The dispute over the Government’s guarantee for the Universal debt has taken a dramatic turn this week. That is because the Belize Bank has written Prime Minister, Hon. Said Musa, demanding immediate payment of the $33 million debt Government said it guaranteed for Universal Health Services in December of 2004.
A forceful letter, dated Wednesday, May 2, 2007, and directed to the Prime Minister from the bank’s chairman, Philip Johnson, tells Musa that the loan agreement he made with the Belize Bank on March 23, 2007, is now in default, since the first payment due on Monday, April 23, 2007, has not been met. (See letter on page 3)
It may be a matter of mere coincidence, but on Tuesday, April 24, the day after Belize Bank claims Musa was supposed to pay up on the debt, he reportedly left the country for Taiwan, and Government Press Office information is that he is not due to return until this Sunday, May 6.
When the Prime Minister returns, Johnson’s letter will be waiting for him.
It states that, “Failure to make payment constitutes default under the terms of the Loan Note. We require you to make payment forthwith and draw your attention to the fact that interest on overdue payments shall bear interest (sic) at a default rate of 17% per annum,” Johnson’s letter says.
The letter goes on to say, “We look forward to receiving payment without delay. We expressly reserve all our rights under the above agreement, including our right to call for the principal sum and all accrued and default interest to be immediately repaid.”
The letter is only cryptic on the matter of exactly how much money – in dollars and cents – the bank is now demanding from the government.
As to the timing of the letter, we note that it was issued the same day, Wednesday, Johnson wrote the Association of Concerned Belizeans (ACB) strongly advising that association against the legal action ACB would initiate later yesterday in the Supreme Court calling for the court to issue an injunction to stop Government from paying any money to the Belize Bank for the UHS debt.
If only the bank had moved so swiftly on UHS when it defaulted on a debt that has burgeoned from $17 million to $33 million. Senior Government sources have told Amandala that the Government guarantee was given when the bank realized that a prior guarantee, given for UHS by the Development Finance Corporation, was no good, and by that time, our sources say, the bank loan was already in trouble. Some members of parliament have questioned why the bank did not move on UHS before the interest of the loan accrued to the level it now is, and members of Cabinet have reported that the interest on the loan itself is 55% of the due balance—so indeed, like the bank’s letter says—it is now charging interest on top of interest.
The Belize Bank’s letter makes it clear that if Government does not pay pronto, the debt will continue to grow, as the bank is charging a hefty 17% interest on what it deems is the outstanding balance.
Johnson’s letter clearly references a settlement deed between the Belize Bank and the Government, as well as a loan note of the same date.
Up until this week, the documents of which the Belize Bank letter speaks have been secret, and the full text of those agreements have still not been disclosed.
We note that on April 13, 2007, the Prime Minister refused to tell Channel 5 News what were the terms of the new negotiations with the Belize Bank, after negotiations to swap over 8,000 acres of land to settle the debt reportedly fell through. Around the same time, other segments of the media who had spoken to inside Government sources were reporting that the Government – desperate for cash to pay the bank – was considering an offer from Belize Natural Energy to sell its 10% equity in the Spanish Lookout field – the only successful oil exploration in the country’s history. On April 16, the Government denied those reports, but failed to disclose the agreements that the bank said had been penned more than three weeks earlier.
First reports that Musa had moved to solidify the settlement of the Belize Bank debt came from Government insiders, including members of Cabinet, who have said that they only recently found out about the guarantee, and that it was never brought to them nor the National Assembly for their approval.
Amid the growing controversy over the UHS guarantee, the parliamentary caucus of the People’s United Party met this Monday afternoon and issued a resolution in support of the Prime Minister, and they also said that they support a renegotiation of the Universal debt and the renegotiation of “the entire process.” That was a day before the Belize Bank fired off a letter to Musa himself, reminding him that he had signed some documents with the bank on March 23, 2007, and it was time for him to make good on the payment.
The Secretary General of the People’s United Party, Henry Usher, refuted a remark Channel 7 News made about a deed of settlement it had reported on. Usher said that there exists no such deed of settlement, but the bank’s letter, issued on Wednesday, May 2, clearly confirms that not only did Musa sign a deed of settlement but he also went further to seal a loan note with the bank, on terms that are unknown to key Government officials.
Musa’s move won’t go without a legal challenge, because the Association of Concerned Belizeans informed Amandala this evening that it also intends to challenge these new documents in its action filed with the Supreme Court late yesterday.
We also expect that the latest revelation of the existence of not only a settlement deed but also a loan note, will be challenged by some parliamentarians from within and outside the PUP. That is because under the Finance and Audit (Reform) Act of 2005, the Prime Minister has no authority to enter into such a financing agreement without an approval from the National Assembly, and some parliamentarians have already publicly expressed the need for parliamentary approval for such transactions.
(Ed. Note: Michael Ashcroft controls the Belize Bank through BB Holdings Limited, in which he is the principal investor.)