There is more contention over the nationalization of Belize Telemedia Limited (BTL) as we go to press tonight, and it centers on recent reports of lawsuits by two Michael Ashcroft banks to recover $58 million from the government-controlled BTL and its affiliate, Sunshine Holdings Trust, as well as claims that the government has wrongly taken on the private sector debts.
The story is quite convoluted, but the gist of it is that when Government took over Telemedia back in August, 2009, the company still owed $45 million to the Belize Bank—one of the most profitable companies in the Michael Ashcroft group. (In the nationalization, the government booted out a string of Ashcroft companies from BTL, seizing the shares they had held in BTL.)
Now the question is, did the government act illegally when it took over the $45 million debt to the Belize Bank in the BTL nationalization?
That is the assertion made by private sector Senator, Godwin Hulse, today, when he called the KREM WUB Morning Vibes show. Citing news reports last week saying that the Belize Bank debt no longer belongs to BTL, Senator Hulse said that the acquisition of the debt certainly requires National Assembly approval, though the Dean Barrow administration holds a big enough majority to pass any such motion.
Those were the questions raised earlier today, but Prime Minister and Minister of Finance, Dean Barrow, told Amandala Monday night that the government has not acquired BTL’s debt, but has instead taken over the mortgage debenture, therefore stepping in the place of the Belize Bank as creditor.
Godwin Hulse is talking nonsense, said Prime Minister Barrow, if he is suggesting that Government entered into a debt.
However, it was not Hulse who made the suggestion, but a Government of Belize release last Wednesday, in saying that Government had acquired the loan and its responsibilities, though it also said Government had acquired the debenture securing the loan from the bank.
Then who pays the bank, we asked Barrow, for the record.
“Government, by way of compensation,” he replied.
Barrow said that even though the Belize Bank has filed its claim to Government for compensation, the government intends to challenge the very validity of the mortgage debenture, and won’t press BTL for payments on the loan until the issues are settled.
“We hold all the marbles,” Barrow declared.
After learning of PM Barrow’s explanation of the BTL transaction, Senator Hulse still held his ground tonight, saying that even if Government wants to compensate the bank, a fundamental rule must be observed: not a dollar should be paid from public funds without National Assembly approval.
Senator Hulse said he does not understand why the Barrow administration is using these “fancy foot-works” to settle the BTL matter.
In the event that Government has to pay, Telemedia also has to pay, said BTL chairman, Net Vasquez, claiming that it is not taxpayers who will have to pay in the end.
Interestingly, Barrow pointed out that the Belize Bank has, furthermore, already filed its claim to the Ministry of Finance, for compensation for having lost the mortgage debenture in the nationalization.
That begs the question, then: why would the Ashcroft group still go ahead and pursue BTL for the loan—which it now claims has exceeded $50 million?
On Friday, November 20, the bank’s affiliate TV station, Channel 5, said that the bank’s sister lender, British Caribbean Bank, would also be suing for an additional $8 million debt Sunshine Holdings Trust owes, bringing the total to $58 million plus. It went on to list existing BTL directors as directors of Sunshine. (Interestingly, it was weeks ago that Sunshine threatened the government, in filing a Constitution claim against the acquisition of BTL and majority shares.)
When BTL was nationalized, we knew that the order explicitly called for the government to acquire the BTL shares of Sunshine, but there was no announcement made that Government was actually acquiring the trust itself.
Why take over the debenture, we asked PM Barrow. He said that when the company got the US$22.5 million loan from the Belize Bank, all the company’s assets were mortgaged to the bank, and leaving the debenture with the bank at the time of nationalization would have placed BTL’s assets at risk.
It could have been a catastrophic event if that had happened, said Vasquez.
“The position of the government remains one of complete conviction,” said Barrow. “This was the right thing to do.”
He said that nothing can happen to cause him to have second thoughts.
Notably, there is no written agreement between the government and BTL governing how the $45 million debt (now to GOB) would be settled, said Chairman Vasquez.
We asked Barrow if any loss had been suffered to date with the nationalization of BTL. “Of course not,” he replied, appearing baffled at the question.
He did concede, though, that Government will have to pay the Belize Bank compensation.
“That’s a long, tough and rocky road,” the Prime Minister said, adding that the question of compensation to the Belize Bank is very much up in the air.
Apart from the Belize Bank claiming compensation for the BTL mortgage debenture, the Ashcroft group of companies has also filed for compensation for the government acquisition of their BTL shares. Additionally, a constitutional challenge has been mounted.
Barrow said that he is absolutely pleased that BTL decided to chop SpeedNet’s international access, because the two (under Michael Ashcroft’s ownership of them) had engaged in “absolute unconscionable agreements” that have cut into BTL’s profits.
Compensation to former BTL shareholders, said Barrow, would be paid from company profits and the sale of shares.
As to whether taxpayers will foot the bill, “That ain’t going to happen,” said Barrow, adding that they would fight “tooth and nail” to avoid taxpayers having to pay for any compensation in the nationalization of BTL.
Although the lawsuits were reported on Friday, Vasquez told us when we spoke with him today that he still has not seen the court papers. He said he does not know why the bank is suing, because they know Government’s intention is to settle with the bank.
Financial Secretary, Joseph Waight, informed Amandala today that, “No funds have been paid by the GOB in respect of any BTL liabilities.”
Waight said his understanding is that since July 2009, before the nationalization, BTL had approached the Belize Bank seeking to extend the terms of the loan, but that this was still in negotiation in August at the time of the nationalization.
“The GOB has not yet been notified of any default on the loan,” he added.
Waight said that even though the Ashcroft group of companies have filed their claims for compensation, they have not fixed a dollar value. Should the parties fail to agree on compensation, the Supreme Court would resolve the issue.
BTL director, Dr. Carla Barnett, former Financial Secretary/Finance adviser, said today that when the government issued the nationalization order, it enabled the acquisition of the Belize Bank debenture.
“As it now stands, GOB has acquired the Bank’s mortgage interest and, as a consequence, BTL now owes the Government of Belize,” said Barnett. “I agree that this needs a lot of explanation by BTL and by Government. This information gap should be rectified soon.”