Photo: Port Coral project design

BELIZE CITY, Thurs. Aug. 24, 2023

Michael Feinstein (1st Claimant) and Stake Bank Enterprise Ltd. (2nd Claimant) on Friday, August 18, filed a claim against the Government of Belize (GoB) for special damages of close to $180 million, inclusive of interest. The Claimants argue that they lost that amount of money due to breaches of its own Definitive Agreement (DA) signed on August 25, 2017. Portico Enterprises Ltd., the developer behind the Port of Magical Belize project, is named as second Defendant whom the Claimants say induced the Government to breach the Stake Bank DA, given that the terms of the agreement for the Stake Bank Port Coral project were made public via the Stake Bank Cruise Docking Facility Development Act which came into force on January 24, 2018.

The Claimants split the special damages claim into $148,434,404 for lost revenue and $30 million in interest (and counting) due to a delay of 6 years in their project. In accompanying spreadsheets, the Claimants’ attorney, Senior Counsel Glenn Godfrey presents a breakdown of the revenue loss which includes lot sale revenues, commercial revenues, marina rental-fuel sales, and water park revenues for North Drowned Caye, as well as revenue loss related to Stake Bank Island. Stake Bank Enterprise is also claiming reputational and general damages.

In its background for the case, Feinstein narrates in great detail the actions of the Defendants he claims led to the delay. He notes that up to September 2003, he was an owner of the Belize Tourism Village. He says he sold his interests there following assurances from the Government, including then Prime Minister Said Musa, that the Government would support him if he moved to construct a cruise ship docking facility in the Belize District. We note here that Waterloo Investment Holdings Ltd., the developer behind the Port of Belize expansion project, also claims to have gotten similar assurances from the Government. Feinstein says Musa specifically assured him “that the Government fully understood that the cruise traffic to the Belize port area could only sustain one cruise ship docking facility, and that the government would not allow the construction of another cruise ship docking facility in the area.” Feinstein adds that the cruise ship companies at the time were pressuring the Government to see such a project come to fruition due to the fact that ships were increasing in size and tendering was considered too much of a hassle.

According to Feinstein, in July 2004, he proceeded to acquire Stake Bank Island and North Drowned Caye, then moved to negotiate a Definitive Agreement with the Government. He claims that they would only subsequently find out that the Government had already started negotiating a DA with Port of Belize Ltd. and would later inform them that they preferred PBL to construct the cruise port. Faced with that development, and despite having secured environmental clearance on August 4, 2007, Feinstein says they reached an agreement with the Government that they would refrain from building the Stake Bank project, but would resume their interest if PBL had not concluded its own construction by 2012. When PBL’s project did not materialize by the agreed time, Feinstein says they sought to move their own process along, beginning in 2013. That finally saw the signing of a Stake Bank Definitive Agreement in 2017. But later that year, on September 7, 2017, the then UDP Administration signed a Memorandum of Understanding with Portico. Doing so, argues Feinstein, constituted a breach of the Stake Bank DA, given that “The Defendants knew or ought to have known that approving more than one cruise ship docking facility in the Belize District would have an adverse economic impact on the viability of the Stake Bank project.” Feinstein points to a clause in the Stake Bank DA where the Government commits to support “in the effort to successfully construct, operate and maintain the cruise ship docking facility in accordance with the terms of this Agreement.”

Feinstein subsequently details that their efforts to negotiate financing to build their cruise port and to secure usage agreements with cruise ship companies were derailed by the signing of the Portico MOU. The businessman explains that they would only see funding approved until after August 2019 when they obtained environmental clearance. However, he says that funding came at higher interest rates. Feinstein argues that the signing of the Portico Definitive Agreement on October 1, 2020, by then UDP Government Minister Erwin Contreras compounded the Government’s breaches of the Stake Bank DA because Portico was able to use their agreement to successfully negotiate with the cruise ship operators the usage agreements Stake Bank itself was seeking. This, says Feinstein, led to the Stake Bank project being further delayed.

Feinstein also classifies the move by the Government in April 2021 to grant environmental clearance to Portico and to have a Portico Docking Facility Bill approved by Cabinet in May 2023 as further breaches of the Stake Bank agreement. The Claimants are therefore also asking the Court to grant an injunction that would prevent the Defendants from taking steps to enforce or implement the Portico Definitive Agreement.

In related news, Portico Enterprises Ltd. CEO, David Gegg earlier this week issued an interesting statement where he affirms that the company has no objection to Stake Bank Enterprise Ltd. and Waterloo Investment Holdings Ltd. getting licenses for their port projects, once “all environmental matters are conducted with the utmost transparency and in full conformity with the environmental and other laws of Belize.” It is a notable statement, given not only that Portico faces accusations of itself flouting the law with the signing of its October 2020 Definitive Agreement, among other things, without yet having received environmental clearance, and also because the Portico Definitive Agreement that is of questionable legality includes a clause which states that no other cruise port can operate within a 25-mile radius of its own port facility.

Portico also reports that it is in full compliance with the requirements of its Environmental Compliance Plan and has paid environmental monitoring fees totaling $300,000 for two years. Making reference to the backing of its partners, Royal Caribbean and Boskalis, with whom Portico has signed MOUs. Gegg said, “We anticipate the passage of an Act in Parliament in the near term which is intended to imbue confidence in our financial partners that Belize is capable of providing an acceptable regulatory framework to facilitate investments of this scale, as would be expected from other jurisdictions. The geology of Belize and the evolution of the Cruise Industry have caused the Markets to determine that Magical Belize is the location of their choice for the industry. I ask of our leaders that all processes be fast tracked in order to insure the benefits that so many Belizeans await. The time to build is now.”