Two U.S. Firms File Suit for Control of Moscow Hotel : Russia: Radisson and Irvine-based Americom both claim breach of contract. If either is ousted, Russian partner could wind up sole owner.
Bill Clinton slept there. So have members of Congress and chief executives of American companies. But Moscow’s only American-run hotel is suddenly attracting more than famous guests.
The Radisson Slavjanskaya is caught in a very public battle for control between its two partners, Irvine-based Americom Business Centers and hotel giant Radisson. Three years after its founding, the Americom-Radisson partnership has disintegrated into open bickering and dueling lawsuits.
A legal complaint filed by Radisson in Minneapolis on April 1 alleges 23 egregious acts by Americom and its president, Paul E. Tatum, including violating Russian law, threatening Radisson employees and acting for the partnership without authority.
In the suit, which could take months to come to trial, Radisson seeks control of the American half of the joint venture. (The other half of the venture to run the hotel is controlled by a Russian firm, Mosintour.) Americom has countersued, seeking Radisson’s ouster for withholding funds from Americom, foot-dragging on further development of the hotel complex and other alleged breaches of their contract.
Although the battle for the Slavjanskaya is unusual in its bitterness and complexity, it is typical of the chaotic legal and financial environment for American enterprises, particularly joint ventures, trying to do business in Russia.
After a tumultuous week in which Tatum was barred from the hotel by armed guards, Americom and Radisson sat down at the bargaining table Wednesday in Moscow. The Russian side gave the Americans until Friday morning, when the three partners will meet again to try to sort out their differences.
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Tatum said Radisson virtually ignores Americom in the day-to-day management of the joint venture. He said Radisson panders to their Russian partner because Mosintour--heir to the Soviet tourism agency, Intourist--has vast power over the hotel business in Moscow.
Radisson, in fact, signed an agreement with Mosintour in October, 1992, to help bring 12 other Moscow hotels up to Western standards, but the agreement has stalled. To get it moving, Tatum said, Radisson must make Mosintour happy at the Slavjanskaya.
“They looked at us as squatters,” Tatum said. “They (Mosintour) say, ‘We want more control over the Slavjanskaya hotel property.’ ”
“Radisson’s approach is to give them everything they want,” he added during an interview in a Moscow restaurant, flanked by two bodyguards.
Radisson denied that it is ignoring Americom in favor of its Russian partner. “Radisson is cozying up to the Russians, I guess, if you say we want to have good relations with our partner,” said John Norlander, president of Minneapolis-based Radisson Hotel Corp. “We’d like to have a good relationship with Americom.”
Mosintour has refused to comment.
Other parts of the dispute seem to stem from Tatum’s stormy relationship with both Radisson and his own colleagues.
Tatum “has a brilliant mind, but no management skills,” said Scott Willens, who worked as Americom’s sales director for a year before quitting in April, 1993. Americom employees who challenged Tatum were fired or induced to quit, Willens said.
At least one former Americom employee in Moscow is suing Tatum for breach of contract after being forced out of the business, according to Willens. Eleven former Americom investors and a former board member are also suing Tatum in Florida for fraud and misuse of company funds. That suit, filed in 1992, has not yet come to trial, according to Marshall Davis, the Florida attorney handling it.
Americom was just a start-up in 1989 when Tatum and a group of investors that included H.R. Haldeman, former President Richard Nixon’s chief of staff, courted the Soviet government for the contract to run a 630-room hotel on the banks of the Moscow River.
Americom brought in Radisson--which manages more than 260 hotels worldwide--to clinch the deal. The Slavjanskaya opened in June, 1991.
The future of the Americom-Radisson-Mosintour joint venture is now in doubt because it is not legally clear whether one American partner can be ousted without the entire joint venture falling apart. And if the venture dissolves, control of the hotel would revert to the Russian partner, Mosintour--an outcome that, despite their squabbling, neither American partner wants.
“You don’t really want to dissolve anything, because that puts everything up in the air,” Norlander acknowledged in a telephone interview.
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If the Russians take over, the Americans would not only lose their share of the hotel’s profits--which Tatum estimates at more than $100 million during the joint venture’s 20-year contract to run the hotel complex--but they could also lose the separate management contracts Radisson has to run the hotel and its restaurants and that Americom holds to run the Western-style business center and hotel shops.
Last Thursday, a U.S. District Court in Minnesota upheld Radisson’s efforts to bar Tatum from the hotel complex, where he not only works but lives. Tatum had been banned from the Slavjanskaya since June 6, after he allegedly tried to break into an office in the hotel and cut off its phone lines.
On Wednesday, the joint venture agreed to give Tatum free access to the hotel again.
