BELIZE CITY, Thurs. Feb. 2, 2017 – – A succession of litigation wars between the unrelenting Michael Ashcroft Alliance and the Government of Belize, spanning a decade and a half, enters a new round this week, with an announcement from Caribbean Investment Holdings Limited (CIHL), formerly BCB Holdings, that it will mount a constitutional challenge to two pieces of legislation recently signed into law, in what Government says is an effort to stop Belize’s foreign reserves from being siphoned to pay $100 million in arbitration awards to the Ashcroft group.
Ashcroft fights GOB’s new law – GOB seeks injunction
At the same time, the Government of Belize is seeking an anti-enforcement injunction in Belizean courts against the Belize Bank and CIHL to stop them from going after the Central Bank’s foreign reserves in the United States and/or elsewhere. We understand that a filing may be made sometime tomorrow, after the Caribbean Court of Justice pointed counsel for the Government of Belize back to the Belize Supreme Court.
The pending court filing is further to the introduction of laws recently approved by Parliament to confirm the international immunity of the foreign reserves of the Central Bank of Belize from being seized to satisfy the foreign arbitration awards. Last Monday, the Ashcroft group filed for an enforcement order in the US—an action which was followed by the passage of new legislation in Belize to not only protect the foreign reserves but also to criminalize with a fine of $250,000 and/or jail time of 2 years any attempt by any party to go after the foreign reserves of the Central Bank.
In the Senate on Monday, Opposition People’s United Party Senator, Eamon Courtenay, SC, a Belizean attorney who represents the Ashcroft Alliance, signaled that the constitutionality of the legislation could be subject to challenge.
In a statement issued today, CIHL said that “it intends to bring a claim in the Belize Supreme Court to challenge the constitutionality of the Central Bank of Belize (International Immunities) Act and the Crown Proceedings (Amendment) Act, which were recently passed by Parliament.”
The company said that the legislative maneuver by the administration of Prime Minister Dean Barrow “is a clear attempt to intimidate and restrain CIHL from pursuing its rights in judicial proceedings that the Government has lost.”
It added that a similar move back in 2010, to amend the Supreme Court of Judicature Act, was successfully challenged in Belizean courts and overturned by the Caribbean Court of Justice in 2014.
This, the release said, “ultimately led to the Telemedia settlement after an unnecessary 7-year delay with substantial costs on all sides.”
Denys Barrow, SC, counsel for the Government of Belize, has told Amandala that they received verbal notification some days ago of CIHL’s intent to file suit but he has not seen anything in writing; and Courtenay was likewise informed by him of the Government’s intent to seek an urgent anti-enforcement injunction.
How could such an injunction issued in Belize’s domestic court protect against the enforcement of a US court order? Barrow told us that the companies in question are two nationals registered in Belize and failure to abide by any injunction of the Belize Supreme Court would constitute contempt.
In the Senate on Tuesday, PUP Senator Valerie Woods said that all this litigation has not benefited Belizeans—but attorneys, those connected with both the United Democratic Party and the People’s United Party—and she was sure to name, among them, her husband, Godfrey Smith, SC, who has served as Lord Michael Ashcroft’s attorney, as well as her friend and colleague, Senator Courtenay.
“Quite frankly, Belizeans young and old of every ethnicity … are simply sick and tired of all these legal games…” Woods said. “Games have been played; games are being played and they are being played by all sides. And it needs to stop!” she said.
By all appearances, though, the litigation is not going to stop anytime soon. Amandala readers will recall that the first major lawsuit between the Ashcroft group and the Government emerged in 2002, when the parties sparred over the manner in which the then administration of PUP leader Said Musa was liberalizing the telecommunications sector by opening up the market for new companies to compete with Belize Telecommunications Limited, now Belize Telemedia Limited (BTL).
At the time, Ashcroft, who was in control of BTL, was furious over a 15-year exclusive contract which the Musa administration had given to former PUP Minister Glenn D. Godfrey to provide telecommunications services to the Government of Belize—which had long been BTL’s biggest client. The arrangement began with LGS and was then solidified with its successor company, Intelco, via a contract issued in September 2001. BTL sued in 2002 but lost in a case which went before then Supreme Court judge Christopher Blackman.
Interestingly, at the time, Eamon Courtenay was the attorney on record for the Government of Belize, specifically the Attorney General and Ministry of Finance; while Denys Barrow represented Intelco and Lois Young-Barrow represented BTL.
Of note is that Intelco, which Ashcroft said was “a pension plan for the boys,” folded, resulting in an arrangement made by the Musa administration with Ashcroft for BTL to assume Intelco’s assets. This resulted in a series of highly concessionary agreements in favor of the Ashcroft group of companies, which had also lent monies to affiliates of the then ruling party to finance Universal Health Services, a private hospital, via a government-guaranteed debt instrument. That matter has also gone to foreign arbitration, resulting in yet another arbitration award against the Government Belize, which the Ashcroft group is trying to have enforced in US courts. The tab in this dispute is over $37 million.
Furthermore, as we recently reported, Godfrey has sued the Government in the US to collect US$22 million, which he says was owed to him in consequence of a master lease agreement with Intelco, which the Barrow administration has—like the accommodation agreement—disputed on the claim that the equipment was defective. Last month, the Government of Belize moved the US Court of Appeal in the Eleventh Circuit, with jurisdiction in Georgia, Florida and Alabama, USA, with a petition to dismiss the claim filed by GDG Acquisitions LLC, a company which Godfrey formed specifically to pursue the lawsuit, which he won in the US in 2014. In the contract, the then administration remitted jurisdiction to the US and waived sovereign immunity—also highlighting concerns that Godfrey may pursue a similar path as Ashcroft in seeking payment from the foreign reserves.
Furthermore, the Barrow administration has been ordered to pay to investors in Newco an arbitration award of $8.5 million, which was levied as a consequence of a decision by the Musa administration to cancel the airport concession given to the investors and to instead give the concession to a group of Belizean investors linked with the then administration.
In the Senate on Tuesday, Senator Elena Smith, representative of the trade unions and civil society, said that Belize is “between the devil and the deep blue sea.”
Senator Smith asserted that both governments, that led by the PUP and that led by the UDP, have made some questionable decisions.
She added that, “…one government started the mess and the other added to the mess. That is the truth of the matter, we cannot hide from that.”
The publication, Americas Review 2003-2004: The Economic and Business Report by World of Information/Walden Publishing, said, in reporting on the then dispute between the Government and Ashcroft that: “Ashcroft is reportedly ‘livid’ at the ‘betrayal’ of the ruling party [meaning the PUP] and has indicated that he will switch his allegiance to the opposition United Democratic Party (UDP). The sense of betrayal has been heightened by a 15-year government contract with Intelco, signed in September 2001, which makes BTL’s rival the state’s sole provider of telephone and Internet services.”
Ashcroft’s BTL refused to provide interconnection to Intelco, and the first company to be afforded connectivity to permit customers to make calls regardless of the provider of the person they want to call was Smart—a company in which Ashcroft now incidentally holds majority stake, in partnership with members of the Briceño family.
Of note, though, is that when legislators moved last Friday to pass laws to block attempts by Ashcroft to move on Belize’s foreign reserves, all members of both the House and Senate supported the bills— most notably Opposition Leader Johnny Briceño as well as Courtenay, local counsel for Ashcroft.
It now remains to be seen what pronouncements Belizean courts will make, after hearing the parties both on the constitutional challenge and on the request for the anti-injunction suit. It also remains to be seen whether the parties will again move to negotiate some other form of settlement of their protracted dispute.
After the last settlement agreement hatched out in the days leading up to the 2015 general elections, the Barrow administration lost at arbitration in another dispute with Ashcroft over BTL, and in consequence of that ruling, the Ashcroft group was awarded nearly half-a-billion dollars. Much of the award has been paid, except for another $150 million to $180 million due to be paid around mid-year—for which we have been told the Government will have to borrow to meet payments.
Meanwhile, there have been suggestions that if the Government is unable to convince bondholders to amend the terms of the 2038 super bond, it may be unable to meet the February 20 payment.
As we go to press tonight, there is no word from bondholders that they will accept an extended offer due to expire, tomorrow Friday, although we are advised that the parties are still discussing a possible revision of the super bond terms.