A scandal is brewing at Sandals!

The family of the late hotelier, Gordon “Butch” Stewart, are fighting in court over control of the company.

According to an article in the Gleaner, Butch’s son Adam Stewart, could possibly lose a chunk of his say in the Sandal hotel chain thanks to this lawsuit.

Now when Butch Stewart died in 2021, I don’t think anyone was surprised that Adam succeeded his father.  Adam was basically groomed to take over, and had already been CEO of Sandals since 2006, so taking over the Group seemed like the natural next step.

Butch pioneered the all-inclusive resort business model in Jamaica and expanded the Sandals brand across the Caribbean. Sandals is actually one of the largest private employers and foreign exchange-earners on the island. 

And the empire is much bigger than just hotels. The ATL/Sandals Group has companies in the retail, auto and media industries. So it’s a massive massive company, that plays a huge role in economies across the Caribbean. Especially here in Jamaica. 

Well, apparently it wasn’t as smooth a transition as we thought. 

It’s a long complicated story, so I’ll just give you the broad strokes, but you can read this article in the Jamaica Gleaner that gives a great breakdown.

At the centre of the issue is a dispute between Butch’s US family and his Jamaica family… and that’s not my wording, that’s how it’s reportedly described in the legal documents.

The US family is Butch’s common-law wife, Cheryl Hammersmith-Stewart and their three adult children.  Even though Cheryl took the name Stewart, she and Butch were never legally married, but they’ve been together so long that the law does recognize her as his common law spouse, or should I say, widow.

The Jamaica family are his children Adam, Jamie, Brian and Robert.

Ok.. so follow me… Butch established two trusts in the Bahamas. One of those trusts controls the Sandals chain.

He also created the private company Cromwell Trust to act as trustee over both. So it’s the company’s job to ensure that the assets in the trust are distributed according to Butch’s wishes.

Now, according to Cheryl, just before he died, and I mean literally the day before, Butch changed his wishes. 

Cheryl alleges that Cromwell Trust is biased and playing favourites with the Jamaican family because they have a financial interest.  

She wants Cromwell removed as trustee and replaced with one who will carry out Butch’s wishes.

According to a memorandum to the trust, dated January 3, 2021, the day before Butch passed, instead of splitting his assets across the two trusts, the assets were to be split across FIVE trusts. One for Cheryl and her kids, and one each for Adam, Jamie, Brian and Robert. 

In this new split, the US family would receive 42 percent of the shares.  Adam, Jamie and Bobby would each get 16 point 6 percent, and Brian would get eight percent. 

In addition, the US family would also get veto shares, equal to what the Jamaican family currently has. 

This change would mostly impact the ownership of Sandals. And that’s a key point to note here.

The way Butch set it up, Adam and Jaime form an advisory board that has the final say over leadership of the company, the appointment of directors etc.  But the trust is what controls ownership.

Now Adam and his “Jamaican siblings” are challenging all of this. 

For one, Adam says that during his father’s final days, he drifted in and out of lucidity- meaning he got confused a lot. So he’s challenging the change to the trust which was dated January 3, the day before his father’s death.

He also said that if the split were implemented, he believes it would seriously harm the business and the value of Sandals.

According to Adam, the reason his father set up the advisory board with just him and Jaime was that his dad was consistently clear that Sandals should be run by his successor, a member of the family. He said Butch was always clear that after his death, that family member should continue to be Adam.

Adam even threw it out there that Cheryl is actively trying to drive a wedge between the Jamaican family and her children to alienate them and pit them against each other.

He said Cheryl’s claim isn’t even really about the so-called bias of the trustee, but about using the case to boost the family dispute for her interests.

So it’s getting really messy. And it will all play out in the public. 

Adam and his siblings tried to put a privacy shield on the matter so that the records and statements weren’t published because they believe “it’s a private family matter”.

But Cheryl argued against that and went all the way to the Privy Council, who ruled against a privacy shield.

Now even though Sandals is a privately owned company, they are a major player in the economies of several Caribbean countries, where they provide thousands of jobs and contribute heavily to the economy.  So perhaps that’s what the courts ruled that this should indeed be a public matter.

And that’s the bottom line.