I just read Lynn Young’s response to the Amandala editorial of 22nd February 2012. It is very vexing. Here are some observations and thoughts that we should consider:
Lynn’s historic comparison between Amandala and BEL makes no sense. BEL was a protected state-owned monopoly that was privatized supposedly in the interest of the people to bring cheaper, reliable power; Kremandala is a privately formed and held entity in a highly competitive, tax paying industry. Kremandala delivered on its social compact to inform and educate; BEL failed to deliver the promised cheaper power.
* BEL is a protected monopoly utility with no competition; Kremandala competes with over five other newspapers, numerous radio and TV stations.
* While fuel prices went up over the years, so did newsprint prices (perhaps the Editor can indicate by how much and how it compares to fuel prices).
* BEL sources a significant portion of its energy supply from another affiliate, Becol, in a less than transparent or arms length arrangement. Becol also enjoys legislative protection and significant fiscal incentives. Amandala enjoys no such privileges and must pay taxes.
* BEL refused to subject its books and business relationships to Fortis and Becol to the scrutiny of the PUC as it relates to rate reviews.
* In its latter days under Lynn, BEL was being subsidized to the tune of millions of dollars by taxpayers through advance payments and a standby LC for CFE.
* BEL was sold to Fortis with all its monopoly protection at a relative loss to the people of Belize in the promise of cheaper and more reliable electricity. Those who negotiated this lopsided deal on behalf of Belize were corrupt, but Fortis had no problem with government corruption when it favored their interest.
* Fortis failed to deliver on its social compact as cheaper prices never materialized, while BEL enjoyed record levels of profits over the years.
* A good corporate citizen charges fair prices to its customers and pays taxes: Fortis and BEL gouged Belizeans and paid little or no taxes.
* As soon as it was required to pay its fair share of taxes (which was still at a rate lower than personal income tax paid by working Belizeans), BEL went into self-induced financial decline and demanded unconditional government financial support.
* Through the SSB, the people of Belize also invested heavily in BEL, to the tune of 26% equity, but received very little returns on their investment as Fortis refused to declare dividends while it continued to outsource services to affiliates at exorbitant fees and prices above market rates.
* Fortis has a tradition of predatory behavior in the Caribbean. They also own a utility in TCI where they employ the same tactics.
* Under Lynn’s management, BEL charged consumers heavily for the extension of power lines. Many Belizean businesses and ordinary consumers were forced to shoulder BEL’s capital costs (with no recovery) to get connected to the grid; $1,000 per light pole and thousands more for transformers.
Lynn is right on one thing; state or private ownership is not the determining factor of financial success for a monopoly utility: it is management. One can argue that if there was one constant at BEL under either type of ownership structure, it was the management participation of Lynn Young. While he claims profitable performance under his management, it was achieved not so much through good management but through accommodative government tax policies and onerous pricing for connections (poles and transformers) charged to Belizeans. Little or no compensation was paid to consumers who lost equipment due to power surges, brownouts and blackouts. Cheap capital came from SSB (the people of Belize) with no return while Fortis fleeced through related party service contracts.
Lynn was also responsible for some disastrous and costly management decisions at BEL, such as the ultra expensive white elephant Mile 8 gas turbine. By the end of his tenure Belize was almost right back where it started when BEL was first privatized: a broke BEL relying on government subsidies and constant threats of rolling blackouts that would have been devastating to the economy of Belize. All this while Fortis was long gone with all the profits of yesteryears.
Without accepting any responsibility for this colossal disaster, Lynn was holding the country and the PUC to ransom. And, when he and Fortis could no longer have their own way he coldly delivered the coup de grace by decapitating the company and wiping out the bank accounts with a final round of exorbitant management bonuses and termination benefits leaving the Belizean people to hold the bag. In the real business world, most failed CEOs are booted out, but not so in the make-believe monopoly world of Fortis and BEL. Lynn is certainly not a friend of the government and that is fine, but I agree with Amandala: he is also no friend of Belize.
People in the know claim that instead of the boot the failed management team of BEL were rewarded with a tidy compensation package from Fortis that included college tuition for some of their kids up to the Master’s level at any Canadian university. Just how many Belizean who grew up on the Southside like Lynn will ever enjoy such privileges and good fortune?
Life in Belize is no basketball game. The Friends of Belize (FOB) have done more damage to the investment climate and, by extension, harm to Belize than the outcome of any basketball game or policy decision of the government (however good or bad). They have been globetrotting to promote a deliberate plan of economic sabotage masterminded by the Ashcroft Alliance. On numerous occasions the local counterparts, including Lynn, gather in the secret confines of Fort George to plot and scheme. They “bad mouth” Belize in all international fora; they do so with the IMF, the American Bar Association, the right wing elements of the United States Congress and the British government, and even with investment rating agencies.
When I saw the towering ”Creole” at the end of the head table at the FOB Washington forum, punctuating that cold pale line of ultra conservative rightwing piety, misrepresenting the history of BEL’s nationalization and lying about the Barrow administration’s “very close relationship” with the Chavez regime, I too had the same thought: Winning at all cost!!