Relations between Prime Minister Dean Barrow and one of the most influential businessmen in Belize, financier Michael Ashcroft, have been rocky since the change of administration. There’ve been fights over a string of sweetheart deals Ashcroft had with the former administration of Said Musa – deals which Barrow’s administration has challenged both publicly and inside the courts, and which have the two at loggerheads today.
In what appears to be a strategic move, Ashcroft appeared this morning on Channel 5, a subsidiary of Belize Telemedia Limited, which he controls, but in which he claims he has no economic interest.
“I supported Mr. Barrow very heavily at the last election,” said Ashcroft, stating that he may have been the largest financial supporter of Mr. Barrow and the UDP in the February 2008 general elections. Ashcroft said that over 18 years or so, he regarded Mr. Barrow as a friend.
As to the ongoing dispute with the Barrow administration, Ashcroft said, “We’d prefer it off the table, but often these disputes take a long time.”
In response to public statements made by Prime Minister Barrow challenging Ashcroft to prove the charity behind the majority ownership in BTL, Ashcroft said that he has already offered to show Mr. Barrow the documents, but did not address Mr. Barrow’s appeal to put more Belizeans on the board of BTL and let them have a say in how the dividends of the company are shared.
Of note is that Ashcroft reaffirmed his claim that he is looking to sell Hayward Trust’s stake in BTL to a foreign investor – purportedly for US$150 million – this despite assertions in the very same show that the reason he agreed to Musa’s urgings to repurchase BTL, was the opportunity he saw to “re-Belizeanize” the company.
This claim does not explain two things: (1) why it was that Mr. Ashcroft began purchasing shares from smaller Belizean shareholders under the name of Mercury Communications right after selling to Jeff Prosser’s ICC, and (2) why he now claims to want to sell BTL to a foreign shareholder and not to Belizeans. No clarifications were offered in today’s televised interview.
He accused the government of engaging in a “systematic destruction” of the company, and hurting the investment of not just BTL, but also of the Belize Bank, by raising taxes on the bank when the global economic environment is signaling a recession, and where other governments are providing bail-outs to troubled banks to provide a stimulus for economic growth.
Ashcroft claims that while his bank has about 40% of the market share, it provides more than 60% of financing to the productive and tourism sectors, but with the latest moves by Government, he said, the bank would have to revisit interest rates and “look at drawing back lending to the productive sector.”
International investors have the world as their oyster, said Ashcroft, stating later that Belize has a history of both governments reneging on contracts – which, he said, is not encouraging to the investment climate.
In addition to Government’s dispute with his own group of companies, he also cited disputes with Belize Electricity Limited, lauding BEL’s majority shareholder – Fortis Inc. of Canada.
He repeated assertions made by Telemedia this week, in announcing the purchase by Hayward of US$5 million of Government of Belize super bonds, that the low rate at which the Belize bonds are being traded reflects “lack of confidence” in the Belizean economy.
To support his stance, he said that Belize super bonds are trading with yield at 2029 of over 20 percent, while for Jamaica it is 12%, Barbados – 8%, and Mexico – 6%.
Today, following the airing of the interview on Channel 5, Government issued a press release restating its position, that investor confidence in Belize is strong.
“The Government of Belize Financial Advisor, Houlihan Lokey, have indicated that the depreciation in value of the 2029 step-up interest bonds…over the past 12 months is simply a reflection of the generalized collapse in the demand for emerging market assets of this class that took place at the end of the summer…”
In a letter to the Social Security Board (SSB) offering some GOB bonds to the board, Carl Ross, managing director-investments of Oppenheimer & Co. (Atlanta International Branch), said that it could sell the SSB between US$1 million and US$10 million worth of bonds at 50 cents on the dollar.
Ross said, “The bond is offered at such a large discount to par value due to the turmoil in the global markets – not necessarily related to any events in Belize. I think Belize is in decent shape to weather the storm, since it does not need access to the capital markets…”
Clearly, Mr. Ashcroft is advancing a very different view of Belize’s financial position, and he even spoke of Belize being pulled “out of this recession.”
Of interest is that Ashcroft’s companies continue to be among the most profitable in Belize, and Government reports the recent repatriation (to Great Britain) of $60 million from the Ashcroft group of companies.
While Mr. Ashcroft took the stance today that his fortune would largely be left for charities in Belize – which he claims to have loved since boyhood – he said that any proceeds from the possible sale of BTL would first have to go back to pay off debts for the repurchase of BTL, and dividends.
Of note is that BTL is on the hook for a debt of US$22.5 million to the Belize Bank’s Turks and Caicos branch, run by Ashcroft’s son, Andrew. He said on this morning’s show on Channel 5 that the bank is even more profitable than his bank in Belize.
A final point of interest from this morning’s interview is Ashcroft’s reassertion that even though the Barrow administration has recouped the US$10 million from the Venezuelan grant which the Musa administration used to settle the debt of Universal Health Services, the dispute over that debt is still locked overseas in arbitration, and if he gets a judgment in his favor, the tally would be not US$10 million but US$16 to US$18 million, including interest and lawyer’s fees.