Harlequin has temporarily stopped work on a highly-publicised resort in Barbados, citing an ongoing $13m (£8.5m) legal battle taking place in Ireland over alleged misappropriation by a former contractor.
The firm also confirmed to FTAdviser that in a separate move it is restructuring its local business operations on the Caribbean island and has shut its offices in Hastings, Barbados.
A spokesperson for Harlequin said that the business has temporarily paused construction on the H Barbados site, highlighting in particular an ongoing court case in Ireland that began in February.
Harlequin brought a claim against a former contractor on its Buccament Bay Resort based in St Vincent and the Grenadines, alleging misappropriation of $13m in funds. The claim, which is denied, is one of two litigation actions Harlequin is involved in, according to the spokesperson.
Buccament Bay Resort, the company behind Harlequin’s main resort, was recently forced to deny that it was in liquidation after no financial statements or annual returns had been filed for the period from 2005-2012.
A spokesperson for Buccament Bay Resort blamed “historic problems” with its accountants Wilkins Kennedy, with whom it is currently in a legal dispute. Wilkins Kennedy has denied it was appointed as auditor of any overseas Harlequin company and is “robustly contesting” the claim against it.
The spokesperson for Harlequin also told FTAdviser that work on its Merricks Resort project in Barbados, which had been suspended, will now continue again as full planning permission has been received.
He said: “Harlequin is currently in the process of restructuring elements of its business, which includes Harlequin Developments.
“Many of Harlequin’s senior staff have, in recent weeks, been giving evidence in a court case that Harlequin has brought against a former contractor in Ireland... as a result of which, and in addition to the current restructuring, Harlequin has temporarily paused construction on the H Barbados site.
“Harlequin is delighted to announce that last week it received full planning permission for The Merricks Resort project in Barbados. There are normal conditions attached to the permission and our team is now working to ensure we have full compliance to allow us to commence works.”
Earlier this month, FTAdviser sister title Financial Adviser reported that law firms Kobalt Law, Carter Lemon Camerons and Regulatory Legal have been inundated with calls from investors for advice over their Harlequin holdings.
This follows an alert from the Financial Services Authority, issued on 18 January in conjunction with Harlequin, which warned advisers over recommendations to clients to invest large sums into self-invested personal pensions weighted heavily towards overseas property bought through Harlequin Property.
The regulator said it has seen an increasing number of Sipp schemes invested heavily in property purchased through Harlequin and that advisers would be expected to have undertaken “thorough due diligence on the various developments being sold through Harlequin Property to fully satisfy themselves that it is a suitable investment” for clients.
