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Can Beverly Hills force Sultan of Brunei to sell his hotel chain?

jay leno sultan protest 600 reuters.jpg

TV personality Jay Leno (C) attends a rally protesting against Brunei's new strict sharia law penal code outside the Beverly Hills Hotel, which is owned by the Sultan of Brunei, in Beverly Hills, California May 5, 2014. The sultanate of Brunei becomes the first East Asian country to introduce Islamic criminal law, the latest example of a deepening religious conservatism that has also taken root in parts of neighbouring Malaysia and Indonesia. REUTERS/Jonathan Alcorn (UNITED STATES - Tags: CIVIL UNREST RELIGION ENTERTAINMENT) - RTR3NWAD

What started as a celebrity boycott of the famed Beverly Hills Hotel has now drawn the attention of the Beverly Hills City Council, which voted unanimously 5-0 on Tuesday to a resolution putting pressure on the government of oil-rich Brunei, whose ruling Sultan owns the hotel, to sever its financial ties.

The council stopped just short of imposing a city-sanctioned boycott. But just how far can the local council go as far as making the Sultan’s ownership of the hotel untenable?

“The Beverly Hills Hotel is located within the jurisdiction of Beverly Hills and is therefore subject to the laws passed by the Beverly Hills City Council.  However, the Council cannot force the Sultan owner to sale his interest in the hotel,” explained California attorney Leo Terrell of “The reason is simple: The Sultan implementation of Islamic law in Brunei does not jeopardize his legal rights to operate the Beverly Hills Hotel. Bad politics in Brunei may not sit well with Americans; however the Council cannot force him to sale. The council would lose in court.”

The political retaliation comes after the country’s leader, Sultan Hassanal Bolkiah, announced last week that he would continue with the implementation of an Islamic sharia criminal code that would eventually include beatings, the severing of limbs and death by stoning for homosexuality or adultery. The Sultan also owns the Dorchester Collection luxury hotel chain, which manages L.A-based properties The Beverly Hills Hotel and the Hotel Bel-Air.

“The City of Beverly Hills strongly condemns the government of Brunei as well as other governments which engage in similar policies for adopting laws that implement extreme and inhumane penalties,” the resolution stated. “The City of Beverly Hills urges the government of Brunei to divest itself of the Beverly Hills Hotel and any other properties it may own in Beverly Hills.”

But a source closely connected to the Beverly Hills Hotel acknowledged that the Sultan, who has an estimated net worth of $20 billion, has no plans to sell amid the pressure. And although the case has drawn comparisons in the media to the recent Donald Sterling case, in which the LA Clippers owner was banned by the NBA over leaked race remarks, Terrell argues that the difference between the Sultan and Sterling are twofold.

“Supporters of the Sultan will argue his right to follow his religion. Sterling cannot play the religion card. Second, Sterling's ownership is governed by contract,” he explained. “The NBA is legally entitled to remove him for conduct detrimental to the NBA. Sterling's racist comments toward blacks hurt the league's image.”

Christopher Cowdray, the CEO of the Dorchester Collection, spoke prior to the council meeting’s vote, pointing out the economic consequences of a resolution and the “unfair” targeting of the properties’ workers who stand to lose millions in tips.

“The actions that you take have to be seriously considered because they will affect the livelihoods of these people. I will protect their jobs no matter what, but I also ask for your consideration that we are an exemplary employer, exemplary contributor to society and to the finances of this city,” he told the crowd, which also included several dozens of emotional employees.

A non-unionized workplace, the Beverly Hills Hotel employs around 600 people, while the nearby Hotel Bel Air has an estimated staff of 400.  Cowdray also claims that the Beverly Hills Hotel pays around $7 million in bed taxes and $4 million in city taxes per year.

With prominent figures including Ellen DeGeneres, Jay Leno and Richard Branson calling for a public boycott, online petitions encouraging people not to visit the once beloved venue, and scores of major organizations pulling their events, the fallout is predicted to have already cost more than $1.5 million in revenue lost.

And some critics argue that the government officials have no place interfering with private boycotts and ownership.

“The government should stay out of private enterprise. If President Obama has an issue with Brunei’s domestic laws, he should call his ‘good friend the Sultan,’ as he referred to him in the White House last year,’” added a Dorchester Collection insider, who was not authorized to speak on the subject.

A spokesperson for the U.S. State Department told reporters this week that “our ambassador has relayed our concerns privately to the government of Brunei," over the newly approved Islamic sharia law, but the department does not take a position on the evolving boycott.

“Remember America does business with many countries that have a poor track record regarding human rights violations. The best example is Communist China. The Beverly Hills Council could pass a resolution prohibiting the city from participating or sponsoring any activities at the hotel. This would hurt the hotel financially,” Terrell continued. “But the Beverly Hills Hotel does not rely solely on American Companies. The Hotel has an international reputation and relies on tourism from all over the world. These individuals and companies may not be as concerned with the Sultan implementation of Islamic law.”

Despite the growing fallout, it was business-as-usual at the Beverly Hills Hotel on Wednesday. While the hotel’s famous Polo Lounge was without its usual slew of famous faces lunching in the California sunshine, most tables were occupied – seemingly in large part by foreign visitors – and staff members were smiling brightly.

“There has actually been a lot of support,” one worker said. “We can’t be held accountable for the terrible law in Brunei.”

Follow @holliesmckay on Twitter.





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