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GOB sugar daddy – $17 million discount for Godfrey?

GeneralGOB sugar daddy - $17 million discount for Godfrey?

Government Senator, Hon. Dickie Bradley, told the Senate on Tuesday that the balance on the Godfrey loans is $4.8 million, down from the original figure quoted at $40 million. How did GOB arrive at this new figure? According to a letter signed by Gian Ghandi, Government?s legal advisor in the Ministry of Finance, $16 million has been paid on the loans to date, leaving a principal balance of $24 million as at the end of December 2005. Subtract from that $19.2 million ?for properties sold to BTL,? and this leaves $4.8 million, Ghandi claims.


We probed behind these numbers and found out that it?s not that simple. BTL has paid just under $1 million to date, as Government has given the company 7 years to complete payment at a generous interest rate of 6%. Secondly, it is the Government that has been paying the loans of the Godfrey group of companies since November 2004.


We were informed that the principal balances for the Godfrey loans were reported as follows: Intelco: $5,436,712.68; WCP: $6,806,378.51; Data Pro: $9,191,187.44; and Santa Cruz: $2,889,129.55. Total: $24,323,408.18.


SSB?s finance director, Rolando Zetina, forwarded these numbers to the Ministry of Finance.


However, the chairman of the Senate Special Select Committee, Senator Godwin Hulse, told us today that the auditor?s report is what stands. That report, prepared by Mark Hulse, CPA, said that, as at September 2004, when the Senate investigation began, the balance was $41 million, and as far as the Committee is aware, the Godfrey group has made no payment since then, Senator Hulse asserted.


Hulse claims that even with the sale of the Godfrey assets to BTL, it would mean that the balance due to the public purse is $21.8 million, and not $4.8 million as Government has claimed?a difference of $17 million.


?The Committee?s view is that [the Godfrey companies] still owe the money,? Senator Hulse insisted, adding that Government needs to give the public a proper accounting.


In 2004, SSB had reported having paid a total of $7.8 million to meet the Godfrey default, but it claimed that Godfrey had repaid SSB $6 million, leaving $1.8 million due to the SSB. Government has given the SSB the public property which houses the administration building in Corozal to settle the outstanding $1.8 million, so the Godfrey group now owes that $1.8 million to GOB.


Additionally, we have learned that since November 2004, it is Central Government that has been paying for two of four loans, with total quarterly payments of $801,000 or a total of $5.6 million, for having met 7 quarterly payments. Government is bound to pay $3.2 million a year until 2012.


Additionally, Government has paid off the other two Godfrey loans – $17.8 million for Data Pro and $5 million for the Santa Cruz Export Processing Zone, both under the Royal Merchant Bank of Trinidad and Tobago with money borrowed from the same bank.


Our information is that in October 2004 Government got a US$76 million bond which included US$64 million to close off the securitization deal, and $12 million for budgetary support. This US$64 million paid off all loans due to RMB under the securitization program, including those for the Godfrey companies. The new transaction carries a cost, with interest payments of nearly 10% annually.


It has been revealed from the Senate hearings that just over $41 million has been paid into bank accounts for Godfrey-related companies as proceeds from the securitization program, and so the Committee contends that all those funds, and the proper interest payments, have to be recouped, if not from the respective Godfrey-related companies, from the then directors of the SSB, who, the Committee thinks, acted outside its statutory authority by not acting in line with the decision and advice of the SSB investment committee.


What was the motive for getting involved with these problematic transactions in the first place? This question may best be answered by looking at the broader scheme of things?the link of the SSB scandal with the telecommunications fiasco.


The $19.2 payment pledged by BTL for the Godfrey-related assets is a part of the share repurchase deal, said Senator Hulse.


At the January, 2005 hearing of the Senate Committee, SSB?s chief executive officer, Mrs. Narda Garcia, said that BTL had committed to pay $20 million in monthly installments towards the Godfrey-related debts.


British billionaire Michael Ashcroft cited the Prime Minister himself as the one who was attempting to broker the deal for the sale of LGS, Intelco?s predecessor, to him around 2000/2001. The attempt led to a stormy court battle, and eventually Government?s buy-back of BTL from Ashcroft, who got a US$5 million premium. GOB paid with expensive loan funds at a cost to taxpayers.


In the mix, Government also sold off SSB?s golden egg?SSB?s high-paying shares in BTL?to Jeffrey Prosser, who then used the shares as collateral for a loan with the Royal Merchant Bank of Trinidad and Tobago, in a deal that involved BTL?s purchase of Intelco?s assets.


In its final report, the Senate Committee simply calls this divestment of BTL shares ?unfortunate,? since in its ruling, the returns from the investment were ?adequate.?


Government aborted SSB?s golden investment in BTL despite objections from workers, claiming that BTL was no longer a promising investment. Shortly afterwards, it resold majority BTL shares to Ashcroft, with substantial perks, including the write-off of $12 to $17 million in taxes, and the US$5 million premium.


At the same time, shareholders also lost in this deal, as Prosser?s Innovative Communication Corporation reportedly used $21 million of BTL funds to pay for Intelco-related acquisitions and transactions, leaving minority shareholders with record low dividends of 2.5 cents per share in 2005, compared with 29 cents the previous year.

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