By Muhammad Cohen From Forbes

For a preview, look at Baha Mar, the $3.5 billion resort project in the Bahamas, that’s been rescued and ruined by Chinese state controlled entities, seen its founder shoved aside to placate China and now is about to the placed in the safe hands of Hong Kong’s billionaire Cheng family, longtime friends of mainland authorities and investors in Macau gaming. The biggest mystery remaining is whether the Cheng’s Chow Tai Fook Enterprises is doing a bigger favor for Beijing or Beijing is doing a bigger favor for Chow Tai Fook.

Even though it’s 97% complete, Baha Mar, with 2,200 guest rooms, a Jack Nicklaus-designed golf course and more, remains closed. The Caribbean’s largest ever resort project is a potential game changer for the Bahamas, which has seen tourist arrivals decline by nearly 20% to 1.3 million over the past decade, projected to contribute more than $1 billion to the national economy annually, boosting GDP by more than 10%.

Prime Minister Christie tried for more than a year to broker a deal to complete and open the resort and to save face for his government and Beijing. After months of false alarms, a buyer emerged: Chow Tai Fook Enterprises, controlled by the heirs of billionaire Cheng Yu-tung, who passed away in September after years in a coma. Cheng family enterprises became the largest foreign investors in the mainland though property deals in the wake of the 1989 Tiananmen Square massacre, when even many Hong Kong companies ostracized China. CTFE, a long time 10% stakeholder in Stanley Ho’s casino vehicle Sociedade de Tourismo e Diversoes de Macau, was initially associated with Baha Mar through its Rosewood luxury hotel chain, and that brand will be part of the revival. However CTFE cites a non-disclosure agreement to withhold further details. Pending government approval of the deal, Christie says the firm will invest $200 million for a phased opening beginning in the second quarter of next year with 1,500 people to be hired as early as January.

Opponents are crying foul, saying Christie has timed hiring to coincide with upcoming elections. They’re also focusing on CTFE’s links to Macau junkets. And speaking of junkets, a government team has flown to Macau to assess CTFE’s casino operations, something that doesn’t exist. The Chengs have been silent investors in Macau, with no role in day-to-day activities. Henry Cheng, who succeeded his father as chairman of publicly listed Chow Tai Fook Jewellery and New World Development and affiliates, also took his father’s seat of the board of SJM Holdings, STDM’s publicly listed casino affiliate, but has no executive responsibilities there.

Looking for Cheng family underworld connections suggests that gaming regulators in Australia, as well as Vietnam, haven’t done their jobs, since they’ve approved CTFE as a partner in the $3 billion Queen’s Wharf Brisbane redevelopment and lead developer in the putative $4 billion Hoi An South Integrated Resort. Opposition to the Baha Mar deal shouldn’t focus on Macau organized crime but mainland China’s organized capitalism. Chinese state companies wrecked Baha Mar, and, with the help of the Bahama government, Chinese interests stand to benefit from the ensuing debacle.

Baha Mar demonstrates there’s no free lunch, especially when you choose Chinese.

IMAGES:

At the early 2011 groundbreaking for the yet-to-open largest resort in the Caribbean, Baha Mar Resorts CEO Sarkis Izmirlian stands between state-owned Export-Import Bank of China President Li Ruogu, left, and Bahama’s Deputy Prime Minister Brent Symonette, before the two governments squeezed him out. (Photo Credit: AP Photo/Tim Aylen)

Paradise Island, Bahamas. (Photo by Kevin C. Cox/Getty Images)

(Photo credit: Aaron Tam/AFP/Getty Images)

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