Finally, finally, Belizeans know the answer to a US$10 million question that had been the topic of almost every conversation, and had dominated the daily talk shows and the media since Friday, February 22, just two weeks after general elections, when it was revealed that Venezuelan authorities had fingered former Prime Minister Said Musa as having received US$20 million, instead of the US$10 million Musa had categorically said he had received.
Yesterday, Wednesday, Hon. Musa and Ralph Fonseca, his ex-Housing Minister, asked for an audience with Prime Minister Dean Barrow, to confess that indeed, the Venezuelans were right; they had sent US$20 million to Belize for the Belizean people, but that US$10 million had been skimmed off the amount and diverted to a Belize Bank account.
Musa told Barrow that the people’s money had been paid to the bank, controlled by British mogul Michael Ashcroft, to settle an outstanding loan on behalf of the Universal Health Services (UHS), a troubled private business.
Musa, Leader of the PUP Opposition, told the Prime Minister, that the deal, between him and Venezuela, was to have been a secret.
Before this, Musa, at the end of his administration, had categorically stated that “not one penny of taxpayers’ money had been paid to settle his government’s obligation to the Belize Bank,” and later, after his party’s stunning defeat at the polls, he had stoutly maintained, through his party media organs, that he had only received US$10 million from Venezuela, nine million for housing projects, and one million for the Marion Jones Stadium.
In mid-January, Belize Healthcare Partners announced that it had acquired 100% of the assets of Universal Health Services (UHS), after having paid the debt of $33 million the company had defaulted on with the Belize Bank. It was revealed today that public funds were used to foot much of the bill.
At a press conference held this morning at the Philip Goldson International Airport before he flew off to a CARICOM Heads of Government meeting in the Bahamas, Barrow said that while US$10 million from the Venezuela money went to the Belize Bank, “we [the Belizean people] got nothing.”
Prime Minister Barrow characterized what has transpired with the money as “outrageously wrong,” “reprehensibly wrong” and “legally wrong.”
Despite repeated calls from Government and the media, it took Musa 13 days to come forward with an explanation of what happened to the US$10 million, which the new administration, taking office on February 8, could not account for when Banco Desarollo Economico y Social de Venezuela (BANDES) requested an accounting of the full US$20 million.
Prime Minister Barrow informed the media that yesterday afternoon, an intermediary conveyed a message to him that Said Musa, former Finance Minister, and Ralph Fonseca, former Housing Minister, wanted to meet with him to discuss the missing US$10 million.
“Prior to their speaking out, the feeling of the general public was that those two good gentlemen have made off with the money for their own personal purposes, so they were caught between the proverbial rock and the hard place. The Venezuelans are obviously hanging them out to dry and Belizeans are looking to go at their throats. So I think something had to give and they obviously felt … political consequences are being visited upon them,” commented Barrow at today’s conference with the press.
At 4:30 p.m. on Wednesday, Musa and Fonseca met with Barrow at the conference room of the Barrow & Williams law firm, with the Prime Minister’s Chief Executive Officer, Audrey Wallace, attending and recording the conversation in longhand, Barrow told the press.
That same evening, PUP Opposition Leader Musa released a video statement on both local television stations – Channel 5 and Channel 7, confessing that they had used the “missing” Venezuelan money to pay the Belize Bank for UHS.
“What was done by Messieurs Musa and Fonseca and, to a lesser extent, by Amalia Mai, is absolutely reprehensible,” Barrow remarked. “It is highly immoral and the product of a conspiracy that seemed to have had as its motive two things: to divert this huge sum of money that was the property of the people of Belize once it was gifted by Venezuela, diverted from legitimate and proper and agreed upon use, diverted so that they, in particular the almighty then Prime Minister and almighty then Minister of Housing, might do with the 10 million US dollars as they saw fit.”
Not only did Musa’s administration give an undertaking to the Supreme Court that they would not pay the UHS debt until a pending court case filed by the Association of Concerned Belizeans is settled; he made a public statement as recently as January 24 that (1) the BHPL had settled the debt on terms he was not aware of and (2) that not a penny of public funds had been used in the settlement of the UHS debt.
On Wednesday, Musa confessed that he had gone against his word, because of the Government guarantee he had given the bank in 2004 to cover an unlimited amount of debt for the bank.
Musa claims that the initial amount of the Venezuelan grant was US$10 million, and Venezuela later agreed to increase the grant by US$10 million, but according to Musa, this later development should have been kept a secret.
“Our understanding with the Venezuelan government was that only the housing-sports facility grant for US$10 million received by the Central Bank was to be announced until further notice,” Musa said.
“This debt obligation,” said Musa, “arose out of a Government guarantee of a loan made by UHS, which was the subject of litigation in London and Belize that could have resulted in the Government having to pay the entire sum due from taxpayers’ funds. As a result of clearing this debt, thanks to this gift by Venezuela, the people of Belize own 49% of the UHS assets, held in a charitable trust…the Belize Healthcare Charitable Trust for the development and provision of healthcare services in Belize for the benefit of the people of Belize.”
But when Musa and Fonseca met with Barrow on Wednesday, they presented no evidence – no documents – to support their claim that the people of Belize have any shares in UHS, and Barrow told the media today that the shares, and indeed the UHS, are under Ashcroft’s control.
“The sense I am getting, based on a discussion I just had this morning with the Governor of the Central Bank, is that those same interests that we spoke about owned the majority of UHS; in other words, there is the trust that is responsible for 49% from what the Leader of the Opposition and what Mr. Fonseca have told me …It is now my understanding that other allied interests in that [Ashcroft] group also have, as it were, additional shares in the entity [BPHL], so that altogether it might mean that it is that [Ashcroft] group that has the controlling interest, that holds the majority shares in the UHS.”
Central Bank Governor, Sydney Campbell, revealed to the press today that at the end of January 2008, the Belize Bank reported a transfer of $40 million from its Turks and Caicos branch, established in 1998, indicating that the funds had come from Belize Healthcare Partners Limited for settling the UHS debt, in the process of purchasing the hospital.
We know that on January 16, Dr. Muthugounder Venugopal (Dr. Venny) and Keith Neal (a Belizean) transferred shares to (1) Thoroughbred Ltd. of Juris Building, P.O. Box 480, Main Street, Charlestown, Nevis, the address of Daniel Brantley and Associates, and (2) to Rantallo Group S.A., also of Charlestown, Nevis.
Speaking with our newspaper today, Dr. Venny told us that no one from Government was even involved in the UHS sale negotiations, and Government currently has no directors on UHS’s board, which, we note, should not be the case if we really own those 49% shares. Instead, Ashcroft’s point men, Phil Osborne and Mel Flores, are the directors of the so-called trust, and Osborne is the trust’s director on the BHPL/UHS board according to Dr. Venny.
He said that his group only owns 51% of UHS, which they bought for $13.9 million – $5.5 million coming from 7 foreign investors (including himself) and Neal. The remainder ($8.4 million), said Dr. Venny, BPHL borrowed from the Belize Bank.
As we write, no one has yet indicated to us what the net worth of UHS is, and whether even the $13.9 million Dr. Venny’s group claims it paid for 51% of UHS was a good deal.
On January 18, 2008, the very day that UHS and BHPL finalized the sale of 100% of UHS’s assets, BHPL entered into a mortgage debenture with the Belize Bank, in favor of the bank, for $3 million. All the assets of the company – BHPL – and “all other property of the company, present and future,” which would include its newly acquired UHS assets, were mortgaged to the Belize Bank.
What Musa did not explain in his statement yesterday is why, if Government paid the majority of the debt, does it hold a mere 49% of the shares in UHS and not the majority of the shares. Dr. Venny told us that those shares were transferred to the companies in Nevis.
Musa said in his statement that, “The UHS assets are today being managed by a private sector group, which is taking the risk to invest in this medical facility.”
On top of that, Musa gave the BHPL (UHS) a service contract, assuring the company that Government will spend up to $300,000 a month with the hospital for five years – funds which our sources indicate are paid into a Belize Bank account.
In spite of the use of millions of public funds to settle the UHS deal, 12 people lost their jobs on February 15, because the new directors argue that the company could not afford to keep them based on the revenue stream, which they claim was exaggerated by the previous owners.
Our newspaper notes that when Musa first attempted to pay off the UHS debt with taxpayer dollars about a year ago, there was great public outcry, and a total rejection of his proposal to use public funds to pay off UHS debts and acquire the hospital—this without an audit of UHS being presented to his own Cabinet, which, for a while, was also kept in the dark about the UHS guarantee.
Fierce public opposition forced Musa to back off on paying the debt, at least for the time being, and he issued a public statement saying that “private investors” would be brought in to take on the UHS investment. Little did Belizeans know that the events would transpire as they have, with the monetary gift intended for the poor going to the country’s richest bank.
Immediately upon the disclosures yesterday, the Central Bank Governor began an investigation, which revealed some key bits of information, not the least being that the Belize Bank’s statement to the bank in January, claiming that the UHS money had come from foreign investors in Belize Healthcare Partners turned out to be utterly false.
Governor Campbell told us that the initial report that the Belize Bank gave at the end of January was, that a huge sum of money had come in to settle the UHS debt – $33.5 million and another $6 million – a total of $40 million.
While it has now been reported that $20 million of that (equivalent to US$10 million) was secretly siphoned from the Venezuelan grant, there are questions as to where the other $20 million came from. At press time, there is no official declaration on the source of those funds.
“More than the 20 million Belize out of Venezuela, I gather that there were other monies sourced elsewhere that were also used to satisfy Government’s guarantee vis-à-vis UHS,” P.M. Barrow said today.
While the conversation today is about the US$10 million that was reportedly used in UHS, there has still not been any report indicating just how the other half of the money, which came through the Central Bank via a deposit at the Federal Reserve in New York, has been spent. The Government has indicated that $15.3 million of the money had been given out by the PUP during the pre-election money frenzy, but preliminary reports indicate that the bulk of it was not for the purpose stipulated under the agreement with Venezuela. Government reported recently that the housing allocation from the money had been overspent by $5.3 million.
Barrow disclosed today that it was former Chief Executive Officer in the Ministry of Home Affairs, Amalia Mai, who went to Caracas on December 28, 2007, to sign the agreement for the Government. But Barrow said that when he asked Musa and Fonseca yesterday about the agreement, they told him that Mai was never given a copy of the agreement she signed.
Since the news broke, our newspaper has been asking the pertinent Government officials if they have a copy of the agreement, and they have all said no, but indicated that they were requesting the document from Venezuela.
Given that to date, the Government of Belize has not gotten official information on the agreement and the disbursement of the grant from Venezuela, Prime Minister Barrow this morning announced that he has appointed Belize’s Ambassador to Guatemala, H.E. Alfredo Martinez, as special emissary to lead a team to Venezuela to get the facts on the ground.
Barrow remarked this morning that, “It is my sense that these gentlemen had no intention of ever coming clean, even after the general elections of February 7, 2008, and it was only that fortuitous, or perhaps not so fortuitous letter, from the officials in Caracas that forced public and official scrutiny, which raised for the first time the fact that it was 20 million US and not 10 million US. It was that which sweated Said Musa and Fonseca to crack now.
“Clearly it was never the intention to use [the funds] for the excellent social purpose for which it had been specifically given, and it was always the intention of these ex-officials to lie about the misuse of the money, to disappear it, to act as if though it had never been given …the even bigger question is what are the legal implications of what has been done.”
Barrow said Ambassador Martinez is being sent to Venezuela to procure a copy of the agreement and the wiring instructions from Belize, to see who exactly should be held culpable for the diversion of the Venezuela grant funds.
The Financial Secretary, Joe Waight, has sent two letters to BANDES, and the bank has confirmed receipt, but at press time, we are not aware of any reply from officials there.
“When that is done, Government will seek legal advice as to the implications of all this. It strikes me that there has to be legal consequences to what has happened. The nature of those legal consequences is a matter on which the Government must secure objective legal opinion,” Barrow stated.
He further opined that the diversion of the Venezuela grant funds was “…legally wrong, but legally wrong in what particular context, legally wrong so as to produce what particular consequences? I do not wish to say. I believe that we need to take proper opinion on that.”
“Could we be looking at a case of obtaining property by deception?” our newspaper asked.
“That’s what I just said. I think we will have to take a legal opinion,” Barrow replied.
The entanglements surrounding UHS so much resembled what has transpired with Belize Telecommunications Limited in recent years. Firstly, the majority shareholders in the company, the Ashcroft group, sold out; Government purchased those shares using a foreign commercial loan, and resold to those same investors for a discount packaged with a write-off of up to $17 million in taxes. Added to that was a concessionary loan of $20 million from Central Government and the Social Security Board, acquired through a trust corporation, Sunshine, which was set up and controlled by the Ashcroft group. The loan (and shares) was purportedly for the workers of the company, who have still not gotten them, having rejected them on the disadvantageous terms upon which they were being offered.
Today, BTL has been reregistered under a new name with new articles of association, and Belizean shareholders are down from the majority to an inconsequential minority.
We note that trust corporations are just as attractive as offshore companies, such as the Nevis company to which the UHS shares were transferred in January, because they similarly benefit from confidentiality privileges and enjoy tax perks and asset protection. (You can read more about this, on where else but the Belize Bank’s website!)
Following the press conference, which ended around noon, Prime Minister Barrow departed to the 19th Intersessional Meeting of the Conference of Heads of Government of the Caribbean Community, slated for Nassau, Bahamas, from March 7 – 8, 2008.
Barrow hopes to have some developments on the Venezuela case when he returns to office on Tuesday, following the long weekend.
During his absence, Hon. Gaspar Vega, Barrow’s deputy, will act as Prime Minister for the first time.