Former Central Bank Governor, Keith Arnold, chairman of Belize Telemedia Limited (BTL) from 2005 until the recent nationalization of the company in August, is the man behind the October 9, 2009, filing in the Supreme Court, asking the court to overturn the nationalization of BTL.
On the claim that the nationalization was an arbitration and illegal expropriation of property, Arnold asks the court to void both the amendment of the Belize Telecommunications Act and the subsequent statutory instrument that enabled the Barrow administration to wrest control of BTL from the hands of British mogul, Michael Ashcroft.
“This represents the deliberate targeting of what the Government wrongly believed were a single man’s interests,” deposes Arnold, a Belizean-American based in Florida, from where he filed the papers.
In the nationalization process, the Barrow administration not only took control of 94% of BTL’s shares, but also 100% of the shares of Sunshine Holdings Limited, held at the time by the BTL Employees Trust—a trust that is misnamed since it has nothing at all to do with BTL’s employees.
Sunshine owned 22.39% of BTL’s shares (11 million) at the time of the nationalization, according to Arnold’s first affidavit, submitted with the lawsuit.
“Lord Ashcroft has absolutely no interest in these shares,” Arnold deposes.
So who, then, is behind Sunshine Holdings and the BTL Employee’s Trust? Not the 500 workers of BTL. That’s according to vice president of the Belize Communication Workers Union (BCWU), Paul Perriott, who told Amandala Monday that the lawsuit has nothing to do with them. The workers were never consulted about the lawsuit, said Perriott, and never agreed to have any part with the trust, which he said is controlled by Ashcroft.
Since the BTL Workers Trust and Sunshine were formed in 2005, said Perriott, this is the first time in four years that they have been told anything – and they were only contacted after rumors began to circulate that Government would acquire BTL. There was a meeting, said Perriott, at which they learned that Sunshine had collected $11 million in dividends from BTL, and the BTL workers have no idea where that money went.
Arnold claims that at the time of the nationalization, the BTL Employees Trust was in the process of selecting suitable persons to act as staff representatives with whom the trustees could consult. Perriott confirmed this, but said the union had already rejected participation on the terms proposed, with Ashcroft being in control of the trust.
Arnold, who is not himself a BTL employee, is seeking constitutional redress for the Trustees of the BTL Employees Trust, himself and Dean Boyce, who had served as chairman of BTL’s board of directors and BTL’s executive committee, respectively, until the August 25 nationalization.
He deposes that “…the fact that the government also nationalized the shares of Sunshine Holdings Trust, suggests that the government was deliberately targeting the Employees Trust in a discriminatory manner and not securing the country’s telecommunications sector.”
The trustees are represented by Opposition member, Godfrey Smith of Marine Parade Chambers, who served as Attorney General under the last tenure of the People’s United Party—which has objected to the nationalization.
Arnold claims that the value of the trust’s shares had been reported at $100 million. As of March 2009, the trust had outstanding debt of $51 million, with net worth of $14 million. The trust had purchased the BTL shares with $40 million in loans – $20 million from British Caribbean Bank (formerly the Belize Bank of Turks and Caicos) and $20 million from the government: $10 million coming from the Social Security Board and $10 million from Central Government.
As we had reported last week, BCB is now suing government for the outstanding debt, which they claim stands at roughly $8 million.
The loan reportedly came after the accommodation agreement, which Arnold claims was crafted in a deal with the Said Musa administration to restore the telecommunications sector after the turmoil of early 2005. At that time, there had been an extended shutdown of telecommunications, as well as the stint in which American Jeffrey Prosser is alleged to have taken $20 million out of BTL – according to Arnold, “without proper authorization.”
Arnold recounts that Prosser had defaulted on the loan he had gotten to purchase the BTL shares, formerly held by Ashcroft and the government, and so Government cut a deal with “the former management of BTL” to repurchase the shares. That is the context in which the accommodation agreement came about, Arnold demonstrates.
As our readers will recall, Prime Minister Dean Barrow has gone on record to say that the accommodation agreement, which promises BTL a 15% rate of return among other things, was illegal. The Government and BTL had a series of legal skirmishes over the payment of taxes, as the agreement purports to give BTL tax holidays when the rate of return is not met.
Barrow argued that the nationalization of BTL would out these legal wildfires – though time has proven that the wildfires have, in fact, raged on, as with the case Arnold has now raised as a trustee of the BTL Employee’s Trust.
In the claim, Arnold asks the court for a series of declarations that the amendment to the telecoms act, tabled in the House of Representatives and the subsequent order, signed by Minister of Public Utilities, Melvin Hulse, are unconstitutional and, therefore, null and void.
Arnold complains that the trust was arbitrarily deprived of property in a move that was not for a public purpose, but engineered as an ad hominem attack against Michael Ashcroft in a discriminatory manner. The act and the order breached the doctrine of separation of powers, said Arnold, because government implemented the nationalization to avoid paying the $38.5 million settlement awarded to Telemedia by the London Court of International Arbitration (LCIA), and other court action mounted in the Belize judiciary.
In his speech proposing the nationalization, Prime Minister Barrow said, “Well, I have said that as God is my witness I will never pay that award… In April of 2009 Telemedia informed the government of further claims they will make to the London Court of International Arbitration, and that the size of a new award ‘could pale the current award of 38 million into insignificance’. Mr. Speaker, members, fellow Belizeans: this is intolerable.”
In the claim for constitutional redress, Arnold also asks the court for unspecified damages, including punitive damages, costs and other relief the court thinks just and equitable.
“There was no national emergency, labour unrest, service failure, or other reason to justify the action by the Government on 24 and 25 August 2009 to acquire compulsorily and take possession of Sunshine Holdings Limited’s shareholding in Telemedia and the claimants’ shareholding in Sunshine,” Arnold argues in the claim. “Such action by the Government was arbitrary and was not carried out in the public interest.”
The stated purposes of the order are: “the stabilization and improvement of the telecommunications industry; the provision of reliable telecommunications services to the public at affordable prices; and the creation of a harmonious and non-contentious environment.”
Later he says, “It is impossible to see how the forcible deprivation of one set of shareholders of their shares, the holding by the Government of those shares for an indeterminate period, and the subsequent on-sale to unknown persons can produce or be conducive to stabilization (assuming that a need for stabilization actually existed).”
Arnold alleges, however, that this does not appear to be the real motive: “The Government has, by the Prime Minister’s own admission, used the Act and the Order to end an ongoing commercial dispute with a private citizen. The Act and the Order de facto oust the jurisdiction of the courts and are in breach of the doctrine of the Separation of Powers enshrined in the Constitution and are therefore unconstitutional and void…”
“The National Assembly therefore cannot pass a law which discriminates against any person on the grounds of, among other things ‘place of origin’. The Prime Minister has stated that the Act and the Order seek to achieve the ‘re-Belizeanization’ of Telemedia, therefore discriminating against any non-Belizean.”
That non-Belizean Arnold refers to in the claim is Michael Ashcroft, who he claims has no interest at all in the BTL Employees Trust, which is suing the Government, namely the Attorney General and the Ministry of Public Utilities, over the nationalization of BTL.
Arnold furthermore claims that Ashcroft has no beneficial interest in Hayward Charitable Trust – the entity that, it is claimed, controlled two-thirds of BTL’s shares before nationalization.
Interestingly, the court papers filed are available on the newly launched site of Hayward Charitable Trust, along with a series of documents dating back to the time that Jeff Prosser’s Innovative Communications Corporation (ICC) was brought in by the Said Musa administration to purchase BTL.
eith Arnold and Dean Boyce are the common denominators between the BTL Employees Trust and Hayward Charitable Trust.
The Hayward website lists him along with Michael Ashcroft and a series of trustees and advisors to the trust: Jose Alpuche, Allan Forrest, Peter Gaze, Philip Osborne, Ediberto Tesucum, and Philip Zuniga, all having served as directors of either BTL (under Ashcroft’s control), or the Ashcroft group of companies – the Belize Bank, or BHI/Carlisle/Belize Holdings.
At the point of nationalization, the Government installed a new board at BTL (of which it had acquired 94%), and new directors for Sunshine Holdings Limited (of which it had acquired 100%). The chairman of both companies is Net Vasquez, who Arnold points out also serves as a commissioner at the Public Utilities Commission.
The appointment, says Arnold, “undermines the PUC as an impartial regulator – the very same regulator that would surely have a key role to play in improving and stabilizing the telecommunications sector in Belize if the stated public purpose of the legislation were genuine.”
(When we contacted the PUC today, however, they told us that Vasquez is no longer a commissioner.)
In explaining why his administration had moved to take control of BTL, Prime Minister Barrow said on August 24 that: “Lord Michael Ashcroft is an extremely powerful man. His net worth may well be equal to Belize’s entire GDP. He is nobody to cross and the new government could well have chosen the path of least resistance; to cower in the face of the certain wrath of this potentate; to continue in the PUP style with business as usual; to betray, in other words, all that we had campaigned for…
“There will thus be no more Telemedia awards against us; no more Telemedia court battles; no more debilitating waste of government’s energies and resources; and there will be no more suffering of this one man’s campaign to subjugate an entire nation to his will.”
The Prime Minister also said that, “This acquisition is, rather, to give all Belizeans a chance to invest once again in a company that has proven to be a moneymaker.”