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The Marriot criminal investigation in Poland arises from a relationship between Marriott International and the Lim Company.
The Lim Company owned a hotel in Warsaw, which formed a part of the Lim Data Centre, a substantial property in central Warsaw.
Marriott operated the Marriott Warsaw at the Lim Data Centre on behalf of the Lim Company.
During the first Covid period, Marriott had denied a request by Lim, to close the hotel. This was not an unusual or unreasonable request. Hotel were closed in substantial numbers, if not entirely, at various points in the COVID crisis.
The denial of the request to close the hotel ensured that the ongoing expenses and running costs that would be incurred would be substantial for the Lim Company.
Added to this, these running costs would arise when typical hotel occupancy had effectively collapsed and income streams evaporated. The monthly sums involved were recognized as being substantial.
Irrespective of any opinion or determination, the initial, essentially straightforward, disagreement was whether or not to open the Marriatt Warsaw during the first lockdown phase of COVID.
The denial of the Lim Company’s request to close by Marriott was held to be unreasonable by the Lim Company. The agreement between Lim and Marriott would make Lim responsible for maintaining running costs, without any likelihood of receiving any bookings or income.
In their opinion it was a matter which required a legal resolution and led to the Lim Company filing a complaint for breach of contract.
At this point, and in the period following the filing of the complaint, further issues arose which served to make things much more serious, especially for Marriott.
Investigations, based on the initial, straightforward disagreement, developed into criminal investigations related to additional matters of money laundering, breach of contract, theft of funds and additional financial irregularities.
Lim claims that Marriott was using their funds to pay other Marriott subsidiaries to reduce their losses during the COVID lockdowns.
Lim additionally claims that they had secured a contract with an advertising company to set up a giant billboard on the facade of the Marriott hotel. The income from this was to assist in ameliorating the losses during the difficult, worldwide, COVID lockdown.
Marriott, however, denied permission for the advertisement to be placed over the hotel. This led to the Lim Company losing even more money during the period of the COVID pandemic.
The fact that matters became a “serious” criminal investigation into the activities of Marriot, escalated the issue to one which required the attention of the Polish government and authorities.
This escalation was significant and serious for Marriott. The lawsuit has raised many questions about the company’s global reputation.
There has been international evidence of a lack of accountability and communication which has led Marriott into hot waters.
Although the case is still being investigated by the Polish authorities, it is likely that Marriott could face a number of additional legal and financial challenges in the future. Much of these will have arisen following the initial disagreements with the Lim Company.
Following the COVID period the Lim Company first turned to Zurich to file a business insurance claim for compensation, with Zurich Insurance Group. The claim intended obtain due compensation for the losses sustained during COVID.
This would be based on a typical business interruption insurance cover policy.
According to the claims by Lim, both Marriott and Zurich failed to keep their word and provide coverage for loss through the challenging pandemic times.
Their failure to recognise and address compensation for the losses sustained during COVID was unreasonable and costly for Lim.
Zurich rejected the claim and pointed out an exclusion clause in the contract with Marriott. Lim, the hotel owners claim that the exclusion clause was never a part of their original agreement.
After Zurich had rejected the initial claim by Lim, they turned to Marriot but faced a similar response.
Distinct to the situation in Poland, in addition to the legal claim filed by the Lim Center and the criminal investigation into Marriott, there appears to be at least two Marriott Hotels who are suing Marriott and Zurich Insurance Group, in similar circumstances.
Marriott has a substantial brand image and corporate reputation to maintain.
Having faced an initial, distinct legal disagreement, this has now increased exponentially to include a number of serious, additional legal considerations and matters which require further investigation.
Such issues will be scrutinized by Polish authorities and Polish government.
Similarly, the same issues will be scrutinized by corporate and financial authorities
Maintaining brand image and corporate reputation during such a scenario could be both difficult and testing for Marriott International.