “plainly and broadly” agreed  that New York law, not Bahamian law, would govern their relationship.

“Moreover, the parties directly disclaimed any choice of law analysis,” Scarpulla said.

“CSCEC has not alleged that the Governing Law clause is invalid or that its enforcement would be unreasonable or against public policy. Thus, there is no reason to ignore the parties choice of New York law simply because a Bahamian statute is more favorable to CSCEC. Further, CSCEC’s argument that New York law only applies narrowly to the interpretation of the Investors Agreement is meritless.”

BML had argued that the shareholder oppression counterclaim be dismissed because to bring a cause of action for shareholder oppression in New York, a party must have voting rights, which CSCEC did not have and that the only remedy that New York law provides for shareholder oppression is winding up of the corporation, which has already taken place; and that CSCEC waived its right to bring the shareholder oppression counterclaim pursuant to the Investors Agreement, because the parties have waived all common law fiduciary duties.

The judge found that because CSCEC did not own 20 per cent voting shares and because Baha Mar Ltd. has already been dissolved,   there was no basis for CSCEC’s shareholder oppression counterclaim.

About Natario McKenzie

Elated to hear Mr. Izmirlian won in this instance. In my view the project was mishandled by the Chinese contractor from the very beginning against the interest of BML Properties, which leads me to wonder whether there was a hidden agenda by the Chinese govt, who also owned the bank which granted the loan to Mr. Izmirlian & the company responsible for carrying out the work. Today the Chinese has too strong a presence & influence in the Bahamas, neither of which is good for our country or people.

Congratulations I am so happy for him I was working their when he had it he was such a good boss. However I was one of them that wanted my job back and did not get it back even though I had three interviews still did not get my job back and they know that I was working their before the hotel close but am happy him and wish him well.

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Sarkis unveils his ‘Preserve’

Baha mar visionary in real estate comeback.

Thursday, June 27, 2019

Sarkis Izmirlian

By NEIL HARTNELL

Tribune Business Editor

[email protected]

Sarkis Izmirlian is targeting a “substantial” jobs and GDP impact with a 333-acre mixed-use development at Clifton Bay that is focused on “sustainability” and environmental preservation.

Tribune Business can reveal that Baha Mar’s original developer is back in Bahamian real estate development via a proposed project called The Preserve, located in southwestern New Providence near Jaws Beach.

Mr Izmirlian has teamed with Tom Dunlap, his former Baha Mar president, to produce a “very low density” development on land he is understood to have acquired last year. While similar in size to the nearby 363-acre South Ocean resort, this newspaper was informed that the duo are aiming for a “live, work, play” concept that embraces traditional Bahamian living.

A spokesman for The Preserve told Tribune Business yesterday that the project will be developed over a 15-year build-out, with the pace dictated by demand for its office, retail and residential offerings.

While unable to give precise figures on The Preserve’s total investment, economic and job creation impact as Mr Izmirlian and his team are still “running the numbers”, the spokesman said the benefits for The Bahamas would be “substantial”.

The Preserve is now awaiting the necessary regulatory approvals and permits from the government to proceed, with the go-ahead set to mark Mr Izmirlian’s comeback in the eyes of many Bahamians from the trials he endured over his multi-billion dollar vision for Cable Beach’s redevelopment.

The Preserve is Mr Izmirlian’s first Bahamas-based project since his controversial ousting from the Baha Mar project by his erstwhile Chinese government partners, aided and abetted by the former Christie administration.

The spokesman for The Preserve told Tribune Business of his new venture: “The sustainability of it is going to be paramount. It will have a real minimal impact on the environment. It will be very low density, and very focused on nature trails, hiking and walking paths. They will only be moving trees if they have to.

“There’s going to be a live, work, play element. There’s going to be a corporate side with a living side and boutique hotel side over a 15-year build-out. The first phase will be the village, which will have a little bit of retail, a little bit of commercial, and a little bit of residential.

“The idea is for it to be replicating buildings in the old Bahamian communities with lots of porches, verandahs. They want to bring that sense of community back, where you can walk to your neighbour’s, walk to the coffee shop.”

The spokesman added that Mr Izmirlian and Mr Dunlap were designing The Preserve so that it catered to the needs of all residents and unit owners, effectively providing an all-encompassing concierge-type service.

“We want to make it easy for people to put condos in a pool so they can be managed,” they said. “If you’re a small business owner, graphic designer and want an office component to your home, these things can be looked at.

“The idea is to try and make sure this is something accessible - whether it’s a business professional who wants to live there and make an investment, foreign residents coming to live here for six months of the year or a second home.”

Emphasising that The Preserve’s residential units will be targeted at a mix of Bahamian and foreign buyers, the spokesman said price points were still being finalised. “The economic models are still being run,” they added, “but the investment and employment - both full-time and construction - will be substantial.”

Recycling and renewable energy will also be key components of The Preserve’s development. The project will not be located right on southwestern New Providence’s waterfront, but will instead have waterfront views out across Clifton Bay thanks to the site’s 60-foot elevation.

One realtor, speaking to Tribune Business on condition of anonymity, said Messrs Izmirlian and Dunlap were “bound to have figured out” the market they are going after given their extensive track records in large-scale real estate development.

The “live, work, play” concept is nothing new for either New Providence or The Bahamas. David Kosoy’s Sterling Global Financial is eyeing a similar concept with its Hurricane Hole redevelopment on Paradise Island, and elements of The Preserve will face competition from similar commercial office and other developments that continue to spring up in western New Providence.

However, demand to live and work in New Providence remains strong and shows no sign of decreasing, with many companies seeking to move out of Nassau and escape the overcrowding, congestion and high crime levels afflicting the Bahamian capital.

Many observers will also likely see Mr Izmirlian’s re-emergence as a major player in Bahamian real estate development as a sign of the Lyford Cay resident’s commitment to The Bahamas despite all the blows he has suffered in recent years.

Mr Izmirlian’s sights are also extending beyond The Bahamas, with media reports earlier this year disclosing that he had invested $26.4m to purchase real estate in Miami’s up-and-coming Wynwood area for a mixed use project there.

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Izmirlian: A wonderful day for The Bahamas

Fri, may 12th 2017, 01:37 am.

Former Baha Mar developer Sarkis Izmirlian said yesterday "nothing has changed" regarding his interest in re-owning the $3.5 billion Cable Beach resort, despite the many obstacles the project encountered after he filed for Chapter 11 bankruptcy in the United States in 2015. A seemingly elated Izmirlian was among those supporting Prime Minister Dr. Hubert Minnis at his swearing in ceremony at Government House. "This is a great day for the country and for the prime minister," Izmirlian told reporters. "It's a wonderful day for The Bahamas." When asked if he is still interested in owning Baha Mar, Izmirlian said, "My offer has always been on the table for Baha Mar and nothing has changed on that." He took no other questions. After Izmirlian filed for bankruptcy protection in Delaware, a bitter dispute ensued, involving the project's financier, China EXIM Bank, its main contractor, China Construction America (CCA), and the government, with Izmirlian seemingly on the opposing end. The debacle -- which played out in courtrooms and in the press -- attracted a lot of negative publicity for the Baha Mar brand. Back in December, former Prime Minister Perry Christie announced that Baha Mar was being sold to CTF BM Holdings Limited, a subsidiary of Hong Kong conglomerate Chow Tai Fook Enterprises Limited (CTFE) and said the executed sale and purchase agreement represents a "significant achievement for The Bahamas, and a milestone in the troubled history of the Baha Mar resort". The resort opened its doors last month, unveiling the Grand Hyatt. Baha Mar President Graeme Davis said over 1,600 people have been employed. Back in March, Minnis pledged that the FNM would execute a real sale of Baha Mar. "Your Free National Movement government will engage and execute a real sale of Baha Mar to a qualified and respectable purchaser who believes in Bahamians; a purchaser who will utilize only Bahamian labor to complete the resort, and will put Bahamians back to work with real jobs as quickly as possible," Minnis said. He has yet to make it clear how he plans to do this. Izmirlian has said that his team had the "best chance" of opening Baha Mar "quickly and successfully". The FNM has repeatedly said it believes the resort is "not really open".

Click here to read more at The Nassau Guardian

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• The Diaspora

Sarkis Izmirlian – Armenian billionaire from Switzerland

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Born in 1972, Sarkis Izmirlian is the heir to the billionaire fortune and peanut business of the famous Armenian Izmirlian family from Geneva (Switzerland). The grandfather of billionaire Sarkis Izmirlian ended up in Switzerland at the beginning of the 20th century, fleeing the Armenian Genocide in the Ottoman Empire. The founder of the family business was Sarkis’s father, Tigran Izmirlian, whom the European press called the “peanut king” half a century ago. Already at the end of the 1960s, Izmirlian senior managed to take control of almost the entire world export of Gambian peanuts and create his own peanut empire – the Swiss company “Alimenta”.

Sarkis himself began working in the family business from a young age, and after studying at the university, in parallel with the peanut business, he began to engage in large construction projects in Switzerland, Great Britain and other countries of the world. In 2005, one of the Izmirlian family companies acquired a 13-acre (5.26 hectare) plot of land that houses the London City Hall. Members of the Izmirlian family have been major patrons of art in Armenia since 1988.

In 1994, the Izmirlian Foundation was founded in Yerevan, which is engaged in the development of business and education, and in 2013 the medical center of the same name was opened. Sarkis Izmirlian himself is also the founder of the fund in support of Armenian organizations in Switzerland: the fund financed the construction and restoration of Armenian churches, schools and cultural centers in different parts of Europe and Armenia. The Swiss Armenian annually allocates large funds for the activities of the Hayastan All-Armenian Fund and the All-Armenian Benevolent Union (AGBU).

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Sarkis set for August 2024 trial on $2.25bn CCA claim

As of Friday, February 10, 2023

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Sarkis Izmirlian

By NEIL HARTNELL

Tribune Business Editor

[email protected]

Baha Mar’s original developer will see his $2.25bn fraud and breach of contract claim against the project’s main contractor go to a full two-week trial before the New York state court in August 2024.

Legal documents seen by Tribune Business reveal that Sarkis Izmirlian’s long-running dispute with China Construction America (CCA) has finally been set down for hearing some six-and-a-half years after it was filed over the Christmas 2017 holidays.

The case has been scheduled for “bench trial” between August 1 and August 16 next year, with the New York State Supreme Court’s judge, Andrew Borrok, issuing a series of case management instructions. All exhibits to be used at the trial will have to be filed with the court by May 29, 2024, with witness lists, affidavits and all pre-trial submissions - including the issues to be determined - to be completed by June 24, 2024.

The trial date is later than Mr Izmirlian had sought, his attorneys having pushed for it to take place this year. They wrote, in a January 27, 2023, letter to Judge Borrok that mediation had proved unsuccessful in solving the two sides’ differences. “Plaintiff believes that it would be worthwhile for the parties to appear at a conference before the court to discuss the upcoming trial. Plaintiff respectfully requests that the court set a date for trial as soon as possible,” Mr Izmirlian’s attorneys argued.

“The trial will be a bench trial, and plaintiff believes that the case can be tried in no more than two weeks. Plaintiff is available on all but the following dates (aside from major holidays) in 2023: June 23 to July 9, and September 29 to October 15.”

The dispute between Mr Izmirlian and CCA has not eased ever since the former was ousted as the project’s developer by the Chinese state-owned contractor and Baha Mar’s financier, the China Export-Import Bank, another Beijing-owned institution in late 2015 after they successfully defeated his Chapter 11 bankruptcy protection bid.

Mr Izmirlian recently doubled down on allegations of “shocking evidence” that CCA “paid illegal kickbacks to the family of Bahamian officials” as part of a plot to seize Baha Mar and establish “Chinese control”. He also threatened to reveal the “damning evidence” if the dispute makes it to a full trial.

Mr Izmirlian, whose family live at Lyford Cay, did not name the families or officials who he was referring to. However, the legal documents suggest their identities may be revealed - along with evidence of the alleged bribes and corruption - before the New York courts should the case reach that stage.

In a blistering opening salvo over their bid for “partial summary judgment” against CCA and its affiliates, the Baha Mar founder and his BML Properties vehicle said that despite failing to complete the multi-billion dollar project on time and on budget when he was in charge, the Chinese state-owned contractor was retained to complete the mega resort - and received a $700m “windfall” - for doing work it should have completed under himself.

“Throughout the project, CCA promised BML Properties that CCA’s management and staff were devoted to the project, that CCA was using best efforts to timely complete the project, and that CCA was acting in the best interests of the project,” Mr Izmirlian blasted.

“However, discovery in this case has revealed shocking evidence of CCA’s fraud and breaches of contract. CCA intentionally delayed construction to extort payments from BML Properties. CCA authorised hundreds of workers to leave the project during the crucial pre-opening period. CCA diverted management and staff to competing projects. CCA paid illegal kickbacks to the family of Bahamian officials to protect CCA’s position.

“And CCA conspired with other Chinese entities to stop construction. Why? To ensure that the resort and casino were transferred fully over to Chinese control.” Baha Mar is now owned by Hong Kong-headquartered Chow Tai Fook Enterprises (CTFE), with Tribune Business having previously revealed evidence suggesting CCA and the resort’s financier, China Export-Import Bank, had long decided it should be a Chinese buyer after ousting Mr Izmirlian.

However, CCA blasted back by accusing Mr Izmirlian of “a nakedly xenophobic attempt to inflame anti-Chinese sentiment” while asserting there was “no evidence” it misused $54m in Baha Mar project funds to acquire the then-British Colonial Hilton.

CCA, in its December 16, 2022, court papers denied that there was any conspiracy involving itself, the China Export-Import Bank and other Beijing-owned entities to force Mr Izmirlian out and wrest control of an asset critical to The Bahamas’ future economic growth and employment levels.

Referring to Baha Mar’s receivership, from which the project was eventually removed and sold, CCA said: “Baha Mar Properties (Mr Izmirlian’s vehicle) writes in its memorandum that this judicially-supervised process reflects a conspiracy among ‘Chinese entities . . . to ensure that the resort and casino were transferred fully over to Chinese control’.

“But Baha Mar Properties does not include an evidentiary cite for this assertion, or otherwise cite evidence to support its implicit accusation that the end results of the Bahamian judicial proceedings were improper or tainted. Instead, the accusation appears to be a nakedly xenophobic attempt to capitalise on and inflame anti-Chinese sentiment.”

Emilio26 1 year, 1 month ago

I really hope to God that Mr. Izmirlian wins his lawsuit against the sleazy and corrupt China Construction America (CCA). And I also hope that he is reimbursed by CCA and the Bahamian government for all the money that he lost on behalf of the Christie Administration for their negligence and shady dealings.

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carltonr61 1 year, 1 month ago

Haha. We still don't know why only Bahamian liquor stores need exit and entry signs, bathrooms and parking to obtained a license. Some very massive governmental corruptions green elephants in the room has cemented themselves too deep within our power structures that only a DNA type new government could unravel.

stillwaters 1 year, 1 month ago

Good luck, Sarkis!!! Hope you finally get the justice you deserve.

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