A top official at the Corporation of Hamilton was suspended on full pay yesterday after it was revealed that he is to appear in court in connection with the failed Par-la-Ville Hotel deal.

Charles Gosling, the Mayor of Hamilton, confirmed yesterday that Edward Benevides, the corporation secretary, had been served with a summons to appear in Magistrates’ Court on June 4 in relation to an escrow account which held funds for the project. Mr Gosling said: “It was decided in this afternoon’s meeting of the corporation’s council to follow best practice and that Mr Benevides would be placed on administrative leave.”

Mr Gosling added: “This matter is to do with the releasing of funds from an escrow account to be used in seeking a permanent major investor for the Par-la-Ville Hotel project almost four years ago.”

He said: “On assuming office three years ago, myself and the newly elected council members were made aware of the release of the escrow funds and the guarantee that the corporation was said to support.

“We have spent many hours correcting the actions of the prior council, including taking action to void the guarantee as this was outside that council’s legal remit. We are very familiar with the situation. If we had discovered any criminal action during this time frame, we would have acted on this prior to the summons being issued.”

Mr Gosling said the dispute over the funds continued with cases before courts in New York and Britain, and an appeal to the Privy Council due to be heard in October. The corporation, under an earlier administration, agreed in 2014 to guarantee a bridging loan of $18 million made by Mexico Infrastructure Financing to Par-la-Ville Hotel and Residences Ltd.

The money was supposed to be used to secure long-term financing for the development of a hotel on the grounds of the Par-la-Ville car park.

The funds were placed in a New York escrow account and withdrawn in October that year, with the majority of the money sent to Gibraltar-based Argyle Ltd.

PLVHR defaulted on the loan two months later and MIF took the corporation to court, as guarantor, in a bit to claw back its $18 million plus interest.

But the Supreme Court and Court of Appeal found that the corporation had acted beyond its powers when it offered the guarantee, so it was not valid.

MIF later launched legal action in the Supreme Court of New York.

The loan firm alleged that the money was withdrawn through “fraudulent and negligent misrepresentations”.

• On occasion The Royal Gazette may decide to not allow comments on what we consider to be a controversial or contentious story. As we are legally liable for any slanderous or defamatory comments made on our website, this move is for our protection as well as that of our readers.