By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Sandals has hired Bank of America “to explore strategic options” amid a renewed push to have the Supreme Court appoint a Bahamian bank as ‘co-judicial trustee’ overseeing the resort chain.

The US-headquartered financial institution’s role, which is said to be “at a very early stage”, was disclosed in May 5, 2025, legal filings with the Bahamian Supreme Court following pressure from Cheryl Hammersmith-Stewart, third wife of Sandals’ founder, Gordon ‘Butch’ Stewart.

Attorneys for Mrs Hammersmith-Stewart, who is embroiled in an escalating legal battle with the Jamaican side of the late Mr Stewart’s family, slammed the contents of a Wall Street Journal article suggesting that Sandals had hired bankers to prepare the resort chain for a potential sale as “remarkable and shocking” given that their client and other family members had allegedly been excluded from the process.

Sandals avoided giving any explicit confirmation as to whether this was true, but this was ultimately forthcoming in an April 25, 2025, letter from Wilfred Ferguson, a Lennox Paton attorney, in response to the concerns voiced by Mrs Hammersmith-Stewart and other family members who are also beneficiaries of the late Mr Stewart’s estate.

He forwarded a response from Sandals’ ‘advisory board’, which stated: “As the beneficiaries will be unsurprised to hear, a business such as Sandals regularly attracts attention from the international market, and when opportunities arise the advisory board considers such opportunities.

“Bank of America has been engaged to explore strategic options for the Sandals business. This project is at a very early stage and, if and when the advisory board has a material update, it will inform Cromwell Trust Company Ltd, as trustee of the Coral Ridge Trust, accordingly if appropriate in the circumstances.” Lennox Paton are the legal representatives for Cromwell Trust Company.

This is the first concrete affirmation that a potential sale of the renowned Caribbean-wide hotel group, which employs hundreds of Bahamians at its Sandals Royal Bahamian resort on New Providence as well as its Fowl Cay private island in the Exumas, could be forthcoming. It is also in the process of transforming its Emerald Bay property into a Beaches resort.

Bank of America’s appointment comes amid a deepening, and escalating, battle over the late Mr Stewart’s estate that has pitted Mrs Hammersmith-Stewart and her children against Adam Stewart, Mr Stewart’s son and successor as Sandals Resorts International’s current executive chairman, together with his sister, Jaime McConnell, and brother, Brian Jardim.

Mrs Hammersmith-Stewart, in the May 5, 2025, legal filings obtained by Tribune Business has renewed her bid to persuade the Supreme Court to appoint The Private Trust Corporation, the Bahamian private bank and trust company, as a co-judicial trustee alongside Cromwell Trust Company to oversee the trust that holds the Sandals resort chain’s parent company.

She is urging that it be appointed to counter the alleged control Adam Stewart has over the Sandals group, claiming that he is using this to his own benefit and advantage against the interests of herself and her children. The current Sandals corporate structure involves the resort chain’s parent, Sandals Resorts International, being held via a trust called the Coral Ridge Trust.

Cromwell Trust Company is the latter entity’s sole corporate trustee. Among the Coral Ridge Trust’s holdings is a 100 percent ownership interest in Oasis Global, a Panama-incorporated company that, in turn, holds all the shares in Sandals Resorts International 2000. The latter owns and operates the Sandals and Beaches resort chains, and is also domiciled in Panama.

Mrs Hammersmith-Stewart, though, is complaining that Adam Stewart’s power as an ‘enforcer’ over Cromwell Trust Company enables him to control the corporate trustee, and thus the Sandals resort group, to her detriment through “the ability to appoint and remove” members of its Board of directors.

And governance, decision-making and management powers for the Sandals and Beaches hotel chain lies not with Cromwell or its directors in their capacity as Coral Ridge’s trustees, but with an ‘advisory board’ headed by Adam Stewart and his sister, Jamie.

In essence, Mrs Hammersmith-Stewart is urging the Supreme Court to re-balance the power relationships within the Sandals corporate structure via her April 18, 2025, application to the Supreme Court seeking The Private Trust Corporation’s appointment as an “independent” co-judicial trustee alongside Cromwell.

“Without the oversight of an independent trustee, there is a real and present danger that the trust fund will suffer irrevocable losses pending the final determination of my claim,” she alleged, claiming that the Coral Ridge Trust’s trust fund “is currently in material danger” without such oversight.

For Mrs Hammersmith-Stewart is also urging the Supreme Court to give The Private Trust Corporation, if appointed, “all appropriate directions and guidance” to conduct “further investigation” into the findings of a report by Edith Wong, a US-based certified fraud examiner with FTI Consulting.

That report, commissioned by Mrs Hammersmith-Stewart and her US attorneys, alleges that the Sandals group’s money streams are being channelled in such a way as to benefit Adam Stewart and his sister through being directed via Unique Travel Corporation, the resort chain’s third-party booking platform and sales agent.

Ms Wong’s report, in particular, raises concerns over $2.728m in payments to the Exumas-based Fowl Cay property, which was said to be held under a separate Bahamas-domiciled company, Blue Voda Holdings. “It is my understanding from counsel that Unique managed bookings for Fowl Cay, a property held under Blue Voda located in the Bahamas,” she wrote. 

“There was $2.7m in payments to Fowl Cay, which consisted of numerous round amounts of $120,000 that were described as operating costs with no supporting documentation. For example, the payment of $120,000 to Fowl Cay on July 14, 2023, is described as ‘general operating expenses’.

“This raises two concerns,” Ms Wong added. “First, round dollar amounts are often identified as potential red flags by forensic accountants and fraud examiners. Secondly, this characterisation suggests that profits generated by Fowl Cay were not sent to Fowl Cay and may have been instead directed to Sandals Resorts International 2000, an entity with no ownership interest in Blue Voda.

“Since Fowl Cay is owned by the Coral Ridge Trust, profits should have been remitted to the Coral Ridge Trust for distribution to its beneficiaries.” Ms Wong also noted “compliance and tax concerns” related to how Sandals funded the costs incurred by its hotels including the Bahamian properties.

She noted that “hotel funding generally remained at a flat $14m per period prior to 2024, regardless of variations in cash collections or seasonal operating needs” before aligning more closely with cash flows. This, Ms Wong added, “suggests a correction of the prior mismatch between funding levels and actual cash inflows”.

“In typical resort operations, hotel funding requirements would be expected to fluctuate based on occupancy rates, payroll cycles and maintenance expenses, making the fixed allocation of $14m inconsistent with industry norms and misaligned with actual business needs,” she wrote.

“The lack of a defined and transparent process for determining hotel funding levels raises concerns. If funding to the hotels was insufficient to cover the hotels’ actual needs, and distributions to Sandals Resorts International 2000 were inflated as a result, this could raise concerns of potential tax avoidance.

“As offshore entities in Panama are not subject to income tax, this would allow Sandals Resorts International 2000 to shift profits away from the taxable jurisdictions where the hotels operate and into Sandals Resorts International’s 2000’s tax-free jurisdiction,” Ms Wong continued.

“Furthermore, I understand from counsel that the Bahamian tax authorities are currently seeking to collect a substantial tax liability from Sandals based on a similar analysis of profit-shifting. Conversely, if funding to the hotels exceeded actual needs and resulted in an underpayment of distributions to Sandals Resorts International 2000, this could reflect a further breach of Unique’s obligation to remit funds to Sandals Resorts International 2000 according to the terms of the 2016 agreement.”

Tribune Business reported last year how Sandals is disputing assertions by the Bahamian tax authorities that its Emerald Bay resort only reported 40 percent of revenues earned as it defended its one-of-a-kind “business model”.

Melissa John, the Exuma hotel’s financial controller, in a September 8, 2023, letter to the Department of Inland Revenue (DIR) denied the property had failed to properly disclose “the true nature of transactions” which sparked demands for $30.844m in allegedly unpaid VAT and Business Licence fees combined.

The Department’s audit findings, which covered six years between 2017 and 2022, claimed the tax arrears had arisen because Sandals Emerald Bay and its operator, Clearview Management Ltd, had under-reported gross revenue income for the period by more than $284m.

The dispute, according to documents filed with the Supreme Court, appears to result from the Sandals’ corporate structure and business model. All guest bookings and payments are made to the resort chain’s corporate parent, Sandals Resorts International 2000, and its third-party booking platform and sales agent, Unique Travel Corporation. Both these entities are domiciled in Panama.

Rather than funds flow up the corporate chain, from subsidiaries to parent company, in Sandals’ case the money trail appears to move in the opposite direction - from Sandals Resorts International 2000 to the resort where the relevant guest has booked their vacation.

The crux of the Department of Inland Revenue’s assessment, and eight-figure tax demand, is that Sandals Emerald Bay over that six-year period only declared the net income received from its parent and not the gross sum collectively paid by tourists to stay at the Exuma property. As a result, the resort both under-reported and underpaid VAT and Business Licence fees for that period.