Oct. 25, 2002 - In July, 18 months after opening, the Four Seasons hotel in Caracas was shut down. 

Before the mudslinging, before the shouting, the Four Seasons hotel in Caracas was the toast of the town. 

It rose 21 stories high out of the upscale Altamira neighborhood, a marriage of luxury and modernity with an unmatched pedigree: Four Seasons' first South American hotel. Travel writers gushed, architecture mavens crowed, the developers rubbed their hands with glee. Then the trouble began. 

Today, the hotel's owner, Consorcio Barr, and manager, Four Seasons Hotels and Resorts, are waging a fierce legal battle that spans Caracas to Miami. 

Consorcio Barr, which is based in Caracas, has accused Four Seasons of financial mismanagement and freeloading, allegations that have been dragged through the media and five Venezuelan courts. In U.S. District Court in Miami, the hotel giant accused Consorcio Barr of hacking into the Four Seasons computer system. In July, 18 months after opening, the hotel was shut down. 

Says Carlos Barrera, CEO of Consorcio Barr: "This is a powerful corporation with a team of lawyers abusing the justice system and using it to intimidate and harass." 

Says Katie Taylor, Four Seasons' president of worldwide business operations: "Quite frankly, in the past four decades we have never had an experience such as the one we are dealing with in Caracas." 

Says Chase Burritt, a hospitality analyst with Ernst & Young: "In a down hotel economy, the whole owner-manager issue is a struggle. A mighty, mighty struggle." 

Carlos Barrera and his brother, Lautaro, had long dreamed of building a luxury hotel in the heart of Caracas, and Four Seasons, the Toronto-based hotel management chain, was eager to open its first South American property. Developer and hotelier clinched the deal in 1997. 

Four years later, in January 2001, the $120 million hotel, designed in part by the Miami firm Arquitectonica, opened its doors. 

Even as travel writers were penning their accolades -- "room highlights are heavenly" Condé Nast Traveler enthused -- tensions were afoot. 

Four Seasons felt rushed into opening; the hotel, they said, was incomplete. 

They agreed to a gradual, 'soft' opening after Consorcio Barr gave assurances that they would cover start-up and operation costs, promises that Four Seasons said were not kept. 

"In retrospect," said Taylor, "It is clear that Consorcio Barr's inability to meet these commitments stemmed from the simple fact that they did not have the financial resources necessary to do so." 

The Barreras' background is in general contracting. Their company, GYCSA, was involved in the construction of the Eurobuilding Hotel in Caracas and the city's subway system. Four Seasons in Caracas is their first hotel. They are not connected with the Four Seasons condo/hotel in Miami, which is scheduled to open next year. 

Barrera, for his part, said the Four Seasons ignored repeated requests, sent out between January and April 2001, to submit financial reports to his company. When the Barreras did receive reports, they were aghast. 

Between January and May 2001, Carlos Barrera said the staff freeloaded $180,000 in services; one staffer racked up $5,000 in expenses in one month, he said, and a pastry chef expensed $16,000 over four months, much of it at the hotel bar. 

"The cost of the food, the beverages and the cleaning chemicals were not acceptable by industry standards," Barrera said. "In some cases, the cost of an item of food was higher than the selling price." Four Seasons said their spending was in line with any luxury hotel's start-up costs, and that their accounting was transparent. But Consorcio Barr, they said, was snooping. 

On Nov. 6, 2001, Four Seasons filed a suit in U.S. District Court in Miami accusing Consorcio Barr of hacking into its servers and accessing proprietary information. 

Four Seasons was granted an injunction forbidding Consorcio Barr from attempting to access Four Seasons network. Consorcio Barr, while decrying the charges as false, said they were entitled to the information anyway. 

Later, their Miami lawyer, Eddie Palmer of Steel, Hector & Davis, unearthed evidence that the Four Season's supposed computer expert witness had fabricated his credentials. 

Back in Venezuela, the crisis grew. 

On Dec. 1, 2001, Four Seasons seized financial management of the hotel. Consorcio Barr had been diverting money away from the hotel to pay other expenses, they said, and food suppliers were not getting their money. 

"Our management agreement stipulates that if the owner of the hotel cannot provide the proper working capital, Four Seasons has the right to assume control of the hotel's revenue," Taylor said. 

The seizure was illegal, the Barreras said, and moreover Four Seasons failed to meet its promise of yielding a net profit of $4 million over the first year. 

They took Four Seasons to five courts in Venezuela, and obtained rulings saying Four Seasons had to relinquish financial control of the hotel. 

Four Seasons appealed, and in June of this year, stopped taking reservations. The litigation had disrupted their cash flow, Taylor said, making it impossible to buy the staples necessary for running the hotel. 

Weeks later, the hotel sat vacant. Some 300 employees, locked out and unpaid, staged protests widely covered in the Venezuelan media. 

According to hospitality industry watchers, money battles between hotel managers and owners are not uncommon, especially in depressed times. Squeezed by their lenders and facing a revenue drought, owners often accuse their managers of cost overruns. One of the majors, Marriott International, is fending of at least four lawsuits from owners charging it with mismanagement and racketeering. 

"Most of the times the operator is not taking advantage, they are only doing what is included in the contract," said Ernst & Young's Burritt. "The operator really doesn't have an agenda. They make money when the revenue is in." 

But Consorcio Barr's position is that Four Seasons is trying to "financially asphyxiate" them. The owners are also indebted $41 million on the $120 million property, which includes shops and condos, and their creditors are demanding payment on the now-empty hotel. 

'Certainly in a better economic environment, perhaps (the Four Seasons') poor administration would have been less visible," the company said in an e-mail to The Herald, '(But) the hotel problems are mainly due to the operators' poor administration." 

Barrera said he is committed to reopening the hotel with a new management team. Four Seasons, however, is digging in its heels. 

"Four Seasons has no desire to leave Caracas . . . we have expended millions of dollars to help ensure the long-term success," Taylor said. "We want to stay." In Venezuela, several decisions are pending, and in Miami both sides are in arbitration. Neither side plans to take the gloves off. 

"Everybody's had this trouble," Burritt said. "The only difference here is that it's a lot more public." 

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(c) 2002, The Miami Herald. Distributed by Knight Ridder/Tribune Business News. FS,