Today, leaks of what appears to be draft legislation to exempt the Port of Magical from taxes and duties were released to the media. The controversial Definitive Agreement between GoB and Port of Magical Belize was also released, attached to a Cabinet Confidential Memorandum presented in mid-May seeking approval to enact the fiscal incentive legislation for the cruise port project

by Marco Lopez 

BELIZE CITY, Thurs. May 25, 2023

A press release issued by Port of Magical Belize this week claims that they have officially signed a Memorandum of Understanding with Royal Caribbean Group – one of the largest cruise line companies in the world. The document, sent out without a letterhead or any contact information, has not been independently verified by the Amandala. It states that Royal Caribbean Group, Portico Enterprise Ltd., and Boskalis International have formed “a joint venture to develop, manage, and operate the Port of Magical Belize.” Rumors that the Briceño administration supports the Port of Magical project gathered strength when the media got ahold of leaked draft legislation to provide for tax and duty exemptions for Port of Magical Belize. 

A confidential cabinet memo states that the legislation, which seeks to give a tax cut to the company, is “in conformity with the Definitive Agreement entered into between the Government of Belize and Portico.” The legality of that document however remains in limbo.  

Despite the Definitive Agreement being under scrutiny, these leaked documents confirm that the PUP administration has, at the least, begun drafting tax exemption-enabling legislation for the Port of Magical. This week, Deputy Prime Minister, Hon. Cordel Hyde explained that the matter could likely become litigious. 

“That matter will certainly become a litigious matter, and so the government is well advised to seek and get legal advice so they can move smartly on that matter,” Hyde said. 

If the legislation enabling tax and duty exemption is passed for the port by this government, it can pave the way for its dominance in the local cruise industry. The draft Cruise Port Policy approved by Government but not yet released to the public, states that only one cruise port will be supported in the Belize District. 

But Hon. Hyde suggested that the legitimacy of the Definitive Agreement remains in question. 

“There [are] some legal persons who think it’s a legitimate document, and there are some who think it’s not, as you know how it goes with the legal persons. Two different lawyers look at the same document and think two different things, but the government is well advised to get it right,” Hyde said. 

He shared that the government has to be very careful how it proceeds, because “For sure, this will end up in court,” he said. 

Last November, we reported on the letter of support from Royal Caribbean to Port of Magical, which indicated at the time that the company “has proven to encompass the adequate environmental and operational criteria required for RCG development, involvement and investments.” 

This blessing from the mega international cruise line was likely on the weight of the controversial 2017 Definitive Agreement reportedly signed by former Minister of Investment, Erwin Contreras on behalf of the GoB and by two Directors of Portico. This new piece of legislation, which reports say may go to the House of Representative as early as its next sitting, also hinges on the legitimacy of that Definitive Agreement. The legality of the document has been called into question by Ashcroft Alliance’s attorney of recent, and before that, by no other than Michael Peyrefitte, the (UDP) Attorney General at the time of the alleged signing. 

In January, Peyrefitte claimed in a letter to current Attorney General, Magali Marin Perdomo that, “at no time during my tenure any definitive agreement was recommended by the investment committee, approved by the cabinet, or finally vetted by my office between the Government of Belize and Port of Magical/Portico.” 

In a subsequent letter, however, Portico’s Chief Executive Officer, David Gegg revealed that Peyrefitte’s law firm, Morales Peyrefitte was in fact retained by the company. One of their tasks, Gegg claims, was to draft the said definitive agreement Peyrefitte denies knowledge of. The rejoinder to Peyrefitte’s letter states that he had various conversations with his law partner David Morales on the matter of the Definitive Agreement. 

The former Chairperson of the UDP cabinet Investment Committee, Hon. Tracy Panton shared that a purported definitive agreement attached to the correspondence from Portico is not a binding agreement, and simply an expression of good faith from the government. 

Today, Peyrefitte posted what looks like the front page of the contentious Definitive Agreement on his social media page. 

“I asked unu Prime Minister for this document through the proper channels and he refused to give me. I got it anyway,” Peyrefitte captioned the post. 

We received a copy of the document. The Definitive Agreement is a 31-page document signed on October 1, 2020, a little over a month before the landslide victory of the PUP. According to the agreement, the developers’ obligations include funding the project, complying with the laws and obtaining permits, providing insurance coverage, and following labor regulations, typical things you would expect any developer to exercise. 

GoB on the other hand is expected to pass laws and take “executive action” to exempt the Developer, EPC Contractor, and sub-contractors from various taxes and duties related to the importation, purchase and procurement of items. The proposed leaked legislation seeks to activate this provision under the Definitive Agreement. 

Besides that, the Definitive Agreement points out that the government should exempt the developers, its shareholder and funders, and EPC contractor from income and business taxes, and capital gains taxes during the duration of the agreement. It orders the Government to exempt the project’s proponents from stamp duty related to share allotment and transfer as well as taxes and duties in regard to land transactions related to the project. 

Importantly, under the Definitive Agreement, the government is obligated to ensure that no competing third party within a 25-mile radius receives tax benefits or duty concession for 25 years. This would immediately knock the Ashcroft port proposal out of the race, and probably do serious harm to the Feinstein port development on Stake Bank. 

The obligation of the government to this port goes on to require them to provide access to national lands required for the project’s development. They should allow the developers to collect port development fees, service fees, toll fees, pilotage, and tonnage fees as part of the project’s operations. 

It goes on to oblige GoB to grant necessary approvals, permits, and authorization for the project and to assist the developer in obtaining these documents. In addition, GoB is obliged to compensate the developer for any tax-related losses resulting from changes in tax rates or new taxes. 

The Definitive Agreement obliges the government to allow the developer to purchase foreign currency without restriction for project-related purposes. 

We will have more details in a subsequent story.