Panama Hotel Owners Want to Oust Trump’s Business
An attempt to oust President Trump's hotel business from its role managing a luxury hotel in Panama City has turned bitter, with accusations of financial misconduct and “gross mismanagement.”
Trump Hotels is contesting its firing, and its staff refused to admit a team of Marriott executives who had been invited last month to visit the property — the Trump International Hotel and Tower Panama — during a search for a new hotel operator, according to two people familiar with the matter.
After the owners' association accused Trump Hotels of mismanagement and financial misconduct in a $15-million arbitration claim, the company owned by the U.S. president fired back with a $200-million counterclaim and refused to turn over the property's financial records.
When a team from Marriott International Inc. came to the property at the invitation of the hotel's majority owner, Trump staffers asked them to leave, according to the two people, who spoke on condition of anonymity because they were not authorized to discuss publicly what happened behind the scenes.
The head of Trump Hotels, Eric Danziger, also called Marriott Chief Executive Arne Sorenson to complain about the visit, the two people said.
Marriott generally steers clear of properties facing ownership and management disputes. But the call from a senior Trump executive to the CEO of Marriott, which manages more than 6,000 hotels, raised the awkward matter of how American companies interact with a business owned by the president.
Marriott, like most major international companies, has significant business and public policy interests before the Trump administration. Federal employees who travel and hold government conferences pay to use its properties, and Marriott has been lobbying the administration and Congress over U.S. tourism, trade and legal restrictions against property ownership in Cuba, disclosures to consumers about resort fees and other issues.
Trump Organization general counsel Alan Garten said the call was not intended to pressure Marriott.
The matter highlights potential ethics concerns raised by Trump's decision not to divest himself from his businesses, said Larry Noble, head of the Campaign Legal Center, a Washington-based public interest group that studies issues of democracy.
Since Trump took office, Trump hotels in New York and Toronto have quietly reached deals to separate themselves from Trump's brand. But the Panama dispute is shaping up to be a brawl.
In a letter to fellow owners, the investor leading the hotel owners' board of directors accused Trump Hotels of “gross mismanagement, breaches of contract, conversion and breaches of fiduciary duties.” Conversion is a legal term for the misuse of someone else's property for one's own gain.
Trump Hotels accused Ithaca of deceiving its fellow hotel owners and illegally terminating the Trump contract.
Rising 70 stories in the shape of a wind-filled sail, the Trump hotel promised investors a chance to become a part owner of one of Central America's finest hotels. It has struggled to sell units after its completion in 2011.
Occupancy rates are low enough that some owners receive no income from their properties and must reach into their own pockets to pay maintenance costs.
The effort to remove Trump hotels from managing the hybrid condo-hotel units on the property began last year, after Ithaca Capital Group purchased 202 unsold hotel units from the building's struggling developer.
After buying the units in August, Ithaca and the other owners voted in November to fire Trump's directors, clearing the way for terminating Trump's contract and the $15-million arbitration claim against Trump Hotels.
Not all the hotel unit owners were represented at the meeting, but those contacted by the Associated Press support the effort to fire Trump.
If the owners in Panama succeed, it won't be the first time Trump has been ousted there. In 2015, in the early months of Trump's presidential campaign, the owners of apartments in the same building voted to fire Trump's management company over budget issues and allegations of misspent funds.
Since then, the property's overall finances have improved. Its annual deficits, which exceeded $1 million, have since turned into a surplus, according to financial documents provided to the AP by an owner.
Source: Los Angeles Times