Prime Minister, the Hon. Bruce Golding, on February 8 provided Parliament with documentary evidence that Gorstew Limited was dropping its US$28.9 million lawsuit against the Government for losses in relation to the Sandals Whitehouse hotel in Westmoreland.
Mr. Golding in responding to questions posed by Opposition spokesperson on Tourism, Dr. Wykeham McNeil last week, had promised to take written proof that the company had withdrawn its claim.
In the letter, which was tabled in the House, Chairman of Gorstew Limited, Gordon “Butch” Stewart, said that even while the claims were justifiable, the decision to discontinue the suit was made “for the benefit of the taxpayers and in the national interest.”
“We have given long and careful consideration to the dollars we have lost on this project and the time and money invested in pursuing our claims. However, in deciding to forego our rightful claim, we hope that out of bad some good will come. Therefore, notwithstanding the circumstances, Gorstew Ltd. now wishes to discontinue and relinquish claims against the aforementioned entities that are the subject of the arbitration,” Mr. Stewart said.
He said that Gorstew Limited recognises that Jamaica needs to focus on positive initiatives, which will create jobs that will assist in the country’s overall economic development. “We also realise that the arbitration at this point in our history is counterproductive and out of step with our common vision to further develop south coast tourism,” he said.
Mr. Stewart, in his letter, said Gorstew Limited had always intended to use the settlement in the arbitration to give back to the Whitehouse community and further invest in south coast tourism.
He said that the company intends to develop a championship golf course, restore the Auchindown historical site and construct an aerodrome in Westmoreland.
After receiving a copy of the letter, Opposition Spokesman on Finance Dr. Omar Davies asked whether the Government would incur any costs because of the legal actions, which were initiated.
The Prime Minister said that each party would bear its own legal costs. “The respecting parties will bear their legal cost relating to the battery of lawyers that had been assembled on both sides and whatever initial expenses were incurred in the arbitration, because the arbitrator had in fact settled one issue, which had to do with entitlement to a portion of income, which the operators earned for certain other facilities,” Mr. Golding said.
The Prime Minister also made it clear that the Government’s decision to sell its stake in Sandals Whitehouse for US$40 million to Gorstew Limited was not related to the discontinuing of the lawsuit.
The Urban Development Corporation (UDC), in 2001, entered into a joint venture agreement with Gorstew Limited for the construction of Sandals Whitehouse. Under the agreement, a tri-partite company, Ackendown Newtown Development Company Limited (ANDCo) was formed with the UDC holding 37 per cent, the National Investment Bank of Jamaica (NIBJ) 30 per cent and Gorstew 33 per cent.
The joint venture agreement allowed for a 20-year lease of the property upon completion of construction to Gorstew, which manages the hotel through its Sandals brand.
Construction should have been completed in December 2002 at an estimated cost of US$60 million, but the property was delivered in 2005 at a cost of US$117 million.
Gorstew, in seeking damages, stated that it suffered losses as a result of the failure to complete and deliver the project on schedule. The company also sought compensation for brand damage.
CONTACT: LATONYA LINTON