On September 5, 2001, the Government of Belize sold US$44.5 million worth of bonds on the international market to a trustee, the Bank of New York. The bonds were backed with assets, primarily those of St. James.

According to Social Security, it sold approximately BZ$100 million of mortgages, and bundled along with them were BZ$45.3 million from St. James. About BZ$41 mn of the mortgages (or 91%) came from Glenn Godfrey?s companies. The details of those loans are outlined in Table 2, published along with this article.

On September 25, 2001, three weeks after the bond offering closed, the Government of Belize gave Intelco a 15-year exclusive contract to provide it with telecommunications services. BTL challenged GOB?s actions and refused to give Intelco interconnection, claiming that GOB had additionally subsidized Intelco and created an un-level playing field.

Between May and August, 2001, Intelco/LGS, had negotiated with the Belize Telecommunications Limited (BTL). The intent was to sell the assets of LGS, Intelco?s forerunner, and the GOB contract to BTL?s then owner, Sir Michael Ashcroft. Even though the Prime Minister brokered the deal, Ashcroft did not buy. Instead, he accused GOB, in a Supreme Court suit, of attempting a ?sting operation,? according to Ashcroft.

It has now been confirmed that it was the Government of Belize that helped Godfrey get international funds to finance the failing Intelco.

According to DFC?s CEO, Troy Gabb, the $20 million borrowed under securitization for two of Godfrey?s companies, Intelco and Western Caribbean Properties, in September 2001 were never used for the purposes that the borrower had claimed?to establish condominiums. ?The indications are that it was then diverted to Intelco,? said Gabb.

In November, 2003, the Prime Minister and his new Minister of Finance, Hon. Ralph Fonseca, formalized negotiations with American Jeffrey Prosser to buy out Ashcroft?s BTL holdings, plus the public?s holdings in BTL. It turns out that Prosser, BTL?s new owner, is expected to buy Intelco by the end of the month.

SSB?s CEO, Narda Garcia, said that as soon as Intelco is sold, GOB?s $31 million exposure to Glenn Godfrey?s companies (as outlined in the Table 2) would no longer exist.

Under the securitization program, it was the Government of Belize that guaranteed the loans for Godfrey?s group of companies. Table 2 shows that because Godfrey had defaulted on most of the payments, SSB had to pick up the slack and pay $5.6 mn to the international lenders.

On Monday, however, the SSB informed us that Godfrey had repaid the $5.6 mn plus 13% interest. But there was still $31 mn of remaining debt that Godfrey has to cover, and if he defaults again, GOB will again have to again pay the financiers and hope that it could likewise collect from Godfrey.

It addition to its $100 million exposure under the securitization process, the SSB has about $45 million outstanding from debtors, some of whose arrears are 6 years old. The biggest debtor is the DFC, which owes SSB a total of $40.6 million. (See Table 1.)

According to Gabb, when DFC?s sells $146 mn worth of its assets?most likely to Ashcroft?s Belize Bank, which has already fronted $50 million to DFC in the form of a loan?the first obligation it will settle is that with the SSB.

We note, as outlined in Table 3, that DFC?s assets have grown during the reporting period Dec. 98 to Sept. 03, by $365 million. However, the Ministry of Finance and Central Bank?s reports indicate that GOB has poured $334 million of its proceeds from foreign loans to DFC between 2001-2003 alone. Additionally, DFC has benefited from direct financing from foreign lenders and from domestic financing from the Central Bank.

It is a wonder then, that according to the International Monetary Fund and Bear, Stearns and Company, the DFC is now ?insolvent,? and incidentally, one of its biggest private debtors, Novelo?s, has been under receivership since March of this year.