The Government of Antigua and Barbuda has decided against getting involved in the lawsuit involving an alleged tax fraud scheme by Sandals Resorts International.
That was according to the Information Minister, Melford Nicholas during the post-Cabinet press briefing yesterday.
Nicholas told reporters that the law firm representing the plaintiffs in the class action lawsuit recently filed in the US, also sought to invite the Government of Antigua and Barbuda to join the complaint.
However, Nicholas stated that the Gaston Browne administration no longer has issues with Sandals Resort.
“This issue in the Turks and Caicos where they have taken to sue the Sandals group, we have been invited to join party with them in a class action suit.
“We moved on and we indicated to the legal firm that made representation for us to join the suit that we have no interest in it,” he said.
The lawsuit, which was filed on Tuesday in the United States Southern District of Florida, claims that Sandals Resorts International has engaged in a decades-long tax fraud scheme that has impacted all guests staying at the company’s resorts in the region.
OBSERVER media received confirmation from Michael Winkleman that his law firm, Lipcon, Margulies, Alsina and Winkleman will be representing more than 500 other unnamed plaintiffs, including the sole named plaintiff, Vitali Feldman.
According to the court document, Sandals is accused of charging guests, 12 percent tax rates but rather than handing over the money to local governments, the funds are secretly retained by Sandals for its own profit.
It is alleged that similar practices have occurred in the Sandals Grande Resort in Antigua, where guests were charged 12.5 percent sales tax.
Sandals Resorts settled with the Government of Antigua and Barbuda over unpaid sales tax totaling US $37.5 million or more than EC $100 million up to late December 2016.
According to the court filing, “Sandals and the government of Antigua and Barbuda signed a Deed of Release and Settlement of Claim under which the government
agreed to accept the payment of $1 East Caribbean Dollar (“EC”) in full satisfaction
of unpaid Antigua and Barbuda sales tax totaling EC$101,424,448.54 (US$37,500,000) up to December 31, 2016.
“Because the government stipulated to not collect the $37.5 million and Sandals retained such monies, Plaintiffs and others similarly situated are entitled to these monies as it relates to the taxes they were fraudulently and deceptively charged.
“These extra profits came at the direct expense of Plaintiff and others similarly situated, constituting a violation of FDUPTA [Florida Deceptive and Unfair Trade Practices Act], and an actionable unjust enrichment claim.”
The Minister explained that after the current administration had written off what he considered a ‘grave error’ on the part of the former UPP administration, there is no more animosity with Sandals.
Nicholas stated “We came to a settlement agreement with Sandals while we had the opportunity to claw back over $100 million that we felt was unlawfully contributed to Sandals, we wrote it off as one of the grave errors of the UPP administration.
“We wrote a clean sheet of paper and moved on. We are now in the position where we are collecting our taxes as prescribed by law,” he said.
The lawsuit will be seeking $5 million in compensation, exclusive of interest and costs.
Meanwhile, Sandals has denied the allegation, stating that it would “vigorously defend against these baseless allegations.”
Sandals’ statement reads: “Our customers are our top priority and under no circumstances would we exploit their faith in us. Our valued guests have never been unlawfully charged for taxes and allegations to the contrary are downright false. Not only do we conduct our business with pricing transparency, we meet all of our tax obligations in each of the islands where we call home.”