Last weekend we reported on a set of guarantees valued in excess of $24 million that the Government of Belize – and particularly Hon. Ralph Fonseca, former Minister of Budget Management – gave to a group of four Glenn Godfrey companies in 2001 and 2002. This week the newly resurrected website of freebelize.org posted a document, allegedly a spreadsheet leaked from the Ministry of Finance, that reveals $64 million in direct and indirect debt the Government holds for the Glenn Godfrey group of companies.
We checked with the Ministry of Finance today, and the numbers were corroborated. However, according to financial advisor, Joe Waight, there is a dispute between the Government and Godfrey as to who owes whom what amount, and Godfrey has made a counterargument that Government would still owe him about $5 million, after he offsets amounts he claims are due, mostly for telecommunications-related projects.
The details of the financial transactions are rather complex, but they entail debts largely related to telecommunications, and tagged under Intelco and its forerunner, LGS Services Limited. Some of the debts we had learned of as early as 2004, and they were further explained while the Senate Special Select Committee did its work between 2005 and 2006.
There are $40.5 million that the Government had guaranteed through the securitization program in transactions that involved the Godfrey-related companies and St. James Building Society – another Godfrey-related entity. Those loans fell into default almost three years ago, and Government is still paying the bill, some of it by giving tax credits to the Belize Telecommunications Limited (BTL).
Additionally, the Government continues to pay on a US$6.7 million loan Intelco has with the International Bank of Miami, and it claims that payments to the bank are in settlement of a lease with Intelco.
When BTL was owned and controlled by Jeffrey Prosser of Innovative Communication Corporation (ICC), it agreed to pay some of Intelco’s debt under the securitization program. BTL reportedly paid just under $6 million, with the understanding from the Government that it would benefit from a merger of Intelco and BTL. When BTL returned to Michael Ashcroft, however, the deal was dead, and because there was really no merger as the Government had promised, the Government has had to reimburse the new BTL by giving a business tax credit to the company. That arrangement was intended to last roughly three years, Waight told Amandala.
The Government did, evidently, make good on its promise to liquidate some assets held by the Godfrey group, and the Ministry of Finance claims that GOB had earned $19.2 million from the sale of real estate properties in Ladyville to the same BTL, but the Government still has the Cahal Pech property, which is held under the securitization deal and can’t be sold, and a property in San Pedro that Finance sources say GOB intends to liquidate shortly. No value has been quoted for these properties.
There is another $10 million of direct debt associated with the Galleria Maya project and the Wide Area Network which Government now uses for communications among its various offices. In the first instance, a big part of the debt has to do with Government’s former stake in the Galleria Maya project. Government had sold back its shares to Godfrey, deposited the proceeds in the Antigua Overseas Bank, but lost it because of a debt default under the Galleria Maya project. The Government has been able to claim some assets from this transaction, but the proceeds after liquidation were not enough to recover the original US$5 million, leaving a balance of almost BZ$8 million for that transaction.
Government also claims that LGS owes $2.2 million, because under the Wide Area Network project, Government had reportedly paid $9.4 million for setting up the infrastructure. Government contends that LGS was supposed to reimburse the Government the entire amount, but it only paid back $7.2 million.
The total tally from the Ministry of Finance for direct liabilities is $36 million, but there is another $28 million in indirect or contingent liabilities – $24 million in principal plus another $4 million in interest – associated with the three put options that we have been reporting on.
The big question is: will Government ever collect? We have been advised that while the name of Glenn Godfrey has been associated with these liabilities, the agreements were actually made with limited liability companies, some of which are insolvent and defunct.
While there is the view that much of the debt would, at the end of the day, remain un-collectible, Prime Minister Said Musa told the media last week that even though there is a dispute over the debt Government had guaranteed for the Godfrey-related companies, the matter is being pursued.
Legal advisor in the Ministry of Finance, Gian Ghandi, confirmed with Amandala today that the Government has tried to pursue collection of the Godfrey debts. After Godfrey claimed that the Government owed his companies $5 million, the Government wrote a letter, roughly two months ago, detailing its claim, as outlined above.
Ghandi said that while Godfrey’s office has acknowledged receipt of the Government’s letter, there has to date been no reply, and so the Government is preparing to take the matter to court.
He said that the Government has already deducted from the liabilities, amounts Godfrey said were due to his companies for Intelco and LGS, and Government’s direct claim would stand in the region of $20 million.