The case of Jeffrey Prosser and two Belizean trade unions against the Government of Belize continued in the Supreme Court on Tuesday, October 2, with submissions made by attorney for the claimants, Lois Young.
As we had reported last week, Prosser and the unions – the Public Service Union and the Belize National Teachers’ Union – had filed a constitutional claim in the court, challenging the Vesting Act of May 2007 which enabled the transfer of the business of the country’s dominant telecommunications provider – Belize Telecommunications Limited, to Belize Telemedia Limited, both abbreviated BTL.
After the transfer, Prosser’s banker, the Royal Merchant Bank of Trinidad and Tobago (RBTT), sold his BTL shares that had been pledged as collateral for a US$26 million loan.
However, attorney Young told the court on Tuesday that the Vesting Act dissolved Belize Telecommunications Limited and, in effect, wiped out RBTT’s collateral.
RBTT, on its own, decided that it would use the old BTL shares and substitute them for Telemedia shares, which it later sold to a Telemedia subsidiary, Telemedia Investments Limited.
“RBTT had a problem, and when Ashcroft offered the money, they grabbed it,” Young told our newspaper in explaining her submission. She contends, however, that even though RBTT claims, through an affidavit of Denise Courtenay, wife of BTL’s attorney Eamon Courtenay, that it had sold “the pledged shares”, RBTT never sold Prosser’s shares in Belize Telecommunications Limited. What they sold were Telemedia shares, she said.
She also argued in her submission that while the Act does dissolve the old BTL, it did not say that Telemedia shares shall replace BTL shares, and so RBTT had no authority to replace Prosser’s old BTL shares with Telemedia shares. What the Act did, she said, was to wipe out RBTT’s collateral for Prosser’s loan by dissolving the old BTL.
She pointed to a move by Public Utilities Minister Ralph Fonseca last year, when he made legislative changes declaring that the Special Share that his government had sold to Prosser for a dollar, had given him “entrenched rights.” RBTT responded with the threat of court action, claiming that the Special Share was very valuable. The protest letter that RBTT had sent to the Government was exhibited to an affidavit filed for BTL by director, Ediberto Tesucum.
There is a long history of litigation surrounding the ownership of BTL, and Young highlighted three major cases involving the same parties.
The first was Court of Appeal decision (#6 of 2005), in which the court overturned Chief Justice Abdulai Conteh’s interpretation of the old BTL’s Articles of Association and found that once a holder of the Special Share appoints its two directors, only the holder – in this case Prosser’s Belize Telecom – could remove them. She contended that at the time Prosser was legally entitled to have four directors on BTL’s board.
The second case referenced was Supreme Court claim #338 of 2005, in which Chief Justice Conteh overturned a Statutory Instrument made by Minister Ralph Fonseca in which he declared the “entrenched rights” Prosser held due to the Special Share, to be unlawful. The court struck down the S. I. The Minister had also written new Articles and Memorandum of Association for BTL.
The third case was Supreme Court claim #167 of 2007, in which Prosser successfully applied to enforce declarations the court had made in #338 of 2005, following its decision given September 19, 2006.
BTL purports that 4 days before Dr. Conteh’s decision, its majority directors – Prosser’s directors excluded – made a business transfer agreement under which they mapped out how Belize Telecommunications would become Belize Telemedia.
Attorney Young said that to date, that business transfer agreement has not been disclosed to the court.
We note that when legislators passed the Vesting Act at the end of May, the majority of them did so without even seeing the agreement, even though the Act makes specific reference to the agreement and is grounded in it.
Minister Fonseca had filed an affidavit for the ongoing case of Prosser and the unions versus GOB and Telemedia in which he says that Government passed the Vesting Act in the interest of national security.
However, PSU president, Jackie Willoughby, has refuted his claim in one of her affidavits for the case.
Our records indicate that at the time the Vesting Act was being considered, Fonseca had told the House of Representatives, in the debate of May 25, 2007, that “…our objective is to make sure we have a stabilized industry, maintain competition, be internationally competitive, keep the rates down, and keep the quality of service as high as possible.”
He also commented, referring to the two larger shareholders – Jeff Prosser and Michael Ashcroft, that, “…we have two elephants that are fighting, and we know when the elephants fight or make love, it is the grass below them that gets trampled.”
(See also previous story, Prosser, PSU and BNTU fight Telemedia and GOB! published in the Wednesday, September 26, 2007, edition of Amandala.)