Roughly US$104 mn in payments due and Government would have to borrow to meet payment
BELIZE CITY, Mon. June 12, 2017–The Government of Belize is hoping to secure the services of a Trinidadian lawyer operating in the British Virgin Islands to help argue its case at the Caribbean Court of Justice in what will likely be a new round of litigation at the country’s highest appellate court, absent resolution by the Government of Belize and the Michael Ashcroft group of a dispute over the final US$104 million in payments due on June 28 for the Government’s 2009 acquisition of Belize Telemedia Limited.
Under the September 2015 settlement agreement between the parties, the litigants are allowed to deduct their expenses incurred in pursuing the claim from the portion of the almost half-a-billion dollar award attributable to the accommodation agreement of 2005.
It turns out that the Ashcroft group is claiming almost 99% of the money, said Financial Secretary Joseph Waight.
Two companies of the Ashcroft group which were formerly shareholders of BTL before the administration of Prime Minister Dean Barrow nationalized the company back in 2009 have filed a letter of claim and a certification from two auditors saying that their numbers are correct.
There are two problems with this claim, said the Financial Secretary. One is the reasonableness of it and the other is the Government’s inability to pay the money in US dollars.
Under the settlement agreement, the portion attributable to the accommodation agreement, which accounted for about two-thirds of the award, minus expenses incurred by the litigants, was to have been paid in Belize dollars, reducing the impact of the pay-out on the nation’s foreign reserves.
Only the proverbial crumbs would be left from Ashcroft’s table for public projects in Belize, if the claim is met
When the Government argued last year, on making the second payout to the former shareholders, that it could not meet the demanded payment in US dollars, and furthermore that some of those funds were to have been paid in Belize dollars for projects in Belize, the CCJ ruled that the Government had to pay the entire sum due last year in US dollars, based on the wording of the agreement. That meant that nothing was left for public projects in the country.
Waight said that even if the CCJ rules that GOB has to pay the sum all in US dollars this time around, and not in Belize dollars as it was anticipating, it would ask the court to allow it to pay in installments, since the Government would have to get in a queue at the Central Bank to obtain the funds. The downside of that would be that interest will continue to accrue on the outstanding payment, potentially causing it to balloon if default interest were to be tagged on.
The 2017-2018 budget did not make allowance for this June 28 payment, said Waight, adding that a supplementary budget would have to be introduced in Parliament to cover it.
The bottom-line is that Government does not have the money to pay, and the $50 million it has earned from the sale of utility shares, said Waight, is not enough to settle the tab.
He told us that the Government would have to resort to borrowing to meet the final payment.