Over the past two days the Prime Minister has been engaged in a staged public relations campaign to quell the debate over the Universal Health Services (UHS) guarantee and debt of $33 million. First, his office issued a release from Cabinet on Wednesday, May 9. Then, he issued a prepared statement via voice and print to the media, and third, he released a one-on-one interview with the head of the Government Press Office, with contents virtually identical to his prepared statement.
This morning Musa appeared on the morning talk show of his party’s radio station, Positive Vibes, and at 10:30 a.m. he met the independent media for his first press conference on the UHS issue. Media personnel had their own lists of questions to ask the P.M., and tried to get in as many as they could in the limited 30-minute period for which the Prime Minister entertained questions.
The bottom line message coming from the Prime Minister today was that he does not think he did anything wrong in signing the Government guarantee without telling his colleagues in Cabinet, and that his intentions were good. He says that it is the media that has been misrepresenting the facts of the matter, making it seem that he did something illegal or fraudulent.
“I was motivated by what was my vision, and my party’s vision, and my party’s promise to the Belizean people from ’98 as well as in 2003 to first of all encourage and promote the expansion of private health facilities in this country…” Musa told the press.
The Prime Minister said that he acted upon legal advice he got from the Office of the Solicitor General, the Attorney General, and legal counsel in the Ministry of Finance, Gian Ghandi, that he had full authority to sign as the Minister of Finance.
He said that he simply did not tell Cabinet members and the Financial Secretary, Dr. Carla Barnett, about signing the Government guarantee with the Belize Bank because he did not feel he had to.
“I did not consider it necessary at the time. My mind was focused on addressing a problem that we were faced with, knowing fully well that all members of the Cabinet were aware at that time that there was a DFC arrangement to finance the hospital,” Musa remarked.
According to Musa, there was already a guarantee the Government had given to the bank through the DFC, and the new one he signed was simply a replacement.
However, there were some critical differences between the original DFC guarantee and the new one. The DFC guarantee, signed by the former DFC chairman (whose signature appears illegible on the document) and chief executive officer, Troy Gabb, was limited to $17 million, while the new guarantee Musa signed as the Minister of Finance, along with Attorney General, Hon. Francis Fonseca, was unlimited – it did not quote a figure and pledged to cover all of UHS’s debts with the bank.
We asked Musa: Why did you sign an UNLIMITED sovereign guarantee for UHS at a time when it was already clear that the UHS was struggling to pay on the existing debts, and when the bank had first lien on the assets held as collateral? Was the Government not concerned about the level of exposure that would eventually and inevitably face the taxpayers of this country?
First off, Musa denied that the second guarantee, which he signed in secret, was unlimited.
“The so-called unlimited guarantee is not really unlimited,” he told us, “It is a standard form guarantee that might appear open-ended.”
He goes on to say that the guarantee was given solely on the premise that the DFC had given the firm (UHS) a commitment for $28 million.
This is an interesting claim, because on Positive Vibes this morning Musa said that when he signed the guarantee in 2004, the debt was already somewhere between $27 and $29 million. However, that begs the questions: how did the debt grow so fast (from an initial principal of $17 million to almost $30 million) in 2 years, and why did it grow by only $4 million in the subsequent 3 years under a loan that had the same terms of interest all throughout.
Musa declined to tell the media this morning what constitutes the $33 million debt. He said that while the Government has gotten a statement of account from the bank, sometimes interest is capitalized, and the figures would have to be studied further to say exactly what portion makes up the principal and what makes up the interest.
Formerly, Ministers of government had told the media that as much as 55% of the $33 million debt is interest. Musa did not make any such claim. Today, he also did not comment on the question of whether there were expenses not at all related to the development of UHS that were covered with the UHS loan from Belize Bank.
“At this stage, a lot of things are arguable,” Musa told the media.
He also told us that he penned the guarantee even though the UHS was already in default because (1) there was already a public sector obligation through the DFC, and (2) the alternative would have been to allow the collapse of this institution. He insisted that he acted in good faith, and that there was an expectation that the DFC would continue to monitor the UHS project.
P.M. Musa told the media that his greatest regret is that there is a lot of speculation out there – fed by the media – that he did something wrong or illegal, without the authority to do so, and that somehow the innuendo is given that Said Musa and his party are benefiting from the transaction.
While there has been much debate on the economic aspects of the UHS issue, there has also been a lively debate on the political consequences for how Musa and his administration have handled the UHS issue. A recent SPEAR poll released on Tuesday indicates that 85.3% of the 414 Belizeans polled believe that taxpayers should not foot the bill for the UHS debt, and roughly 68.9% want elections now. But the Prime Minister does not believe the poll.
He told the media today that he is not convinced that the majority of Belizeans are calling for early elections, and he is buttressed by the support of the area representatives of his party who tell him that they want his administration to continue in Government.
If all goes as planned, we will know exactly where those area representatives stand in about a week, as Musa plans to call a House Meeting on Friday, May 18, 2007, to address the UHS matter.
Last Friday the Opposition, United Democratic Party, wrote to the Speaker of the House requesting a May 18 meeting, but Musa said that the decision to hold the meeting on that date was not sparked by the UDP’s request.
Meanwhile, Musa said, officials of Cabinet will be meeting with the bank to restructure a loan note he signed with the bank on March 23, and to try to get a discount on the $33 million debt.
In explaining why he signed a deed of settlement and a loan note which he now claims were never intended to be final, the Prime Minister claimed that he did so to stop the debt from growing. However, we point out that a demand letter the bank sent to the Prime Minister last week informed him that the new loan that he signed – clearly without the required National Assembly approval – is now in default, and would be accruing interest of 17%. So if the bank sticks by its letter, the debt continues to grow as the clock ticks.
Musa seems convinced that the guarantee he gave the bank is good as gold, and that the Government – whichever Government is in power – will have to pay it. But is he just as convinced that the people of Belize will have something to show for it? Last December, the Cabinet announced that Government would take over the UHS after paying off the Belize Bank debt. However, former claims by UHS primary shareholder, Dr. Victor Lizarraga, that it was the Government’s, and specifically DFC’s, fault that the UHS fell in financial trouble—because they had not come through with their side of the bargain to provide financing within a timely period and effect the National Health Insurance Scheme as planned—and threats by Lizarraga in 2004 that he would sue the DFC, all suggest there could be some resistance to a Government takeover.
We asked the Prime Minister today what assurance he could give to Belizeans that there would be no resistance on the part of the current shareholders of UHS to a Government takeover, even after Government pays off the Belize Bank debt. To this, the Prime Minister replied that he does not think they – the UHS principals – are in a position to resist, and that if there is any resistance, it will be met full steam by the Government. Musa said that the Government has every right to take over the UHS and decide what to do with it, as the Government’s legal position is that it would “step into the shoes of the bank.”
As to concerns from members of the public, including health care professionals, that the Government should use the money it plans to put into UHS to develop the flawed public health care system, including building a new mental hospital, Prime Minister Musa said that projects to build up the public health care system are already in place nationwide, and a new mental health hospital is being built in Belmopan. He agrees that there are serious shortcomings in the public health system, and claims that Government is working hard to fix them.
Meanwhile, the Association of Concerned Belizeans (ACB), the National Trade Union Congress of Belize, the Medical and Dental Officers Union of Belize and Senator Godwin Hulse continue to pursue legal action in court, challenging the UHS guarantee and the subsequent deed and loan note, as well as Government’s move to pay the UHS debt. The ACB reports that last weekend it received 1,537 signatures on a petition supporting the Supreme Court action.