A group of investors, including Saudi Arabia’s Prince Alwaleed bin Talal, has won a UK court battle to recoup a secret €10m ($13m) payment made during the sale of the Monte Carlo Grand Hotel in 2004.
The money was paid to Cedar Capital Partners, which had been recently established by businessman Ramsey Mankarious to provide consultancy services in the hotel industry.
He had acted as a broker between the hotel owner, Monte Carlo Grand Hotel Ltd, and the investors, which included FHR European Ventures, Fairmont Hotels and Resorts, Fairmont Dubai Holdings Dubai (Bermuda), the Bank of Scotland and Prince Alwaleed’s Kingdom Holdings.
The investors bought the hotel for €211.5m in December 2004.
But it was later revealed that they had not been made fully aware of the contract between Monte Carlo Grand Hotel Ltd and Cedar to pay €10m if an investor introduced by Cedar successful bought the property.
During a 2011 trial in the UK, the judge accepted the evidence of one of the investors that if he had been told of the size of Cedar’s fee he would not have agreed, and the judge ruled Cedar had not adequately disclosed its relationship with Monte Carlo Grand Hotel Ltd.
The judge also found that it was likely that Monte Carlo Grand Hotel Ltd would have accepted €201.5m for the hotel, affectively meaning the investors had paid Cedar’s “secret commission” rather than seller, which had brokered the agreement.
"…in circumstances where Cedar were engaged to negotiate the best price, at the very least it was material that the vendor was in fact prepared to receive a net sum of €201.5 million from the sale. That was material to be known by Cedar's principal and was not made known to [the investors]," the trial judgement says.
The investors were entitled to seek the €10m from Cedar, however the company had since been made insolvent.
The investors, led by Prince Alwaleed, were then granted leave to appeal in January.
On Monday, the Appeals Court upheld the appeal, giving the investors the right to enforce the original judgement against anyone who subsequently received any part of the secret payment, specifically Mankarious.
In a statement following the judgement, Prince Alwaleed said the decision “reaffirmed his strong belief in transparent and ethical business practices”.