Chinese Company Can't Avoid Billion-Dollar Fine Tied to Bahamas Casino Fraud
A New York appellate court has rejected an appeal by China Construction America, Inc. (CCA), affirming a previous ruling that holds the company liable for $1.6 billion in damages related to its involvement in the failed Baha Mar resort project in the Bahamas.
LISTEN TO THIS ARTICLE:The court's decision supports the earlier judgment by the New York Supreme Court, which found that CCA committed multiple acts of fraud and breaches that led to the collapse of the Baha Mar project and the complete financial loss for its original developer, BML Properties Ltd., led by Sarkis Izmirlian.
Related: China-Backed Real Estate Developer Ordered to Pay $1.6 Billion in Casino Fraud CaseThe case centers on allegations that CCA and its parent company, China State Construction Engineering Corporation (CSCEC), deliberately mishandled the construction of the resort, resulting in delays and, ultimately, the bankruptcy of BML in 2015. The $1.6 billion figure awarded by the court includes BML's initial $845 million investment plus interest accrued since May 2014. According to BML, the total judgment has now exceeded $1.7 billion following the appellate court's decision.
Baha Mar, a multibillion-dollar resort envisioned as a transformative project for the Bahamian economy, was initially slated to open in December 2014. However, after missing the deadline and a series of subsequent dates in 2015, BML filed for bankruptcy, citing poor construction quality and project mismanagement by CCA. At the time of the filing, the resort was reportedly 97 percent complete.
The project was originally financed during the 2008 global financial crisis, with Izmirlian securing approximately $2.45 billion from China's Exim Bank. A condition of the financing was that CCA be appointed as the general contractor and allowed to bring in up to 8,000 Chinese construction workers, giving a significant boost to China's domestic employment and economic interests. CCA also invested $150 million of its own funds into the project, while BML contributed the majority of the equity.
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The Bahamian government, viewing Baha Mar as a critical national development, eventually intervened. Instead of supporting BML's efforts to restructure and continue with a new contractor, the government allowed a liquidator to take control of the project. Construction came to a standstill for over a year before an agreement was reached with CCA to resume the work. The resort was later sold to Chow Tai Fook Enterprises, a Hong Kong-based conglomerate with connections to Macau's and Australia's gaming industries.
In its decision, the appellate court found that CCA had committed fraud beyond any doubt and that its actions were instrumental in forcing the collapse of the Baha Mar project. The court emphasized that CCA exercised complete control over its subsidiaries, CCA Bahamas and CSCEC Bahamas, and used this control to breach contractual obligations, deceive BML, and take over the project to benefit Chinese interests.
Izmirlian expressed satisfaction with the ruling, stating that the court's affirmation validated claims that CCA's conduct caused the project's failure and BML's financial loss. He indicated that efforts would continue to enforce the judgment against CCA, CSCEC, and affiliated entities involved in what he characterized as orchestrated fraudulent behavior. He also suggested the hope for a swift settlement to avoid further disruption to the defendants' operations.
In response, a spokesperson for the defendants expressed disappointment with the appellate court's decision, arguing that it misinterpreted New York law and overlooked BML's own role in the project's failure. The spokesperson confirmed that CCA intends to pursue a further appeal to the New York Court of Appeals, indicating that the legal battle is not yet over.
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