KINGSTON, Jamaica – Prime Minister Bruce Golding says hotelier Gordon ‘Butch” Stewart has dropped all the suits filed by his company Gorstew Limited against the three state agencies in 2005 for compensation for losses suffered over the Sandals Whitehouse hotel in Westmoreland.
“The chairman of Gorstew, the Honourable Gordon Butch Stewart, has confirmed to me that it will discontinue all claims against Ackendown Newtown Development Company Limited (ANDCo), the Urban Development Corporation (UDC) and the National Investment Bank of Jamaica (NIBJ),” Prime Minister Bruce Golding told Parliament.
Golding was defending his administration’s decision to sell the hotel to Sandals Resorts International (SRI).
Sandals Whitehouse is the property for which the UDC in 2001 entered into a joint venture for construction with Stewart’s holding company, Gorstew Limited.
Under that accord a tri-partite company, ANDCo, was formed with the UDC holding 37 per cent, the NIBJ 30 per cent and Gorstew 33 per cent.
The agreement provided for a 20-year lease of the property upon completion of construction to Gorstew, which manages the hotel through its Sandals brand.
But delays in the construction of the property resulted in an increase in the funds needed and the Jamaica Observer newspaper, which is owned by Stewart, reported Wednesday that up until recently several disputes had remained unsettled as to the liability for the cost overruns, with Gorstew filing for compensation in the amount of US$28.8 million.
Prime Minister Golding in addressing whether the Government would settle all outstanding disputes and claims before the completion of the sale to SRI maintained that the outstanding disputes and the sale of the hotel were “distinctly separate issues”.
“Whether the Government sells or retains ownership of the property, the issue of cost overruns and Gorstew’s claims for losses and brand damage will have to be determined,” he said.
“On the other hand, even if these issues are determined, the burden of ownership of the hotel on terms of the lease entered into in 2004 will result in recurring losses for the Government at least for the next 14 1/2 years.”
Golding said that the 2001 Heads of Agreement indemnified Gorstew from any cost overruns except those from design changes it may have requested.
“Other than those cost overruns attributable to such design changes, Gorstew has nothing to lose in the outcome of the arbitrator’s findings regarding responsibility for cost overruns. It is the government agencies that are more at risk,” Golding said.
ANDCo, UDC and NIBJ had in turn filed defences and counter suits against Gorstew. However, the parties had agreed to a stay of the claims and the matters referred to arbitration in 2008.
That ruling has, however, still not been issued and in 2009 the parties executed a Standstill Agreement with the arbitrator to suspend the proceedings to allow for a negotiated settlement to be reached. That, however, was unsuccessful.
Golding has promised to present in writing to Parliament next week the commitment by Stewart to drop the suits.
But he told legislators that Stewart’s “word as his bond” was sufficient to allow for the announcement to be made. (CMC)