Prime Minister Dean Barrow today condemned the actions of former Attorney General, Godfrey Smith of Marine Parade Chambers, for making what he describes as “anti-Belizean,” “anti-patriotic” and “completely reprehensible” statements to an Irish investor negotiating to purchase shares in Belize Telemedia Limited (BTL).
On September 9, Godfrey Smith wrote Richard Fraser, group head of mergers and acquisitions for Digicel saying, among other things about the government: “If indeed you are contemplating doing due diligence on acquiring an interest in BTL, we would be happy to share substantial and detailed information with you on Belize’s very disturbing attitude and track record as it relates to foreign investment and international business contracts,” wrote Smith to Digicel, in his capacity as attorney for the BTL Employees Trust, which held 22.39% in BTL at the time the Government took their shares in August 2009.
On Wednesday evening, September 29, the Government of Belize fired off a press release stating, “For a former parliamentarian and practicing attorney, born, bred and fed in Belize, to so deliberately and calculatingly undertake to undermine the economic interest of his country and people, is outrageously unpatriotic, if not treasonous.”
The release continued, in chiding Smith, to say: “The Government of Belize registers its strongest condemnation against the actions of a Belizean attorney and former parliamentarian deliberately intended to smear our country’s reputation abroad and discourage foreign investment in Belize.”
It would appear that you are trying to scare off Digicel, Amandala told Smith this morning. To this he responded that Digicel has access to a battery of professionals and lawyers. “They will not scare easily by some half-cocked… letter that has no basis; if it has basis they will consider it…”
Despite recent letters by Smith warning the Jamaica-based Digicel group against putting up their money to invest in shares in Belize Telemedia Limited (BTL), a Digicel team is back in the country this week, according to information from Prime Minister Barrow.
Ironically, on September 23, 2010, Dean Boyce, trustee of the BTL Employee’s Trust, wrote Barrow offering to purchase 51% interest in BTL—a proposal that Barrow said he would not even entertain.
“It is now clear that an opportunity exists for the trust to secure, on behalf of the BTL employees, a majority stake in BTL. Such an investment will ensure that BTL remains in Belizean hands, and that the company will be fully supported by BTL staff,” Boyce tells Barrow.
Smith told Fraser: “We are writing to you to put you on notice of prior claims to such shares by the former shareholders of BTL, including our clients Dean Boyce and the trustees of the BTL Employees Trust (the claimants).”
“The letter which has angered government is absolutely factual,” Smith told Amandala.
Smith noted in his letter to Digicel that they are challenging the constitutionality of the acquisition of BTL shares. The Supreme Court had ruled in the government’s favor, but the trust has appealed to the Court of Appeal and is awaiting proceedings there.
“In the event that any shares in BTL were to be transferred prior to the final determination of our clients’ right of appeal, such transfer would be liable to be set aside in the event that the appeal court finds that the acquisition was unlawful and invalid. In such circumstances, the government would have no title to the shares which could be validly transferred,” Smith’s letter continued.
He also said, “There are at least two international arbitrations underway under Belize’s Bilateral Investment Treaty with the UK concerning the BTL nationalization, as well as an array of lawsuits locally in Belize. These lawsuits and arbitrations, like flashing, neon caveat emptors, will not conclude any time soon and are likely to affect entities that may purchase shares in the nationalized BTL.”
Fraser responded to Smith on September 13 saying he was not in the position to comment on the matters raised by the Smith law firm.
The Government’s press release calls on Smith to “desist from any further actions of the sort, which are clearly motivated and sponsored by some interest other than the national interest.”
The GOB release notes that Smith ironically cites various examples of breaches of contracts, “including agreements entered into and later reneged on or unilaterally cancelled by the last PUP administration in which he himself served as a minister of government and Attorney General.”
Smith said that he is not in the habit of responding to personal attacks by the government, but would respond by saying that he indeed wrote the letter not in a political but in a professional capacity, as a lawyer representing Boyce and the trust.
He said that nobody can accuse him of political bias because some of the breaches occurred under a government of which he was a part, so he knows what he is talking about.
Smith alleges that the Barrow administration has no intention of paying the compensation estimated at tens of millions of dollars. It was in that context, said Smith, that he wrote to the intended buyer pointing out certain things, which he asserts to be facts.
Smith told Digicel that successively the government has displayed an alarming disregard for the sanctity of contracts involving foreign investors, citing tourism contracts, the Belize Water Services privatization, the legal dispute between Belize Telemedia Limited and the Public Utilities Commission, the Newco airport concession, and the alleged refusal of the Barrow administration to honor arbitral awards, as well as amendments to the Supreme Court of Judicature Act, which the Ashcroft group and affiliates are now challenging in the Supreme Court.
“There are at least two international arbitrations underway under Belize’s bilateral investment treaty with the UK concerning the BTL nationalization, as well as an array of lawsuits here in Belize,” said Smith.
According to Barrow, however, the government is challenging the validity of the arbitration proceedings on the basis that the treaty had never been domesticated into Belize law.
Compensation to former shareholders is a huge issue. “The Prime Minister has no intention of paying. He said he will not pay arbitration awards [$90 million] and I believe he has no intention of paying this,” said Smith. Barrow says that Smith’s claim is untrue.
The Government and the former shareholders of BTL have not been able to settle on what compensation should be paid to the company, though, according to Prime Minister Barrow, they have submitted a claim at foreign arbitration for US$300 million.
Barrow said that foreign experts are auditing an internal assessment of BTL, and once the experts make a recommendation, they will present a compensation offer to former shareholders.
Barrow told us that he would like to see Government retain 40 to 45% shareholding in BTL after offering shares for sale to the Belize public, in view of an agreement with Digicel.
He also told Amandala that he will move to return the level of business tax on telecommunications from 25% to 19%—a move that will also benefit BTL’s rival SpeedNet, and it would lower the rate of taxes on dividends, which should benefit private enterprises in general.
Barrow said that the government will investigate to do its best to ensure that the Ashcroft group does not use another company to re-acquire shares in BTL; however, if somebody fronts for Mr. Ashcroft under his or her own name, there is very little that can be done to prevent that, except in cases where interested buyers are known allies of the former shareholders. The risk of having someone front for Mr. Ashcroft, Barrow concedes, is very real; however, he said, that would mean that they would never be able to transfer those shares to him [Ashcroft].
Speaking on “The Adele Ramos Show” on Tuesday, September 8, People’s United Party area representative for the Albert division and deputy leader of the party, Mark Espat, said that while he fully supports returning the company to Belizean ownership, there are some issues that the Government should clarify to improve the success of the re-privatization.
“Government also needs to come clean in terms of where we are in negotiations with the former owners of BTL,” said Espat, adding that Belizeans need to know cost of acquisition and how this would factor into future budgets of the government.
“It will add a lot of credibility to the process,” said Espat. If government doesn’t reveal those facts, they might have a problem offloading the shares, he added.
Barrow told us that the issue of compensation won’t be settled in a hurry, but he believes that based on the preliminary assessment, the monies that government would earn from the sale of shares should not differ much from the compensation that would be paid out to shareholders.
He told us also that the shares would be sold at below market value, though he did not indicate a price, which he said has yet to be finally agreed upon after discussions with his Financial Secretary and government’s economic advisers.
“We will happily call off the fight if we are compensated properly,” said Smith.