In the final Belize appeal heard at the Privy Council in London, which has since been replaced by the Caribbean Court of Justice as the country’s final appellate court, the Government scored a victory when the panel of judges—with the exception of one—agreed that the appeal by the Belize Bank should be dismissed.
The three-year-old dispute has been over the Central Bank directive ordering the bank to return to the Government of Belize US$10 million that had been granted to the Government of Belize by Venezuela for housing for the poor and the Marion Jones Sports Complex, but which had been diverted in December 2007 to the bank to help settle the $33 million debt of Universal Health Services (UHS), now Belize Healthcare Partners.
Whereas the Belize Bank eventually complied with the demand, it sought to challenge the directives via proceedings in the courtroom. It lost in the Supreme Court and the Court of Appeal, and on Thursday, October 21, 2011, it struck out with its loss in the final round of litigation at the Privy Council.
The Belize Bank had challenged the constitutionality of the Banks and Financial Institutions Appeals Board (BFIAB), which had been called to review a Central Bank directive for the return of the funds.
The Belize Bank has persistently argued that Prime Minister Dean Barrow had shown bias by his public declarations that his administration would get back the diverted funds, and that bias, in turn, infected and tainted the appeals board.
However, the then Chief Justice, Dr. Abdulai Conteh, in his 2008 ruling, had said that he did not find the appeals board to be tainted; and in fact, he went on to quote sections of the Banks and Financial Institutions Act that he said provide safeguards for ensuring a fair hearing of the Belize Bank’s appeal, as guaranteed by the Belize Constitution (section 6).
Musa had said that US$10 million from Venezuela—sent overseas to Turks and Caicos—had been earmarked to pay the UHS debt, but former Central Bank governor said otherwise and executed a special examination of the Belize Bank.
The October 2011 Privy Council judgment notes that whereas former Prime Minister Said Musa had said that the US$10 million had been earmarked to help settle the UHS debt, former Governor of the Central Bank, Sydney Campbell, had indicated that the written wiring instructions did not indicate for whom the funds, sent from Venezuela to Belize, were intended.
The Privy Council observes that the funds were actually sent overseas, to the Turks and Caicos Islands, rather than being kept in Belize.
“Notwithstanding the absence of wiring instructions, the $10m was credited to one of the bank’s accounts in the Turks and Caicos Islands,” said the judgment.
The Privy Council said that the transfer of public funds to the bank’s private overseas account seemed “a remarkable thing to do.”
The Council detailed the subsequent order for the return of the money from the bank to the government:
“On 14 March 2008, as a result of their investigation, the Central Bank issued two directives under section 36(5) of the Banks and Financial Institutions Act. Only the first of these is relevant in the present appeal.
“It was in the following terms: ‘[The Bank] should forthwith credit [the government’s] account with [the Central Bank] with US $10m as per ‘Payment Details’ stated on wire transfer instructions sent by Bandes-Fideicomisos De Venezuela on the ‘Cash Payment Confirmation’ dated 28 December 2007’.”
The Belize Bank fiercely challenged the directives, and its case was heard by the BFIAB. The Belize Bank later alleged apparent bias of the board, since the Prime Minister appointed two of three board members, Jaime Alpuche and Jeffrey Locke. The third was Supreme Court Justice Samuel Awich, appointed by the then Chief Justice to head the Appeals Board.
“…the bank is therefore entitled to a hearing of its appeal before an independent and impartial tribunal.”
The Privy Council agreed that, “…the bank is therefore entitled to a hearing of its appeal before an independent and impartial tribunal.”
It pointed out, however, that Financial Secretary Joe Waight, who made the recommendations to Barrow for the appointment, had signaled that apart from the two men being eminently qualified to hold the seats on the board, that it was “normal practice for members of such Appeal Boards to take the Oath of Allegiance and Office prescribed in Schedule 3 of the Constitution – the same oath that is taken by Judges of the Supreme Court – before they enter upon their duties.”
The Privy Council also signaled that the ministerial appointees cannot control the board, since a quorum for the Appeals Board is two members, with one being the Chief Justice or his nominee, in this case, Awich. Decisions are by majority and that majority must also include the justice of the court.
The Belize Bank argued that Barrow could have delegated his power to appoint the two board members, in light of “his obvious and frequently stated commitment to recover the $10m.
”
“As Prime Minister he [Barrow] had an obvious responsibility to recover money that he believed had been wrongly diverted from public resources.”
The Privy Council panel said, however, that, “As Prime Minister he [Barrow] had an obvious responsibility to recover money that he believed had been wrongly diverted from public resources. And as the Minister of Finance he was obliged to make appointments to the Board. In his position of Prime Minister he can hardly be criticized for informing the public that he was determined to recover the money for the people of Belize. This is the stuff of politics. Simply because he had a statutory obligation to make appointments to the [Appeals] Board, he should surely not be muzzled from public comment about what he perceived to be irregularities in relation to money which he believed should have been used for public works.”
The judgment furthermore says, “The [Privy Council] Board has decided that an informed and fair-minded observer would have no difficulty in concluding that the statements made by Mr. Barrow did not give rise to the risk that Mr. Alpuche and Mr. Locke would behave other than in a perfectly proper fashion. The Board has, therefore, concluded that the appeal must be dismissed and the Board will humbly advise Her Majesty accordingly.”
Whereas most members of the panel agreed that the Belize Bank appeal should not be allowed, one judge on the panel disagreed.
Dissenting Privy Council judge declares objectivity and impartiality “open to doubt.”
Lord Brown commented: “…in the light of the appointment procedure adopted, the objective impartiality of the Appeal Board as constituted would be likely to appear to a fair-minded and informed observer open to doubt.
“How could it not strike such an observer that Mr. Waight may well have chosen these two Board members, and Mr. Barrow so speedily have accepted his choice, because each felt confident that these two would instinctively be more sympathetic, i.e. predisposed, to the Central Bank’s and government’s cause than BBL’s? In short, it is my opinion that such an observer, having duly considered all the facts, would conclude that there was a real possibility that the Appeal Board was biased.”
With the decision of the Privy Council to dismiss the Belize Bank appeal, the bank’s quest to reverse the Central Bank directive and reclaim the Venezuelan money via this means falls away.
In a second judgment issued last week Thursday, however, the Privy Council declared, in a case lodged by the Association of Concerned Belizeans, Senator Godwin Hulse and the trade unions, that the loan note and settlement deed, under which the Musa administration transferred the UHS debt obligation to the Government of Belize, are “not invalid;” however, it does caution that if the governing law makes the loan note (which the court deems to be a promissory note and not a direct loan obligation) illegal, then such a promissory note would not be enforceable.
Have your say on Amandala’s online poll:
Do you agree that the Government of Belize should be required to repay the Belize Bank the $33 million loan for which former Prime Minister Said Musa gave a sovereign guarantee in favor of Universal Health Services (now Belize Healthcare Partners Ltd.), which defaulted on the debt?