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$90 mil battering for Belize

Headline$90 mil battering for Belize

“The interest [$50 mil] alone is more than the actual amount of the loan,” said Belize Bank’s attorney, Eamon Courtenay

BELIZE CITY, Thurs. Nov. 23, 2017–On November 9, the Government of Belize (GoB) paid out US $78 million to a Michael Ashcroft group as final compensation for the nationalization of Belize Telemedia Limited.

Barely two weeks after that massive payout, GoB is now faced with the grim reality that it will have to cough up over BZ$90 million more, to yet another Michael Ashcroft entity, the Belize Bank Limited.

On Wednesday, the Caribbean Court of Justice (CCJ) sided with the Belize Bank Limited, which had secured an arbitration award against GoB since 2013 before a Tribunal of the London Court of International Arbitration.

The London Court had ordered GoB to pay the bank BZ$36,895,509.46, together with interest at 17%, and arbitration costs of £536,817.71.

The root of the payout goes back to 2004, when the administration of then Prime Minister, Rt. Hon. Said Musa, made a guarantee for a loan from the bank to a private company, the Universal Health Services (UHS), after the original guarantor, the Development Finance Corporation, could not provide the loan.

In 2007, GoB and the Belize Bank Limited entered into an agreement to settle the monies owed under the guarantee, without taking the matter to the National Assembly for approval.

However, one year later, after the administration of Prime Minister Dean Barrow came to power, they did not honor the agreement. GoB defaulted on the payments, and so the Belize Bank Limited took the matter to the court, which resulted in the 2013 arbitration award.

In both the Supreme Court and the Belize Court of Appeal, the Belize Bank Limited lost its application for enforcement of the arbitration award. The Supreme Court was of the view that the enforcement was contrary to public policy, and the Court of Appeal agreed.

The Belize Bank Limited, however, then appealed the matter at the CCJ, which found the arbitration award to be enforceable.

The CCJ agreed with the ruling by Belize’s then highest court of appeal, the Privy Council, when it heard the case in 2011, that the agreement between the Musa Administration and the Belize Bank Limited was legally valid.

Additionally, the CCJ was of the view that the agreement did not require Parliament’s approval. The CCJ was also of the view that there was a need to uphold treaty obligations, as they are “an important factor for foreign investment and economic development given the advantages of predictability, certainty and reliability of the global network of arbitration arrangements.”

Following the CCJ’s ruling, Amandala spoke to Senator Eamon Courtenay, SC, who, along with Ms. Angeline Welsh, had represented the Belize Bank Limited.

Courtenay told our newspaper, “The case this morning was a decision by the Caribbean Court of Justice that gave permission to the Belize Bank to enforce an arbitral award that was made way back in 2013. It related to the financing of the Universal Hospital which the bank had lent money to do its original development, and the bank lent the money at the request of the government. The hospital defaulted and the bank sought to collect.”

He added, “The loan note under which the loan was made was determined by the Privy Council to be valid. The second point is that because the government didn’t pay, it had to go to arbitration. Government started participating in the arbitration and they tried to derail it, and when they failed, they did not participate any further, and therefore, the bank continued the arbitration in the absence of the government and the arbitrators gave an award for about BZ 36 million dollars.”

“We then sought to demand payment from the government. The government refused to pay and so we had to apply to the Supreme Court for permission to enforce the award. The Supreme Court refused, the Court of Appeal refused, and today, the Caribbean Court of Justice allowed the bank’s appeal and said that the government must pay the money that is due under the award,” Courtenay said.

He added that because of the delay in paying the arbitration award, the amount due is now over 90 million dollars, which includes the original arbitration award, over 50 million dollars in interest, and also legal fees which have not yet been computed.

“The interest alone is more than the actual amount of the loan,” he said.

When asked what actions GoB could take to wriggle itself out of this judgment, Courtenay explained that there was no way out. He explained, “There is no way that it can be appealed. The court itself expects the government to obey an order of the CCJ, so that there would be no need for further steps on behalf of the bank to collect the money. This money is long outstanding. It was a loan that was made that the Privy Council said was lawfully made, the arbitrators said was lawfully made, and today the CCJ affirmed that there was nothing illegal about what was done. Therefore, the government must pay up.”

According to Courtenay, the arbitration award is now payable. The administration of Prime Minister Dean Barrow has to go to the National Assembly to get permission to make the payout as is outlined under Section 150 of the constitution. “There is no wriggling out of it,” said Courtenay.

GoB was represented by Solicitor General Nigel Hawke, Anthony Astaphan SC, and Ms. Agassi Finnegan. Hawke commented briefly on the ruling.

He said, “It’s always a disappointment when you lose, but it’s the final court and we have to respect the decision. That’s how our system is designed.”

He added, “Litigation is always a risk, and the reality is that we thought we had some formidable arguments in relation to the public policy issues. I think the court … relied on the Privy Council’s judgment in saying that the loan note was valid. Our argument that we were urging is that at the time when that consideration was given, the arbitration award was not out.”

According to Hawke, he respects the ruling.

GoB, in a press release issued after the ruling, was critical of the CCJ’s decision in favor of the Belize Bank. It said: “The Government of Belize is extremely disappointed and laments the judgment delivered by the CCJ. The lawsuit arose from a dispute stemming from one of the most egregious and scandalous acts of the Musa administration, where the then government secretly diverted US$20 million that was granted by the Venezuelan and Taiwanese governments for social programs for needy Belizeans to pay towards a loan the PUP had contracted for UHS, a private hospital owned by PUP cronies. GOB maintains that the enforcement of the arbitral award granted by the London Court of International Arbitration is not only contrary to the public policy of Belize, but also offensive to the legal and constitutional order of Belize.”

Today, Amandala spoke to former Prime Minister, Said Musa, who said that he felt vindicated by the ruling. He explained that after the DFC could not continue as the guarantor for the UHS, he decided to make agreements with the bank because GoB would have eventually owned the hospital, and it would have been used as an integral part of the National Health Insurance (NHI) scheme and as a center for dialysis treatment for Belizeans.

However, Musa could not make payment to the Belize Bank Limited and so he approached the Bolivarian Republic of Venezuela and the Republic of China (ROC) Taiwan, who each issued grants of US $10 million, which was paid to the bank, settling the debt.
When Barrow came to power, however, he snatched back those monies from the Belize Bank, which triggered legal proceedings.

Tonight, former Prime Minister Said Musa told Amandala that Barrow must take the matter to the National Assembly to get permission to access the consolidated funds.

The approval will only be given by a majority vote. If the National Assembly votes against the resolution, Musa explained that that would be unchartered waters. He explained that it would be unprecedented and would constitute a defiance of the CCJ.

In a constitutional democracy such as Belize, you are expected to obey the rulings of the court, he said.

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