The chief executive of Corinthia Hotels & Resorts said this week that the operation of the company's European luxury hotels would not be affected by any European Union or U.K. sanctions against Libya, even though Corinthia is mostly owned by a group whose investors include a Libyan sovereign wealth fund.
"In light of the present conflict in Libya, International Hotels Investments sought clarification about the effect of any sanctions from the E.U. and the governments in the U.K.," said Tony Potter, CEO and managing director of CHI Hotels & Resorts, which manages Corinthia. International Hotel Investments owns most of the properties.
"As a consequence, the owners received assurances from the E.U. and the U.K. governments that there will be no impact on IHI or the day-to-day operations of any Corinthia hotel," Potter said.
The Libyan interest in Corinthia made headlines in Britain, just as Corinthia prepares to open a luxury hotel in London. The Corinthia London is the company's first property in a Western gateway city.
Although one blog referred to the hotel as "Gadhafi’s London Palace," Potter said that the publicity about the Libyan government’s stake in IHI had not resulted in any cancellations as far as he was aware.
"At this moment, I don’t see anything to worry about," Potter said in an interview from the company’s headquarters in Malta. "What annoys me is when you see the inaccuracies out there."
Even so, he was clearly more concerned about political and military upheaval in Libya than he was about bad press in the U.K.
"Let me put it this way," he said. "It would be very helpful if the present conflict was resolved. ... That would be in the best interest of everybody, including the people of Libya."
Potter confirmed that the Libyan sovereign wealth fund, Lafico, owns about 35% of IHI. Another big investor is Nakheel, which is owned by the Dubai government.
Potter emphasized, however, that Libya does not have a controlling interest, and IHI has some 3,000 public and private investors.
According to London newspaper the Guardian, Lafico was one of five entities against whom the E.U. imposed "restrictive measures" last month because they were under the control of Moammar Gadhafi and his family, and were thus a potential source of funding for his regime.
As a consequence of the E.U. order against Lafico, the Libyan entity’s ownership stakes in several prominent European businesses, including automaker Fiat, Italian soccer club Juventus and Pearson (the Financial Times' publisher) have been frozen and cannot be sold, the Guardian reported.
IHI is controlled by the Pisani family of Malta, which founded Corinthia Hotels, IHI and CHI.
Despite the recent publicity, Potter emphasized that Libya’s investments in IHI were never a secret. In fact, the U.S. Treasury’s Office of Foreign Assets Control, which enforces economic sanctions, as late as 2006 included Corinthia Hotels among its list of "blocked" entities. But Potter said that "was way back; that is history."
The London hotel, set to open this month, will be Corinthia’s ninth property. In addition to two in Malta, IHI has hotels in St. Petersburg, Russia; Budapest, Hungary; Tripoli, Libya; Prague, Czech Republic; Lisbon, Portugal; and Khartoum, Sudan.
Corinthia was among the first Western hotel companies to open a property in Libya. Potter said that hotel remains open despite the ongoing conflict.