On Thursday, May 24, the nation breathed a collective but uneasy sigh of relief when the Prime Minister, Hon. Said Musa, announced that he would not pursue a motion in the National Assembly to pay off a $33 million debt with the Belize Bank for Universal Health Services, which Musa had guaranteed in secret.
Notwithstanding the announcement, over a thousand protestors still headed to Belmopan, to tell Musa that their watchful eyes would be open to ensure that as he had promised, taxpayers would not foot the $33 million bill. By Friday, however, it was disclosed that there were more secret deals in GOB’s proverbial closet that threaten to cost taxpayers even more. One is that Musa had gone on to sign a new $12 million loan agreement with the Belize Bank. The other was that the Government had entered into a share purchase agreement with the owners of UHS, but had still not stepped in to assume control of the hospital.
On Friday evening, chairman of the Belize Bank, Philip Johnson, swore an affidavit in the case that the Association of Concerned Belizeans, the National Trade Union Congress of Belize, the Medical and Dental Officers Union, and Senator Godwin Hulse, had filed against the Government, challenging the move by Government to settle the UHS debt. The Belize Bank has joined the defense as an interested party, and the Johnson affidavit filed on the bank’s behalf is revealing.
While the Prime Minister had said last Thursday in a statement to the nation that the Government has successfully renegotiated the debt to $29 million, Johnson says that because Government failed to meet its agreement with the bank, that renegotiated deal is off, and they are back to the bank’s original claim of $33.5 million, plus 17% default interest.
While the ACB and its colleagues are challenging this very transaction, and the Government guarantee against which the bank is making its claim from the Government, the affidavit reveals that the Government has borrowed an additional $12 million, with $4 million having already been disbursed to pay off a debt the UHS had to the Development Finance Corporation. Like the guarantee, and the settlement deed and loan note of March 23, 2007, this new loan, contracted, according to the bank, on March 29, 2007, has been secret up until now.
However, the affidavit claims in addition that there is also an agreement between Government and UHS in which the Government agreed to buy all the shares of UHS. The Government entered into a share purchase agreement with the UHS and GOB “has full control and use of the hospital…”
When Government issued a statement today, it said nothing about this share purchase agreement, and the claim that it has already taken over the UHS shares.
We understand that the new loan facility and the share purchase agreement were not disclosed to the majority of legislators and members of Cabinet, just as the guarantee, loan note and settlement deed were not disclosed to them.
Perhaps the most shocking part of Johnson’s affidavit is that the Prime Minister had signed a series of documents with the bank in which it made “express and unequivocal representations,” claiming that he had full authority and the required legislative approval to do so. Those agreements now in question were a $29 million loan for UHS, which the Prime Minister had signed as a party and dated December 9, 2004, along with the Government guarantee; the settlement deed and loan note of March 23, 2007, for $33 million; and the additional $12 million loan of March 29, 2007.
In his affidavit, Johnson set out a chronology of how the bank got involved with the UHS project, and claimed that it was the DFC that had requested money from the bank for UHS, as temporary bridge financing, since the DFC was unable to provide UHS with $24 million it had agreed to lend the hospital. DFC began with a mere $3 million request, and kept asking for more and more money from the bank, but instead of paying, it asked for extensions of the repayment deadlines. While the money was for the UHS, it was the DFC that made the promise to pay the bank, Johnson’s claims.
Now, as far as the bank is concerned, the Government owes $33.5 million from the original loan, plus $4 million from the new loan – a total of $37.5 million.
We note that a day before Musa presented the UHS motion in the House, the Belize Bank’s London attorneys, Allen & Overy, wrote Musa, referencing the settlement deed and loan note for the $33 million, as well as the 2004 guarantee, and asserting that the bank will, if necessary, go for arbitration not in Belize, but in London.
According to the bank, under the terms of the loan note, any dispute arising from the agreement should be submitted to arbitration in London, under London Court of International Arbitration rules. (Musa agreed to surrender jurisdiction to London when he signed the loan note.)
In addition to pursing this avenue for London arbitration, the bank also asserts that it intends to fight the ACB all the way to the Privy Council if need be – a process that it notes could span three years, swelling the $33 million debt to a hefty $55 million.
The bank contends that regardless of the outcome of the proceedings now before the Supreme Court, it will get its money, and it can assert that claim, it says, because Musa first told the bank that he had authorization to enter into the settlement deed and loan note. The bank would also claim that the agreements “were procured by negligent or fraudulent misrepresentations and misstatements made on behalf of the Government.”
The bank now threatens that in the event that Musa committed fraud in entering into the agreements with the bank, when he knew he did not have National Assembly approval, it would seek damages against the Government–in effect, taxpayers.
There is no indication that any of the persons who signed the agreements, namely Said Musa and Francis Fonseca, would be called to pay personal consequences for having entered into these secret agreements – and particularly the agreements of March – without National Assembly approval.
The Belize Bank information has revealed that while there has been much talk about the settlement deed and loan note, there were a total of four agreements that Musa penned in March without disclosing them. The other two are the new $12 million loan with the Belize Bank and the share purchase agreement with UHS.
It is no wonder that in the UHS Motion of May 18, Musa asked the House to “…authorize, empower and direct the Minister of Finance [meaning himself] to approve, adopt, ratify and confirm in all respects all past and future actions of the Government of Belize in connection with all and any of the Belize Bank’s agreements with the UHS and/or the controlling shareholders of UHS and/or with the Government of Belize.” The motion also said that, “…the Belize Bank has agreed to provide an ongoing line of credit,” but did not specify an amount for the new credit.
The revelation of the new $12 million loan, in the wake of Musa’s retraction of the UHS motion on Friday, May 25, has sparked renewed public outrage over the secret GOB-Belize Bank-UHS deals.