Luxury eco-resort embroiled in “green-washing” dispute with “extortionist” NGO

Exclusive luxury resort Soneva Fushi is embroiled in an increasingly hostile dispute with Biosphere Expeditions, an international environmental conservation non-governmental organisation (NGO), over allegations of grant contract breaching and “green-washing”.

Soneva awarded Biosphere Expeditions a three year, US$79,000 Social & Environmental Responsibility Fund (SERF) grant to conduct coral reef research, give scholarships enabling research placements for Maldivian nationals, and provide educational materials to local school children, beginning in 2011.

Soneva maintains they have no legal obligation to continue the funding.

Biosphere Expeditions alleges Soneva was delinquent in making payments for the first two years of the contract and now refuses to pay the final grant installment, which has dramatically limited the scope of the project, the NGO’s founder and executive director Dr Matthias Hammer told Minivan News.

“Unfortunately, Soneva displayed a lack of co-operative spirit paired with a good dose of corporate arrogance and incompetence right from the start.

“Biosphere Expeditions tried to be sympathetic, realising that Soneva/Six Senses were in financial trouble and offering various deferred payment options,” Hammer said in a press release issued March 6, 2013.

“However, Soneva is now ‘flat out’ refusing to pay the remaining US$24,000 owed, claiming Maldivian laws don’t obligate them to pay, only that they make ‘optional donations’. This is nonsense. They are legally obligated to fulfill the contract we’ve signed.

“Soneva cannot argue the contract hasn’t been enforced, because they eventually paid the agreed upon amount for the two years,” Hammer told Minivan News.

Hammer further explained that Biosphere Expeditions was “perplexed” by Soneva’s behavior given the company’s eco-friendly claims. The NGO claimed to have filed a case with the Civil Court last week.

“We were initially happy to receive the SERF grant. They were the last sponsor we’d expect to behave like this given their reputation. Their actions don’t match up.

“They have tried every trick in the book: saying the payment has been made but is late, there are internal issues within the company, the Six Senses company is being split, and they don’t have the money,” Hammer said.

“Payments were always late and a drain on our resources.

“I have never come across anything like this in the last 15 years of my career in this field. Given Soneva’s green claims, I am astounded by this apparent case of green-washing and how Soneva is treating its partners in conservation,” the NGO stated in a press release.

Soneva hits back

Soneva’s founder, president, and chief executive officer (CEO) Sonu Shivdasani also spoke to Minivan News about the dispute.

“Our public relations manager Sophie Williams proposed funding the Biosphere Expeditions project, but ultimately this project had more public relations benefit than real substance in terms of community development,” he said.

“We do not have a charter together [for evaluating proposals], but we have the different environmentalists on staff, such as our marine biologist, our management team, and representatives from the host committee to discuss the project proposals.

“Soneva didn’t do exhaustive diligence, but our team had discussed the project and went ahead [with approving it],” Shivdasani stated.

He cited three primary reasons Soneva will not continue to fund the Biosphere Expeditions project: the company has limited funds to donate, the project did not meet Soneva’s standards, and the agreement with Biosphere Expeditions is not legally binding.

“In essence, Soneva/Six Senses donates .5 percent of total revenues for charitable projects, which comes to about US$300,000 from US$20 million annually,” said Shivdasani.

Shivdasani explained that given the recent sale of Six Senses and Soneva Gili, the amount of charitable donations dropped. Thus, the company had to review and reevaluate the charitable projects they were funding.

“In 2011, Eva sold Six Senses, because we wanted to focus on the one brand Soneva, with one owner, management company, and philosophy,” Shivdasani stated.

“[Downsizing] to one resort and the subsequent reduction in SERF allocations from US$300,000 down to US$120,000, meant we had to carefully review how to use this money to create maximum impact on the environment.

“Invariably we needed to cut US$180,000 from our annual donations. US$24,000 is quite insignificant in context. There are so many more worthy causes, we’d rather spend money on other things,” added Shivdasani.

Shivdasani also spoke about the timing of the first two grant installments.

“The Biosphere Expeditions program has been very piecemeal and due to the specific nature of payments, any delays should not have caused payment hardships with the world in deep recession in 2009 and 2010.

“This was the worst recession since World War Two. 2009 was a slow year. Revenues were down and cash flow was tight. I can’t see how Biosphere Expeditions was inconvenienced. We were careful about the timing of charitable payments,” explained Shivdasani.

Soneva also decided the Biosphere Expeditions project did not “pass muster”.

“Unfortunately, Biosphere Expeditions did not meet up with our strict standards and we felt there were more worthy initiatives to support,” Shivdasani said.

“The feedback from hosts (staff) trained on the [liveaboard] expedition was negative, they didn’t enjoy the experience. Furthermore, we felt the education campaign did not have much of an impact, while the scholarship program only benefited two Maldivians.”

Regarding Biosphere Expedition’s allegation that Soneva had breached the grant agreement contract, Soneva maintained they did not have a legally binding contract.

“Rather than a contract with the Biosphere Expeditions, we had a charitable ‘Letter of Grant’ dating back to 2010. This involved a schedule of donations from Soneva Gili, Six Senses Laamu and Soneva Fushi.

“We could stop grant donations by giving notice, which Soneva did in the form of a formal letter in October 2012.

“We consulted our lawyers in Malé and they confirmed that three months was an adequate period of time to give notice to Biosphere Expeditions,” said Shivdasani.

He maintained that Soneva had no legal obligation to continue funding Biosphere Expeditions and that no case has been filed against the resort.

“Hammer is lying; no legal case has been launched against us. Our lawyers have not been notified of any case being filed in Male’. We are within our rights to stop funding.

“As of today’s date, we cannot contest any court case because Biosphere Expeditions have not put any case before us. No lawyer would want to represent someone who sends out press releases before lodging a case with the courts.

“If it was a legal contract, then we would have honoured it, but it’s within our rights not to continue.

“Soneva happily funded US$50,000-60,000 [of Biosphere Expeditions’ project], now it’s time to stop,” Shivdasani stated.

Soneva prides itself for being “an innovator in the field of responsible tourism, taking environmental and social responsibilities very seriously”.

Soneva states that its ‘SLOW LIFE’ philosophy “applies to everything” they do, with SLOW standing for Sustainable-Local-Organic-Wellness Learning-Inspiring-Fun-Experiences.

Thus, the Soneva SLOW LIFE Trust handles the Social & Environmental Responsibility Fund (SERF), which was created to “provide funding for a wide variety of humanitarian and environmental projects”.

Hostile exchanges

Communications between Biosphere Expeditions and Soneva have become increasingly hostile since the partnership agreement began, with numerous emails exchanged between Hammer and Shivdasani.

Following repeated correspondence requesting the agreed upon grant installments be paid, “Sonu said I was on a ‘high horse’ and ‘chasing the money’, all of which was in really bad taste,” Hammer explained.

“Soneva’s condescending top-down communication is a problem that comes from the very top [levels of management] and percolates throughout the company systemically.

“They think are a big powerful corporation and we’re just a small NGO.

“We shouldn’t be treated like this. Having jumped through all the hoops [to receive the grant] we bloody well expect the other side to pay what’s agreed,” exclaimed Hammer.

Hammer said that Biosphere Expeditions was surprised a luxury resort was “quibbling” over US$24,000.

“This is peanuts for them and we are not prepared to be treated like serfs or go away. By a funny coincidence that is what their grant 
is called: ‘Social & Environmental Responsibility Fund (SERF)’. I am only now beginning to understand its true meaning,” said Hammer.

Ultimately, Biosphere Expeditions has taken the stance that Soneva is not only violating the terms of their grant contract, but also guilty of “green-washing”.

“I can only conclude that Sonu Shivdasani and Soneva’s priorities are to maximise profits. They surely do not appear to be serious about conservation and the environment.

“It seems the company’s claims of ethical behaviour and environmental awareness are, sadly, simply marketing-driven lip service,” read the press release from the NGO.

Shivdasani maintains he has been misquoted by Hammer.

“The press release from Dr Hammer involves various threats of a slanderous nature. It is a sham. Hammer is not pursuing a legal case. If he does, Soneva has a very strong case,” said Shivdasani.

“Hammer is an extortionist. Someone needs to look into his operation. Is Biosphere Expeditions really a non-profit?” Shivdasani questioned.

The project

Originally, both Biosphere Expeditions and Soneva were partnered with the Maldives Marine Research Centre (MRC) of the Ministry of Fisheries and Agriculture, Reef Check and the Marine Conservation Society “to study and safeguard the spectacular coral reefs and the resident whale shark population”.

The funding dispute between Shivdasani and Hammer has curtailed the project’s activities.

According to Hammer, scholarships for and hiring of Maldivians has been halted, educational leaflets will not be distributed, and research studies cannot continue, with coral reef studies being “slashed to one week”.

Earlier in 2012, the Soneva Group faced controversy when allegations that Shivdasani had engaged a PR firm to “spruce up” the image of President Dr Mohamed Waheed Hassan Manik’s government were published in UK media.


Six Senses bought by Pegasus Capital Advisors

Luxury resort company Six Senses has been acquired by US-based private equity fund manager, Pegasus Capital Advisors, for an undisclosed sum.

Six Senses manages 10 resorts and 28 spas in 20 countries around the world, including Oman, Vietnam and Thailand, with another 15 under construction or development. Its brands include Soneva, Six Senses and Evason.

In the Maldives the group has operated the upmarket Soneva Fushi and Soneva Gili properties, and a new resort in Laamu that opened last year. Under the terms of the deal the Soneva-branded properties will be carved from the Six Senses portfolio and will continue to be held by Six Senses founder Sonu Shivdasani, who will remain as CEO, chairman and principle shareholder of the Soneva Group.

Pegasus Capital specialises on investing in middle-market companies facing financial distress, and has tended to focus on consumer products, technology, business services, energy, financial services, industrial manufacturing and the communications sectors.

“Going forward, the new Six Senses will be a debt-free company with committed capital for expansion into new and within existing international markets,” said Craig Cogut of Pegasus Capital Advisors, in a statement. “We are confident that our president Bernhard Bohnenberger and our strong management team will continue to build on its legacy as a recognised leader in luxury hospitality.”

Shivdasani said: “For myself and Eva, my wife, this means we can devote all our energies to our first love – the development of the Sonevas. Soneva will continue to operate its philanthropic arm, The Slow Life Trust, and remain dedicated to achieving environmental goals and a corporate commitment to sustainability.”


Robbery targets offices of senior politicians and Six Senses group

Police are investigating a robbery that yesterday targeted a building containing offices belonging to Vice-President designate Waheed Deen, luxury resort operator Six Senses, and the Maldivian Democratic Party’s (MDP) Interim Chairperson Reeko Moosa Manik.

Police Spokesperson Sub-Inspector Hassan Haneef confirmed that police teams were currently investigating the thefts at the offices, which are all based in the Jazeera Building on Boduthakurufaanu Magu in Male’. However, Haneef was unable to confirm what had been taken during the raids or if anyone had been hurt as a result, adding that it was “too early” to establish whether there was a political motive to the crimes.

According to the local media, a large sum of money is reported to have been taken from the office of Bandos Island Resort, owned by Waheed Deen, whilst significant damage was said to have been caused to the properties targeted during the alleged break in.

Local media reported that a sum of around Rf 1 million was taken from the Bandos office, whilst two safes at the Six Senses office said to contain Rf 200,000 (US$13,000) and US$5000, were also emptied during the raid. Six Senses operates several of the country’s more upmarket properties, including Soneva Fushi.

News agencies said that no money was believed to have been taken from the offices of Reeko Moosa Manik’s Heavy Load company. However, electronic equipment including computers and fax machines were reportedly destroyed as well as official documents, including staff passports.

The intruders also reportedly left several messages for Moosa Manik including, “Moosa, you may have escaped this time but you will be killed,” and “We will vote for you next time if you put some cash next time”.