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“I do not recollect …” – a forgetful aristocrat

General“I do not recollect …” - a forgetful aristocrat

BELIZE CITY, Fri. Feb. 2, 2007
Claims of ignorance and partial amnesia about problems associated with multi-million-dollar transactions at the Development Finance Corporation (DFC) continue to surface in public hearings held this week by the Commission of Inquiry into the DFC. “I do not recollect” or “I did not know” were the two most frequent defenses Commissioners Merlene Bailey-Martinez and Herbert Lord heard in testimonies today from David Courtenay – former deputy chairman of the Development Finance Corporation, and Hugh McSweaney – former Financial Secretary.
Courtenay told the Commissioners that he only knew that the $30 million loan to the Novelos was disbursed in a single day when he heard it mentioned publicly by the Commission.
At the time of the transaction, Courtenay was deputy director and chairman of the Board Management Credit Committee (BMCC)—whose job was to oversee the proper execution of the loan agreement. And even though Courtenay said that he was not aware of the one-shot disbursement, with cheques paid to Eugene Zabaneh and Novelo’s Holdings Limited, the co-chair of the Commission of Inquiry, Mrs. Bailey-Martinez, told him that there are minutes in the Commission’s possession of a meeting he chaired and those minutes make reference to the one-off disbursement.
Courtenay’s defense was that he must have overlooked that information, because he did not read all the reports that went to him in the packages with minutes for meetings. He maintained to the Commission that he had no knowledge or recollection of the full $30 million being disbursed in one day.
The Commission has raised this issue at other points with previous witnesses and has said that DFC lost all control over the loan by not adhering to the disbursement schedule for the loan. Even after DFC sold the collateral, that loan had a balance of $27.5 million, according to forensic auditor, Mark. C. Hulse, CPA, who gave the report at the hearing on Thursday morning, February 1.
Hulse had also pointed out on Thursday that David Courtenay, and his chairman, Glenn D. Godfrey, usurped control over DFC from the development bank’s executive managers.
The Commissioners asked Courtenay about his business involvement with the DFC, while he worked as a director. Commissioner Bailey-Martinez questioned him in particular about a housing project taken on by CAD Construction, Courtenay’s firm.
Courtenay said that he knew that when the Musa administration took office in 1998, they were elected on a campaign promise to build 10,000 homes, and being the businessman that he is, he offered his services. The Commission revealed that David Courtenay got a $3 million loan, while he served as a DFC director, for a 120-house project in San Lorenzo, Orange Walk. But Commissioners went on to point out that, according to Hulse’s preliminary audit report, half those houses have still not been sold even though DFC has discounted $10,000 off the sale price of each.
Commissioner Bailey-Martinez questioned whether DFC made the investment on economic merits. She summarized the transaction by explaining that Courtenay got a DFC loan to build the houses, sold the houses to the DFC, and used the proceeds of the sale to repay the DFC loan. There was no indication how much money CAD Construction netted as profit from the deal, if any.
Mrs. Bailey-Martinez said that the Commission has testimony claiming that David Courtenay collected a 3% commission on the CAD Construction-San Lorenzo project, even though Mr. Courtenay claimed that he could not remember that.
Under CAD, he later went on to manage the Mahogany Heights project for a 3% commission on the project cost, which he concurred he did receive.
The Mahogany Heights project also came up when the second witness testified in the afternoon. Hugh McSweaney—who served as Financial Secretary between 2003 and 2004, and previously as Deputy Financial Secretary—told the Commission that even though he was clearing payments through the Ministry of Finance to pay Abdul Hamze for the Mahogany Heights land, he was not aware that there was an encumbrance on the property.
Commissioner Herbert Lord informed McSweaney that of the $9.5 million contract price, the Government of Belize had paid $7 million to Hamze, but to date no one at Mahogany Heights has been able to get title to the land on which their house sits because of the encumbrance.
McSweaney suggested that Gian Ghandi, who has provided legal counsel for the Ministry of Finance, would have known of the problem.
Another person who allegedly knew about the encumbrance was Godwin Arzu, who sat on the DFC’s board as the Financial Secretary’s representative. But even though McSweaney served as Fin Sec then, he claimed that Arzu never informed him about the problem. McSweaney said that Ghandi would have handled the issue of the encumbrance.
He told the Commission that the only oversight the Commission could point to for the 500 million plus dollars he oversaw each year was the $9.5 million “oversight.”
McSweaney told the Commission that they made “some mistakes,” but they “did a good job.”
“The Government of Belize’s problem was a cash problem,” said McSweaney. “As far as I’m concerned, we couldn’t do anything to stop the D.F.C. train… Even though we tried.”
Courtenay told the Commission that at the time that CAD got the Mahogany Heights contract, he was no longer deputy chairman of the DFC. He also claimed that at the time the San Lorenzo project decision was made by DFC’s board, he had left the room, as is required when a director’s project proposal is discussed at the board level.
His uncle, Derek Courtenay, appeared with David Courtenay this morning at the witness stand to provide legal advice during the course of his testimony.
There are two more days of hearings scheduled. They continue Thursday, February 8, and Friday, February 9. David Novelo, one of the principals of Novelo’s, is slated to give testimony when the hearings resume.

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