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Ralph Fonseca vs Lanny Davis looks like ?advantage Prosser?!

GeneralRalph Fonseca vs Lanny Davis looks like ?advantage Prosser?!

Additionally, Prosser is seeking US$200 million via international arbitration from the Government of Belize on the grounds that the Government of Belize defrauded him in the sale of BTL shares last March.


It is the Hon. Ralph Fonseca, Minister of Public Utilities and Home Affairs, the same man who sold Prosser the shares, including the Special Share, who would be charged with taking back the Special Share from him. It will not be without a fight.


Prosser threatens to retaliate


Jeffrey Prosser?s high-powered attorney, Lanny Davis, threatens a list of 12 retaliatory actions against Belize, following a move by the Government to take back the Special Share in BTL, which it had sold to Prosser in March 2004.


?Only a dictator can announce that you?re seizing private property,? said Davis.


According to him, Prosser?s company, Innovative Communication Corporation (ICC) had pledged the Special Share (also called the ?Golden Share?) as collateral for the US$25 million loan that ICC has taken on for Intelco with the Royal Bank of Trinidad and Tobago (RBTT).


Decrying GOB?s move to take back the Special Share by passing new legislation, UDP Opposition Leader, Hon. Dean Barrow, warned that the Government is stirring up a hornet?s nest that could come back to haunt Belizeans.


ICC is threatening to petition the United States Treasury to freeze Belize?s assets in the US and to lobby international agencies such as the World Bank, the Overseas Private Investment Corporation, the Export-Import Bank of the United States and the Inter-American Development Bank to reject Belize?s requests for money. ICC also threatens to petition the US Department of Commerce to issue an investment advisory, discouraging US investors from bringing their money to Belize.


It?s the last thing that a financially embattled Belize administration needs. Davis further says, however, that ICC would seek the suspension of visa privileges from the US Department of State for any minister of Government who is involved in ?the illegal expropriation of private property??


GOB fails to get back Special Share


Chief Justice Abdulai Conteh had declared on July 7, 2005, that the sale of the Special Share, while lamentable, was perfectly legal.


In a prior court session in April, the CJ had remarked that it was a mystery to him how ICC came to be the holder of the Special Share?which is clearly intended to be a Government share with special rights and privileges?but added that it is ?not beyond the means and ingenuity? of GOB to regain the Special Share from Prosser.


In the July session, the CJ pointed out that under the articles, the holder of the Special Share could ask BTL to redeem the share. However, ICC has refused to surrender it.


Last month, the Financial Secretary of Belize, Dr. Carla Barnett, wrote to ICC to request that ICC return the Special Share to the Government.


Davis said that ICC will not return the Special Share because it had paid for it. He said that Government?s claim that ICC did not pay for the Special Share is ?bogus.?


According to the Government, with ICC as the holder of the Special Share, it controls half the seats on the board. The significance of this is that for the Government of Belize to complete the intended sale of shares to Lord Ashcroft?s ECOM Limited and his Belize Bank, the impasse at the board level between Prosser and a GOB-Ashcroft alliance has to be broken.


Prime Minister, Hon. Said Musa, told Amandala on Wednesday evening, when we questioned him about what was holding up the sale, that ??we have to work through all the possible stumbling blocks. Anybody who is putting up money obviously wants to ensure that he is not walking into an ants? nest.?


According to Davis, BTL is not allowed to reregister shares without the approval of a majority of the board of directors.


GOB claims that the board is at a gridlock, but deposing two of Prosser?s directors appointed through the authority of the Special Share would place the GOB-Ashcroft alliance in control?control that insiders say would be passed over to Ashcroft?s companies, should GOB?s intended sale of shares to ECOM reach conclusion.


It?s a long drawn out battle and the Government?s general in this fight, Ralph Fonseca, has returned to the frontline after Mr. Musa?s strategic Cabinet reshuffling in mid-July.


The amendments passed in the House on Wednesday would give Fonseca the power to revoke the rights that ICC now has under the Special Share, as well as set up an inspector to investigate BTL. They would also broaden the circumstances under which the Government could take over a utility company.


Davis interprets the amendments as Government?s attempt to have its way with BTL after it lost in court.


Davis said that while the judge of the Miami court has not presented her final ruling, her preliminary injunction restored control of BTL to ICC.


They lost in the Belize Supreme Court on who owns the Special Share, but said they will ignore the court and pass a law to overturn it, opined Lanny Davis.


?A Government is not allowed to seize private property without going to court ? the difference between a dictatorship and a democracy is exactly that,? he asserted.


Fonseca goes to the House for amendments


In the House of Representatives on Wednesday morning, August 3, Fonseca laid two legislative amendments before the House: one for the Belize Telecommunications Act and the other for the Public Utilities Act. The bills?the main reason for Government to hold the Special House Sitting?were passed through all their stages in a single session.


The BTA amendment covers two main areas: (1) it gives Fonseca the power to effectively revoke ?entrenched rights? that are against public policy and public security, and (2) it gives Fonseca, himself, the power to appoint an inspector to investigate the affairs of a public utility provider and set the terms of such appointment. The PUC amendment allows the Minister, in this case Fonseca, to issue an order in the Government Gazette authorizing Government to take control of a utility company after its license is revoked or it loses control of operations.


?The legislation provides for the Government to, as it were, by force, to just on the say of the Minister decide that the rights attached to that Special Share, by law, shall become unlawful. That has to be completely unconstitutional; to involve the House in that kind of a charade is deserving, in my mind, of the greatest censure,? said Barrow. ?It is the legislation [that is the problem]. If there is some way to properly get back the Special Share from Mr. Prosser, all of us would say, hallelujah. But you can?t go by way of legislation that will be seen by the entirety of the outside world as amounting to a violation of contractual rights and a violation of the rule of law??


Fonseca, not PUC, gets more power


We raised the question, if it is the Public Utilities Commission (PUC) that is charged with regulating the sector, why would these powers be given to the Minister?


?What we said was that, basically, as far as we are concerned, it was not proper for a Public Utilities Commission to be making these kinds of determinations and making these kinds of declarations,? said Dr. Gilbert Canton, chairman of the Public Utilities Commission (PUC). ?We didn?t feel like it was something we should be doing, and I feel that that was taken on board and I understand, as you?ve said there, it now shows that the Minister has taken on that responsibility himself, but again, it is placed under the Public Utilities Commission Act and there is some confusion out there that it is the Public Utilities Commission that will be doing this??


Dr. Canton said that if Fonseca cancels the Special Share, it would mean that it no longer exists, or that some or all the rights that go along with the Special Share?such as allowing the holder to hold two seats on the board?would no longer exist.


?If the Minister were to go in and declare the entrenched rights [the Special Share] to be unlawful and of no effect, then ? it cannot be utilized,? Canton said.


Fonseca says motive is to bring BTL back in order


After the House Sitting, we interviewed Hon. Ralph Fonseca about the two amendments. We asked him about the purpose of the legislation and he said that it allows the government to take over telecommunications without having to put the entire nation into a state of emergency.


When we asked him about the timing of the legislation, he responded: ?Obviously, as I?ve explained, we?ve had problems in the past and we?ve got to make sure that we are prepared for anything in the future.?


We asked: Do you see a scenario that exists right now where the Government might need to take control of BTL?


To this he replied: ?I don?t see anything right now, no.?


We also asked him to respond to allegations that the amendments were made to facilitate the return of Ashcroft to control BTL and his response was that, ?The amendments were strictly an attempt to put BTL back in order, because it?s out of order now and you can?t regulate something that?s out of order.?


(We note that when GOB began negotiations with Ashcroft to buy out Carlisle?s majority interest in late 2003, GOB had, at that time, said that the intention was to end the craze of litigation in which BTL was tied up, as well as the continual boardroom quarrels with the Carlisle group.)


As to the next step, Mr. Fonseca said that he would carry out ?broad based consultations? before deciding ?what order BTL should be in.?


Lanny Davis remarked when we spoke with him today that, ?I understand that Fonseca has worked closely with the Carlisle group on this legislation and we ask Mr. Fonseca to deny that he has talked with anyone from the Carlisle group or that the Carlisle group had anything to do with this legislation?? He put out the same challenge to the Prime Minister and suggested a full-scale investigation to determine the role played by the Carlisle group in the drafting of the BTL and PUC amendments.


How Prosser got the Special Share


On March 22, 2004, Fonseca, then the Minister of Finance and Home Affairs, signed a contract with Prosser selling him 84% of BTL, including the Special Share.


For the first time, the Special Share (also called the ?Golden Share?) left the possession of the Government of Belize. One of the privileges that come along with holding the Special Share is being able to appoint two of eight directors on BTL?s board.


While much of the talk has been about the Special Share and reports that Government would cancel the Special Share to unseat two of Prosser?s directors, there is a bigger issue involved that has to do with the Intelco debacle?what will become of its debt and assets, and who will pay for cleaning up the mess.


GOB and Intelco still tied up


To date, the PUC has not revoked Intelco?s license, and the Government of Belize is Intelco?s only significant subscriber. Currently, BTL is managing Intelco under a contract, according to Dr. Canton.


If the PUC revokes Intelco?s license, then the Government would, assuming the amendments become law, move in to take control of the company.


?There will come a time if it is actually amalgamated into BTL, where there is no need for the existence of two licenses, because it?s one operation, then that license would be revoked at that point in time,? Canton further stated.


Who pays?


The bottom line, as always, is how these maneuverings affect Belizean ratepayers and taxpayers.


Responding to questions by Channel 7 on a guaranteed rate of return for Ashcroft?s companies who are buying the BTL shares from GOB, PM Musa conceded that Ashcroft has been lobbying for a guaranteed rate of return?which Fonseca had given Prosser via contract?but, ?Once there is a rate of return, either it will affect rates or the assistance from government.?


That ?assistance? simply means GOB will have to pay. Canton told us that as the laws are written currently, the guaranteed rate of return could not be factored into phone rates and GOB, hence taxpayers, would have to pay it directly. The laws would have to be amended for the PUC to factor in the rate of return into phone rates, he further explained.


?We have always said and maintained that a guaranteed rate of return is not, we don?t see how it fits into the competitive environment that we?re trying to promote,? Canton commented. ?You can?t have one entity being given a guaranteed rate of return and the other one competing in that environment, and we?ve made this position very clear to the Government.?


The Prime Minister also declared that GOB is also negotiating with BTL for it to assume close to US$20 million in Intelco debt?a bill that would, at the end of the day, be footed by ratepayers.

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