BELIZE CITY. Wed. Jan. 12, 2022– On Tuesday, AMANDALA reported that a letter had been sent by the chairman of the UDP, Senator Michael Peyrefitte, to the Prime Minister, Hon. John Briceño, to request information about an allocation of $15 million approved in October of last year for the payment of legal and advisory fees for the closing of the Superbond and the financial and legal maneuvers that led to the Blue Bond loan agreement.
On Tuesday of this week, a response to Hon. Peyrefitte’s request was issued by the Prime Minister, and in the initial part of that response, the Prime Minister referred to a key portion of Hon. Peyrefitte’s query: who received the legal and advisory fees paid by the government for the handling of the Suoerbond/Blue Bond negotiations. The letter stated the following: “You… know well, Mr. Peyrefitte, the identities of the ‘lawyers and advisors who were paid’ to facilitate that process, because they are the very individuals and entities who worked on the process during the Barrow administration, of which you were a part. And the public also knows who those entities are, because multiple press releases and media reports cited these advisors and their respective roles. What unease can you reasonably harbor about the competence and integrity of the legal and financial advisory team that negotiated the Superbond on the country’s behalf when every single firm my Administration retained had previously been contracted by the UDP administration? Thus, unless you are feigning ignorance, you are well aware of these entities. In essence, you are requesting to find out what you already know.”
In a subsequent portion of the letter, Prime Minister Briceño lists the firms and advisors who worked on Superbond negotiations over the last decade for both the Barrow and Briceño administrations and who were compensated for their work: “Citi Capital Markets, HallMark Advisory, Sullivan & Cromwell, Orrick Herrington & Sutcliffe LLP, David Polk Wardwell LLP, The Bank of New York Mellon, Carter Ledyard, and Milburn LLP, Equip Global Restructuring LLC and Global Bondholders Services Corporation”. His letter then asserted that, other than these well-known professionals who have been working on those negotiations under both UDP and PUP governments of Belize, “there are no other firms or individuals that have received compensation from the Government of Belize in these transactions.”
The letter further outlines how the total amount thar was paid was obtained—indicating that funds were secured via three steps: partially by means of “USD $6m in the Fiscal Year 2021/22 Budget for debt restructuring costs”, after which “USD $10 m was secured to a component of the Blue Bond financing itself” (which was likely funds borrowed from TNC to partially cover fees of at least some advisors or firms.at the closing of the bond), subsequent to which there was a supplementary allocation of BZD $15 million, which he said was a “non-issue”. This piecemeal approach to securing funds to cover fees ultimately resulted, according to Briceño, in total funds of about USD $16 million, along with the BZD $15 million.
The Prime Minister appeared to assert that regardless of how the total amount was pieced together—a portion with US funds, another with Belizean dollars, with some advisors being paid with a subsequent allocation while others were paid with the TNC loan, the list of advisors who received the funds is unchanged. There was an underlying insistence in the letter that regardless of the timing of each advisory firm’s payment, every dollar allocated went only to the advisors on the list presented by GOB —the same professionals employed by the previous Barrow administration—and that no one other than those persons who worked on the complex Superbond-Blue Bond transition received such funds. He also indicated a key factor that further determined the amount paid: the fact that some compensation was tied directly to these advisors’ performance —that is, the amount of savings they secured.
He then provided a breakdowns of those transaction costs and fees—stating that transaction costs for the Superbond buyout were USD $10,226,039 and transaction costs for the Blue Bond were USD $4,342,785 —resulting in total costs of USD $14,568,824. He then noted that “60% of the fees paid were success and incentive-based financial, structuring and conservation advisory fees…while 34% covered legal costs and 6% were for operational expenses.”
The figures presented would appear to indicate that the amount disbursed for the buyback of the Superbond and for the arrangement of the Blue Bond financing transactions was roughy consistent with what was being paid for Superbond negotiations under the previous Barrow administration (which, according to PM Briceño’s letter, “incurred Superbond restructuring expenses totaling USD 19,080,111” —almost BZ $40 million— in 2013 and 2017) with additional amounts being calculated based on the incentive portion of the payment arrangement— as a percentage of the hundreds of millions saved during the most recent transactions. 7News thus noted in its newscast on Tuesday, “The total costs for the Blue Bond… is on par with the Superbond restructurings — but with far greater savings.”
There appears to be no indication as yet that any additional entities, other than the listed firms and advisors who worked on the negotiations, had been paid. But Peyrefitte is insisting that documentation must be shown to prove that no other person or firm other than the advisors and companies who worked on the Superbond and Blue Bond negotiations received payment. As mentioned by AMANDALA in the mid-week issue, “a helpful reference [point] would be the typical remuneration structures outlined by these [international advisory] companies for transactions of such magnitude. These are an international standard that provide insights into what an advisor involved in orchestrating such a complex deal, would receive…”
Peyrefitte responded to the Prime Minisrer’s letter at a UDP press conference this week, however, by insisting that the Prime Minister did not provide documents corroborating his claims and he further said that the sums paid to the various advisors were not included in the information provided.
Peyrefitte went on to classify the 3-page breakdown of transaction costs as “fluff” and “distractions”. He also made reference to the manner in which the funds were secured to cover the various fees—since those funds came from various sources—with the Briceño administration, at the closing of the Superbond, opting to borrow an additional 20 million US dollars from the TNC to cover the closing cost of the agreement, in addition to 12 million Belize dollars that was allocated in March of 2021 to cover such expenses. And he went on to estimate that at closing the government likely had almost 32 million dollars to cover legal and advisory expenses, and then questioned how the 15 million dollars requested in the October supplementary allocation was used, and to whom it was paid.
“After you borrowed extra money to pay for the transactions cost of the Blue Bond, you went and you asked the National Assembly for an additional 15 million dollars, for what? For who? Who got paid out of that? Who got that extra 15 million dollars? The question I ask you is this: after you borrowed 20 million dollars to close the cost, you went afterward and ask for an additional 15 million that you cannot explain why you wanted it,” Peyerefitte said in his remarks.
Since the figures listed in Hon. Briceño’s letter would place the amount disbursed to the Superbond advisors in the range of typical disbursements for such international transactions, especially when the incentive-based portion, calculated as a percentage of the hundreds of millions in savings secured, is factored into the tabulations, it is possible that Hon. Peyrefitte’s concerns/suspicions are based on the timing of the payments related to the Superbond transaction, since Peyrefitte prefaced his question with the words, “If all of these people have been paid at the closing time of the transaction and the closing time of the restructuring”. The Prime Minister, however, had not indicated whether some fees were disbursed subsequent to closing time. It is to be noted that a delay in payment to some advisors in itself would not indicate that funds were given to any entity other than the advisors who worked on this deal.
Nonetheless, Hon. Peyrefitte insisted, “I will write every week if I have to, because he has not answered my question. Who got paid out of that 15 million and how much did each person get paid out of that 15 million.”