Today the Commission of Inquiry into the Development Finance Corporation (DFC) resumed public hearings with former DFC chief executive officer, Troy Gabb, taking the hot seat for most of the day.
Beginning this morning Gabb testified before the Commission on a number of key questions, ranging from how he got his job at the DFC to how he got a DFC property for $15,000 on the island of San Pedro, Ambergris Caye for what the Commission said was $53,000 below market value—a major deal of less than a quarter on the dollar or a whopping 78% discount.
But the high point of the day came early this afternoon when former DFC chairman, Glenn D. Godfrey, showed up before the Commission, but with a different attorney representing him – none other than former Solicitor General, Elson Kaseke – the same attorney representing Mrs. Narda Garcia, who is suing the members of the now dissolved Senate Special Select Committee which did a similar probe into the Social Security Board.
So it was not surprising that the Commission of Inquiry erred on the side of caution when Godfrey offered to testify—up to midnight if necessary—to answer the Commission’s questions, even though his attorney had said that he was not properly served and supplied with the forensic audit documents.
Those documents, the Commission informed, were sent along with a prior summons to Dickie Bradley, who had appeared on February 14 as Godfrey’s attorney before the Commission. Bradley had informed the Commission then that Godfrey could not appear to testify because he was out of the country. Today when Godfrey showed up, however, it was Kaseke who showed up as his legal rep.
Commissioner Merlene Bailey-Martinez had to put the brakes on Godfrey when he sat before the Commission and remarked that the “forensic audit report you have there is not worth the paper it’s written on.”
The Commissioner told Godfrey that she would appreciate it if he would not cast any aspersions or fling any derogatory remarks on a document he has never seen, as was claimed in the letter Kaseke presented to the Commission this morning with respect to Godfrey’s appearance.
Commissioners Bailey-Martinez and Justice Herbert Lord also asserted that until the Supreme Court or Court of Appeal strikes down the report of the forensic auditor, the Commission has the right to act on it.
After an extensive back and forth between Godfrey and the Commission, and a break for the Commissioners to consult, the Commission decided that it would not let Godfrey testify today but would reissue a summons to Godfrey through his new legal rep, and asked him to reappear next Tuesday, March 13, at 9:30 a.m.
Pictured on our front page is Glenn Godfrey as he is leaving the Belize Institute of Management where the hearings are held. He dodged Amandala’s camera and called us “the paparazzi.” As he hurriedly got into a nearby SUV, he also mumbled snide remarks about our “lyad” articles.
Somewhat reminiscent of his statements in 2005 when he appeared to testify before the Senate Special Select Committee, Godfrey said to the Commission this morning that he would take several objections to the Commission, which he would flesh out in his oral presentation when he appears before the Commission.
Troy Gabb went further to say that the three volumes of “purported auditor’s report” delivered to him with a summons on March 3 breached his rights under natural justice, because the auditor did not check any matter with him in which adverse opinions are expressed in the report. He furthermore went on to challenge the legality of the auditor’s appointment by the Government of Belize.
At the start of his testimony Gabb was questioned about the manner of his recruitment as DFC’s CEO. He told the Commission that he was interviewed at Glenn Godfrey’s private office on Freetown Road in the presence of the deputy chairman and another director. He said that he had applied for the job a year before, when he saw a vacancy notice. Gabb claimed that he never took his instructions from the Minister responsible for the portfolio while he worked at the DFC.
Over the course of today, Gabb had a lot to answer for, but often said he could not recall any specifics. He was questioned on a number of transactions, including the legality of the rescheduling of the Novelo’s loan; DFC’s involvement in the $9 million Mahogany Heights deal with Abdul Hamze; the hotly debated $50 million “round-tripping” transaction the DFC made with the Belize Bank and the Government of Belize, and which Government later reversed after the IMF questioned its propriety; transactions involving Glenn Godfrey companies, including a $24 million guarantee the DFC board approved for Intelco; the $30 million Novelo loans; and some personal transactions CEO Gabb did with the DFC.
On the issue of Mahogany Heights, Gabb told the Commission that when DFC found that there was a problem with the demarcation of the property Government had gotten from Hamze at Mile 31 on the Western Highway, DFC discontinued payments. Gabb said that at the time he was not aware that there was an encumbrance on the same property because of a prior deal between Hamze and a Chinese investor, whom we now know to be Johnny Kuo.
Gabb told the Commission that DFC got the property from Government, and Government instructed the DFC to make payments for the property to Hamze and in what amount. There was no indication how much of the $7 million Government has paid towards the property, came through the DFC or directly from Central Government.
Commissioner Bailey-Martinez noted that DFC’s own valuator, Emerson Burke, had said that with all the “save and except” clauses that came along with the conveyance for the property, he came to a negative figure for DFC’s portion.
The biggest question of the day was the $50 million question about what Commissioner Herbert Lord called “a phantom transaction.”
The Commission asked Gabb about the March 17 DFC board meeting which so far, the Commission’s investigations have been unable to confirm.
Gabb also said that he knew nothing about the meeting, and when the Commission questioned why he made reference to it when he wrote of the $50 million loan, Gabb said that he must have been informed by the then chairman, Omar Espejo.
While the Commission has previously revealed that the DFC had been making interest payments to the Belize Bank on the loan, which was later reversed, Gabb said that his “understanding” was that GOB reimbursed the DFC every penny of what the transaction had cost it.
The Commission also asked Gabb about a $24 million guarantee the DFC’s board approved for a Glenn Godfrey company – Intelco. It was a special guarantee approved for a bank in Guatemala, but if that loan were not approved, the guarantee would have been transferable to another financial institution. Gabb said that the guarantee “didn’t happen” even though the board had approved it.
Another set of Godfrey-related transactions that were called into question were those whereby St. James got $17.1 million through one set of securitization transactions with the DFC. The Commission is still trying to find out how come St. James did not pay certain fees for the transaction; rather it was the DFC, it appears, that has had to meet the payments.
According to the Commission, the St. James transactions cost the DFC close to $8 million. But Gabb said that that was not the case, as far as he remembers. He claims that the figure was closer to $2 million in expenses and DFC did not foot the bill.
More than the figure that DFC would have had to meet for these St. James related expenses, the Commission questioned the legality of how the decision was taken – a decision that the Commission said was not documented in the minutes of the DFC’s board of directors.
Gabb said that he did a “round robin” himself and called up the directors, but he does not remember any documentation being made of the board’s decision.
The Commission noted that board members have said that they have no knowledge of this transaction.
“Mr. Gabb, I must say that the matter of the prudence of your giving instructions is based on telephone conversation, and I have to look at the legality of your giving instructions to commit 7.9 million of the funds of the DFC based on telephone discussions. It has to be looked at very carefully,” Commissioner Bailey-Martinez told Gabb.
Then the questioning came down to Gabb’s personal assets. First he was asked about a property he had bought for $10,000 from Anna Vellos on May 7, 2002, and then sold to Roy Young for $100,000 with financing facilitated by the DFC.
The Commission asked who appraised the property. Gabb said that there should be an appraisal on file, but the Commission noted that there is none. What the Commission also revealed is that the approval carried only the signature of Mr. Godfrey and a Mr. Bautista, a then member of the Board Management Credit Committee.
Following this were questions about a San Pedro Ambergris Caye property Gabb had bought from DFC. The total cost of the property – lot and building – was $68,000, but according to the Commission, CEO Troy Gabb got it for $15,000 – $53,000 below market value – after writing to Godfrey.
While the Commission brought up a number of lots in the area, Gabb put on record that he had purchased only one property in San Pedro, and that he did nothing irregular by writing directly to the chairman for the property, which he purchased with a loan.
Commissioner Bailey-Martinez said that at its best, this is considered insider trading, to the detriment of the funds of the DFC. She said that it was an unusual transaction, which benefited Gabb.