CCJ varies injunction barring payment of BTL dividends

When Belize Telemedia Limited (BTL) declared dividends of 25 cents a share at its annual general meeting last month, the Government of Belize, the Belize Social Security Board (SSB) and the Central Bank were not paid dividends, because of a December 2012 order by the Caribbean Court of Justice (CCJ), freezing the payment of dividends to the public sector shareholders, pending the outcome of a legal challenge against the nationalization of BTL.

Although that case has yet to be fully resolved, the CCJ today heard an application from the Government of Belize to have that interim injunction discharged.

After a hearing held Tuesday morning in Port of Spain, Trinidad, where the CCJ sits, the court ruled that half the dividends declared for 2012 and 2013 should be paid to the parties.

The original CCJ order did not, however, affect BTL’s smaller private shareholders, who have been able to collect their dividends.

A press release issued by the Government today said, “Dividends for 2012 had been declared in the sum of $11,889,000. Dividends for 2013 had been declared in the sum of $12,388,000.”

It added that, “All dividends payable to the small shareholders of BTL were paid in December 2012, as permitted by the CCJ, but over 90% of the dividends, due to GOB, CBB and SSB, were held back.”

The parties in the CCJ case are the Government of Belize, through the Attorney General’s Ministry and the Minister of Public Utilities, represented by Denys Barrow, SC, Naima Barrow and Iliana Swift on the one hand; and Dean Boyce of Sunshine Holdings, represented by Peter Goldsmith, QC, and Godfrey Smith, SC, and British Caribbean Bank, represented by Eamon Courtenay, SC, and Jose Alpuche, on the other hand.

At the start of the proceedings today, the court asked the parties if they found it agreeable for the court to vary the 17th December 2012 order, so that 50% of the dividends due to the public sector shareholders could be paid to them. The CCJ permitted a time for deliberation, after which the parties reported back to the court.

Whereas Senior Counsel Barrow indicated that the Government parties are “quite open to having this matter resolved along the lines that the court had suggested…,” Boyce and BCB made two propositions: (1) that the SSB and the Central Bank give an undertaking that, if the court were to find the nationalization void and order the return of the shares to the former shareholders, that the SSB and the Central Bank would return the dividends they are collecting; and (2) that the dividend payments for the Government should be held in escrow by the court, pending the outcome of the appeal.

Courtenay told the court that the justification for the second proposition is a statement from Financial Secretary Joe Waight that the Government had not included the dividends as receipts in the current budget, and also that the Government had represented to the International Monetary Fund (IMF) that it would use the dividends and proceeds from the sale of BTL shares for compensation to the former shareholders of BTL.

“Since they have not budgeted for it, the government’s portion should go into escrow,” Courtenay argued.

Barrow told the court that “…what we are getting here is the equivalent of treating the Government of Belize as if though… it were a panades shop – in Trinidad I am sure you would say a roti shop. The Government of Belize cannot be told by these litigants that it must hold monies which it receives … in escrow.”

He also told the CCJ that the claim made by the attorneys for Boyce and BCB, regarding the statement to the IMF is false. “They are misquoting,” Barrow alleged.

He also indicated that the SSB and the Central Bank, which are not party in the court case, “are perfectly entitled to take the view” that the nationalization created and vested certain rights in them.

Barrow questioned whether it would be appropriate for the CCJ, in the event the nationalization is declared null and void and the 8th Amendment to the Belize Constitution is struck down, to order the return of shares and to return the company to the former shareholders. He also questioned: Would the court need to consider implications on third party rights and all that may have taken place in relation to hundreds or perhaps thousands of contracts with the existing board?

The CCJ pointed out that they see no reason why the Central Bank and the SSB should give such an undertaking.

It noted that the dispute before the court involves 11,092,000 shares, or 23.39% of BTL’s shares, but those 11 million shares are within the shareholding of the Belize Government, so there is no need to make a proprietary claim against the other parties.

Queen’s Counsel Goldsmith said that part of the consequence of a reversal of the nationalization may be an order from the court for shares to revert to their former owners, and the court may have to consider the consequences of that.

Although the court decided to release half of the dividends due to the public sector entities for 2012 and 2013, it emphasized that further dividends should not be paid without permission from the CCJ.

The court noted, though, that it would be a failure if the CCJ does not issue a final order before BTL holds its next AGM. The CCJ expressed the hope that the case should be concluded before then; but if something were to go radically wrong, causing the matter to be delayed that long, the parties will need to seek leave from the court for further payment of dividends to the Government.

A statement issued today by the BTL Employees Trust on the CCJ hearing noted that, “The order restraining the board of Telemedia from dissipating any of the assets of the company remains in place until the CCJ has finally determined the appeals.”