Even though the Michael Ashcroft group of companies have so far failed to score any major victory in the courts of Belize for legal control of BTL, they have made a major maneuver which they expect will oust American Jeffrey Prosser from the company once and for all, and seal their unfettered power over the company through the control of over 90% of BTL.
This week the board of directors of Belize Telemedia Limited (BTL) informed minority shareholders present at this year’s annual general meeting that a subsidiary of BTL, Telemedia Investments Limited, has acquired almost 30% of the company’s shares that had been held as security by the Royal Bank of Trinidad and Tobago. The shares were being held as a part of a security package for a defaulted Intelco debt of US$25 million, which Prosser had agreed to transfer to BTL in exchange for some Intelco assets.
In March 2004, Government sold Prosser roughly 32% of BTL—a golden investment that provided hefty returns for a string of public sector entities, the primary one being the Social Security Board.
In a statement delivered in the House of Representatives on December 10, 2004, Prime Minister Said Musa tried to convince the public that he had to sell the shares as a condition to get Ashcroft to sell his 52.46% majority, held at the time by Ashcroft’s umbrella company – Carlisle Holdings. Musa had claimed that the Government had to buy out Ashcroft to end turmoil over phone rates and a quarrel with BTL over a long-term contract that Government had given to BTL’s competitor – Intelco.
It so happens that almost four years after the Government buy-back of the Ashcroft shares, concerns over phone rates and allegations of unfair competition have resurfaced—this time, the “beef” is with foreign companies providing Voice over Internet Protocol (VoIP) communications. BTL is now threatening to increase rates if VoIP by other companies continues to hurt its bottom line. (More on this in a separate article.)
While not much has changed in this regard, change has been evident in the increase in Ashcroft’s ownership and control of BTL. By 2005/2006, the shares originally held by Ashcroft reverted to his control through a series of transactions with smaller companies, including E-Com, with discounts and a tax write off to his affiliated companies amounting to tens of millions of dollars.
Even though Ashcroft had claimed that he was getting out of the telecommunications business, it has become evident that his intent was never to surrender his control of what has proven to be a very lucrative business.
Since 2004, another set of Ashcroft companies, including Mercury Communications, had been buying out minority shareholders.
Since Ashcroft now controls all the seats on BTL’s board, he has no need to expend company funds to purchase any more BTL shares. The most recent strategy is to use a BTL subsidiary, Telemedia Investments, to buy out other shareholders, whose numbers have reportedly dwindled from 1,300 at the last official report to roughly 800.
At the time that Ashcroft divested his 52.46%, Belizean minority shareholders numbering roughly 1,600, held 16.4% of BTL’s shares. Today that percentage is in the very low single digits.
Even as Ashcroft was consolidating his control of BTL, there were some significant legal challenges in the pipeline.
In June, Prosser—whose company should have had directors sitting on BTL’s board by order of the Supreme Court—had scored a significant victory in court when Chief Justice Dr. Abdulai Conteh granted an interim injunction for a special board meeting and ordered that the books and records of the company be turned over to him for the meeting. However, the Ashcroft directors of BTL had already transferred the business of BTL to Telemedia, leaving the former company as a mere shell.
Notably, the Government had facilitated the transfer process by passing new legislation enabling the vesting of the business of Belize Telecommunications Limited into Telemedia.
At the company’s AGM on Tuesday, shareholder Net Vasquez asked the men at the head table who were the directors who negotiated the business transfer agreement for old BTL and who were the ones negotiating for the new BTL. At first, BTL’s secretary said that the same 8 directors negotiated for both, and then he claimed that there were four of the eight directors for Telemedia, and the remaining four for BTL.
The new board had promised that all BTL shareholders were to be issued Telemedia share certificates after the changeover of the company; however, during the process of that transfer, Telemedia Investments Limited acquired the Prosser shares from RBTT. Prosser’s company claims that this was done without his knowledge and consent.
Prosser’s company has maintained that the transfer of the shares to Telemedia violated his agreement with the bank, which was for the bank to provide the US$57 million for him to acquire the Ashcroft shares. That, obviously, never happened, as Ashcroft was able to regain those shares from the Government of Belize after GOB announced that Prosser was unable to meet an extended deadline to pay for the Ashcroft shares.
We understand that not only does Prosser intend to challenge the transfer of BTL’s business to Telemedia in a Supreme Court case coming up on Monday, September 24, but he also intends to separately challenge the sale of the Government shares from RBTT to Telemedia.
The Government had reported that Prosser had paid US$28.5 million for those shares, but he had left an unpaid balance of US$2.675 million, and had returned US$1.55 million worth of shares Government claimed had been erroneously transferred to Prosser, including shares belonging to the unions.
With Prosser’s shares now in the hands of Telemedia, there is bound to be the question of whether he has any standing to bring a claim against Ashcroft regarding the transfer from BTL to Telemedia.
However, our newspaper understands that the unions – the Public Service Union and the Belize National Teachers Union – have also joined in on the case, challenging the constitutionality of the transfer of BTL’s business to the new company.
At the backdrop of the BTL fiasco is the Government’s tangled involvement in the failed Intelco enterprise.
When Intelco came on the scene, Ashcroft had publicly accused GOB of subsidizing the competition and risking 25% of BTL’s revenues with the contract it gave to Intelco. It was later revealed that the Government had guaranteed substantial debts for Intelco, including a multi-million-dollar loan with the International Bank of Miami for Government’s telephone network, and a securitized mortgage of almost US$10 million with the Social Security Board.
Government is still paying the Miami bank for the Intelco network and, in addition to meeting payments for defaults related to the Intelco business, it has loaned $20 million of public funds – $10 from the SSB and $10 million from Central Government – to Sunshine Holdings, a company now under Ashcroft’s control which had purchased a block of BTL shares.
Meanwhile, Prosser still has a live arbitration claim against the Government of Belize for US$200 million – a claim in which he alleges he suffered substantial financial losses after Government fraudulently induced him to buy the BTL shares.
His company claims that one of the reasons why he was wasn’t able to seal the RBTT deal was because the Government had reneged on certain promises, including passing legislation “outlawing” VoIP, which would have secured him—and assured the Trinidad bank—a 15% return on the investment in BTL.
Prosser has alleged that these were the same promises that were used to induce him to purchase the BTL shares.