Paddy McKillen vs. Qatar: The real estate mogul could face his toughest battle yet with former billionaire allies
In a rare interview with Italian journalist and intellectual Alain Elkann three years ago, media-shy property and hotel tycoon Paddy McKillen explained how he did business with the Qatari royal family.
The Belfast-born businessman told how during his titanic legal battle with the billionaire Barclay brothers for control of the luxury hotel group Maybourne, the Qataris became involved and offered to help behind the scenes.
Identical twins David and Frederick Barclay, owners of Daily Telegraph, attempted a hostile takeover in 2011. McKillen (67) has been an investor since 2004 and held a 36 percent stake. What followed was one of the most bitter legal battles in living memory.
“One morning the Barclay brothers came and said, ‘We own 64pc. You’re out of here,’” McKillen said to Elkann.
They loved the way I defended the hotels and when I got a deal with the Barclays I invited the Qataris
“We had an ugly court case for five years in which the hotels were like a ship without a rudder and suffered from two conflicting managements, but in 2015 the Barclay brothers gave up the fight and said, ‘We can’t get you. We will sell’.
“The Qataris always offered me help in the background. They loved how I defended the hotels and when I struck a deal with the Barclay brothers I invited the Qataris.”
Qatar’s ruling Al Thani family is said to have coveted the trophy of the group’s London hotels, Claridge’s, the Berkeley and the Connaught, for decades. It came as no surprise when they jumped at the chance to buy out the Barclays while striking a deal with McKillen.
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Sheikh Hamad bin Khalifa al Thani
The takeover of the hotel group was part of a spending spree that, according to an investigation, The Observer newspaper, has seen the gas-rich autocratic state amass more than £40bn (€45.8bn) in UK assets, including a property portfolio worth over £10bn (€11.5bn).
According to court documents, the royals bought McKillen’s shares in April 2015. The sale included an initial payment based on the group’s then “conceptual equity value” and an agreement that McKillen would run the hotels for seven years.
It is speculated that he is entitled to a sum of up to 1.2 billion euros
This also included the promise that he would receive an additional payment in April 2022, taking into account the increase in the value of the group under his leadership. It is speculated that he is entitled to a sum of up to 1.2 billion euros.
However, the harmonious relationship hinted at in the Elkann interview broke down when the Qatari owners, ex-Emir Sheikh Hamad bin Khalifa Al Thani (70) and ex-Prime Minister Sheikh Hamad bin Jassim Jabber Al Thani (63), refused to pay.
There is said to have been a dispute over the value of the deal that has yet to be resolved. The group is now valued at between £6bn (€6.9bn) and £8bn (€9.1bn).
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The Maybourne Beverly Hills
Last April, McKillen and his adviser Liam Cunningham were ousted from Maybourne’s board. Since then, other significant fault lines have emerged.
In the past week, the Irish Independent has revealed how McKillen’s firm Hume Street Management Consultants (HSMC) has sued senior Qatari royals and various Maybourne companies in France and the US over their alleged failure to pay fees for the development of luxury hotels near Monaco and in Beverly Hills.
HSMC is demanding almost 20 million euros in the French case, while in the US case McKillen and his company are said to have been “cheated” out of tens of millions of dollars, including $18 million (€16.9 million) for hotels, by the Qatari royals and project management fees. The Laments offer a glimpse into a world usually only seen by the rich and powerful.
Papers filed in the US case tell how McKillen flew to Doha in October 2019 and met with Sheikh Hamad bin Khalifa and his daughter Sheikha Lulwah on the former Emir’s yacht to discuss the Beverly Hills project.
One could imagine that teams of lawyers are involved, clarifying the intricacies of such discussions. But that wasn’t the case here.
The former Emir valued McKillen’s opinion and wanted to know if he should buy what would become the Maybourne Beverly Hills.
McKillen is said to have convinced him that the project has value. The former Emir entrusted McKillen with the management and refurbishment of the estate.
Mutual trust was so great at the time that there was no written agreement on how much and when HSMC would be paid. McKillen clearly didn’t anticipate that deferring those finer details would be a problem having previously dealt with the Qataris.
He did not panic when representatives of Sheikh Hamad bin Khalifa and Sheikha Lulwah, as alleged in the US case, later used the Covid-19 pandemic to justify delaying talks on the details of HSMC’s fees.
McKillen also thought it would be “scandalous” for hotels to have a dress code for guests
But judging by legal documents, the trust that existed at that time is long gone. According to McKillen’s company, multiple attempts to get paid were ignored or otherwise thwarted.
McKill is no stranger to challenges, both in the business world and in court, where he has repeatedly refused to back down.
Although raised well thanks to his family business, Ireland’s first chain of tire and exhaust shops, DC Exhausts, he made his own fortune.
During the turmoil, he was sent to Dublin by his father as a 16-year-old to work, initially in the clothing trade. Over the next 30 years, he built a domestic portfolio of malls and retail properties while building a real estate empire that stretched from London to Tokyo.
A low-key approach kept him out of the media limelight most of the time, so much so that when he later made headlines for his involvement in high-stakes litigation, news outlets struggled to source an up-to-date photograph of him.
One of his ideas was to create a “wadding” experience for guests.
That was pretty remarkable for someone who counted U2’s Bono and Oscar-nominated film director Jim Sheridan among his circle of friends.
During his time at Maybourne, McKillen focused on expanding the group and enhancing the high-end luxury experience for its guests.
“We’re trying to reinvent hospitality,” he told Elkann.
One of his ideas was to create a “wadding” experience for guests.
This included a dedicated arrival channel at Heathrow Airport and a chauffeur service to take guests from their hotel to their room.
He didn’t like the idea of the traditional “check-in”. Instead, he felt that guests should be able to walk in and out directly and not have to check their bill in front of other guests.
McKillen also thought it would be “scandalous” for hotels to have a dress code for guests. “Who am I to be the arbiter of their liking?” he said.
Although frozen out of Maybourne, he has other hotel interests, notably the Shinmonzen boutique hotel in Kyoto designed by renowned Japanese architect Tadao Ando and Villa La Coste in Provence.
The multi-award-winning French hotel is set on a 600-hectare estate that includes a biodynamic vineyard and a sculpture park.
While McKill would no doubt be better remembered for his business accomplishments, he is now as involved with high-end processes as he is with high-end hotels.
The Barclays only gave up their offer after 11 court cases in the UK.
Earlier in 2011, McKillen won a landmark Supreme Court case preventing €2.1 billion in executive loans to companies with which he was associated from being transferred to Nama.
It seems that the dispute with the Qataris could become the toughest legal battle yet.
They have yet to respond to the US and France lawsuits but are expected to take action against the claims.
McKillen, despite his wealth, will face off against the rulers of a Gulf state with seemingly limitless resources and far-reaching influence.
https://www.independent.ie/irish-news/courts/paddy-mckillen-v-qatar-property-mogul-could-face-his-toughest-battle-yet-in-dispute-with-billionaire-former-allies-42226166.html Paddy McKillen vs. Qatar: The real estate mogul could face his toughest battle yet with former billionaire allies