Features — 09 December 2017 — by E. Andrew Marshalleck, SC
The UHS obligation: when conventional truth is exposed to be false

The Buddhists have long since taught the Doctrine of Two Truths: conventional truth and ultimate truth. Albeit the doctrine has been the subject of some debate and confusion, the doctrine in essence acknowledges that truth can be perceived differently depending on depth of consciousness.

It is indeed often the case that a proposition becomes true simply because a majority of people believe it to be true. This form of truth is often indistinguishable from common perception. It is however also true that common perception may simply be wrong so that a “truth” founded on common perception can be exposed as false.

It was, for instance, common perception and a conventional truth for centuries that the earth was flat. It was not until about the sixth century BC that the notion that the earth might be spherical was introduced and it was not until the fourth century BC that that notion took root and became accepted as a new conventional truth. Accepting a change of conventional truth may be a bitter pill to swallow and the process of change can take many years.

Belizeans have been told for many years that the government guarantee of the UHS debt, and the Loan Note given in satisfaction of it, were illegal. Statements to this effect were repeated with such regularity and emphasis that they became common perception and conventional truths.

The notions that the transactions were illegal were indeed introduced by the Opposition of the time led by now Prime Minister Dean Barrow. He argued that the illegalities were so grave that then Prime Minister Musa, who approved and entered the transactions on behalf of the government, ought to be hanged at the foot of the Swing Bridge for having so grossly violated the trust of the people of Belize.  The majority of Belizeans were entirely convinced of the arguments.

The formal legal challenge to the UHS Loan Note was in fact led by the Association for Concerned Belizeans (ACB), a non-profit group formed for the purpose of taking on such legal challenges, and was supported by The Medical and Dental Officers Union of Belize, Godwin Hulse personally, and the National Trade Union Congress of Belize. Of course formal legal arguments had to be formulated for the court proceedings.

The arguments initially were that the guarantee was illegal because it was given without Cabinet approval in breach of various provisions of the Constitution and that the Loan Note needed approval of the National Assembly in accordance with provisions of the Finance and Audit (Reform) Act. The Cabinet approval argument was eventually abandoned and the case proceeded to trial on the argument in relation to the Loan Note alone.

The ACB, Godwin and the Unions were represented in court initially by Dean Barrow, SC and Lois Young Barrow, SC. After Dean Barrow, SC became Prime Minister, on the back of the general perception of corruption in government created in part by his characterization of the UHS transactions, Lois Young Barrow, SC carried the burden of the claim. I appeared together with Mr. Vincent Nelson. QC for the Belize Bank and Mr. Derek Courtenay, SC appeared for Universal Health Services Limited.

The case was born out of and fraught with political tension. It was my first experience with a politically volatile case and the tensions they carry. The tension in the court room could be cut with a knife. I can clearly recall Dean Barrow, SC at one point early in the case, putting his finger in Nelson’s face and admonishing him to be careful with what he was saying.

The Supreme Court of Belize found that indeed the Loan Note evidenced a loan and that given that the loan was in excess of $10 million, the Loan Note required approval of the National Assembly for it to have been lawfully entered into in accordance with provisions of section 7(2) of the Finance and Audit (Reform) Act.  The Bank had maintained that there was no loan – only an acknowledgement of an existing obligation under the guarantee (which pre-dated and so was not governed by the Finance and Audit (Reform) Act) and a promise to pay.

The trial judge found evidence of the loan in a number of obscure references in descriptions of the transactions by the Bank’s former manager, Philip Johnson. She ignored the terms of the Loan Note itself and held a position that reflected the common perception of the time. The Court of Appeal supported the trial judge and upheld her findings.

These decisions both supported and reinforced common perception of the UHS transaction as illegal and corrupt and elevated the view to conventional truth.

Things changed when the claim eventually reached the Privy Council. For one thing many years had then passed and the political tensions had in large part evaporated so that there was little or no public attention on the case at that stage. Secondly, the Privy Council was completely unaffected by the politics and the conventional truths.

The hearing did not last very long. The Court looked upon the terms of the Loan Note itself, acknowledged that the document spoke for itself and that what others thought or said about it was irrelevant, and found that the document in accordance with its terms did not provide for a loan, so that no House Approval was required in accordance with the Finance and Audit (Reform) Act. The Loan Note contained an acknowledgement of an existing debt and a promise to pay, was not affected by section 7(2) of the Finance and Audit (Reform) Act, and was not illegal. The decision of the Privy Council received little or no public attention in comparison to the allegations of illegality on which the original claim was founded.

The Prime Minister maintained that the government would not pay the UHS debt created by the Loan Note and the Bank, which had already initiated arbitration proceedings in London against the government, continued to prosecute its claim for the full amount owed. Eventually, after the arbitration claim was settled by the Musa government and the settlement effectively reversed by the Barrow government, an award was made by the London Court of International Arbitration in the Bank’s favour for the amount of the debt  giving due credit for partial amounts paid pursuant to the then abandoned settlement.

The Bank in its effort to collect the debt had entered into a settlement agreement with the owners of UHS and the government under the terms of which the government and a partner it had found would pay to the Bank the amount of the debt and the owners of UHS would transfer its interest in assets of the company to the government and its partner in certain agreed shares. The Bank further agreed to make further sums available for the hospital under its new management.

One half of the monies paid to the Bank by the government under the arrangement was retrieved by the Government through the exercise by government agencies of regulatory control over the Bank so that the government in the end only partly paid for the interest in assets of UHS it had agreed to acquire under that arrangement. A significant balance of the debt remained and continues to be outstanding to the Bank on which compound interest has accrued and continues to accrue.

The Prime Minister persisted in refusing to honour the arbitral award and the Bank applied for leave to enforce the international arbitral award in Belize. The Government insisted notwithstanding the Privy Council decision that permission should be refused for the award to be enforced on the basis of public policy because to do so would be to require the government to pay monies not appropriated by the National Assembly. The Supreme Court agreed and the Court of Appeal again supported the Supreme Court decision.

Things again changed when the case reached our final court of appeal which had by then become the Caribbean Court of Justice. The Caribbean Court of Justice found that in light of the Privy Council decision there was really no basis for refusing permission to enforce the award on the ground of public policy or otherwise. The Caribbean Court of Justice ordered that the Bank should have permission to enforce the arbitral award making clear that the Government should seek the appropriate approvals to make the required payment including the required appropriation by the National Assembly. This marked the end of the road for the legal position that the award should not be enforced against the government in Belize, the legal arguments having once again been rejected by Belize’s final court of appeal.

The arguments now made in support of the refusal to pay have apparently shifted to a moral one. The Prime Minister has expressed extreme disappointment with the CCJ decision and maintains that the court was wrong. He now insists that it would be morally wrong to pay the debt. A significant public relations campaign to that effect has been launched and there is again opinion building that the court was somehow wrong and to pay is morally abhorrent. Even some in the opposition somehow seem convinced of these positions.

Few have stopped to consider the possibility that common perception and those who propagate it may simply be wrong and that the CCJ is plainly right. Acceptance that the court is right would of course require acceptance of a change in conventional truth: a very difficult process because this particular truth is indeed a very bitter one to swallow and because such a truth goes to undermine the very justification given by the current administration for the ousting of former Prime Minister Said Musa from power, a position that some within his own party have also found useful.

As to the moral argument, it should be recollected that according to Aristotle it is immoral to charge interest on a money loan. The argument is that money as a means of exchange has no intrinsic value so that charging for a money loan is unjust because you are charging for something without value. There is support for this view in the Bible. The view does not accord with a modern view of money.

The contrary view is libertarian. It holds that if you freely bind yourself to debt you are morally obliged to make good your promise. This view also finds support in the Bible:  Ecclesiastes 5:5, “Better you should not vow than vow and not pay.”

In the final analysis we are all well served by remembering that our leaders are politicians concerned more with perception than any truth. Legal as well as moral principles are employed to sway perception and votes rather than to discover truth or be upstanding in the eyes of God.

(Ed. NOTE: The views expressed above are those of the learned letter writer, and not those of this newspaper.)

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Deshawn Swasey

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