The nationalization of Belize Telemedia Limited (BTL) in August was hailed by the Government of Belize as a necessary move to put an end to the tangle of litigation between the Ashcroft group of companies and the Barrow administration.
However, the Prime Minister has now conceded to assertions made back then by the Opposition People’s United Party that what would in fact happen would be the launch of a new era of litigation.
As far as our newspaper is aware, the Ashcroft group of companies have not dropped their claims for $82.6 million against the Government for awards made to them by the London Court of International Arbitration (LCIA).
In late August, BCB Holdings and its subsidiary, the Belize Bank, announced that the LCIA had ruled in the arbitration over business and income taxes that the Barrow administration has to pay them BZ$44 million (US$22 million), on top of a previous LCIA ruling for $38.6 million to Telemedia after the company accused the Government of reneging on the accommodation agreements the same Musa administration gave to BTL.
When Prime Minister Barrow tabled legislative amendments to effect the nationalization of BTL, on the heels of the LCIA’s second ruling, he argued that the nationalization was intended to put an end to the endless onslaught of litigation over the accommodation agreement.
Prime Minister Dean Barrow said at his press conference Thursday, however, that he “misspoke.” There will be litigation, he said, but now Government will play offense, and not defense.
According to Barrow, the fight is extending to a string of anti-competitive agreements that Ashcroft’s directors, who were controlling BTL after the first government buy-back of shares back in 2004, gave to Ashcroft’s new phone company, SpeedNet/SMART.
Litigation there will continue to be, but it will be offensive litigation, Barrow told the media Thursday. “These agreements are going to be challenged.”
Back in August, when Barrow went to the House of Representatives with legislation to effect the takeover, he said that the move would quell the onslaught of litigation; the Opposition, People’s United Party, forecasted that the storms of litigation would, nonetheless continue.
Said Freetown Division area representative Francis Fonseca: “That is a very important question I think the Belizean people have a right to hear about because one of the primary arguments being advanced for the move today is that we’re going to put an end to litigation. But is that in fact so; are we not in fact entering into a new era of litigation?”
Even though Barrow only pointed to litigation that would be instigated by his administration, local media had previously reported that the Ashcroft group is mounting new legal battles against the Government—further to their threats that they will invoke the UK investment treaty with Belize in launching arbitration over the government-takeover.
Additionally, the Ashcroft group, through the employees’ trust it controls, has launched a constitutional motion challenging the Government’s takeover of BTL.
Since the government takeover, said Barrow, what has been especially troubling to the Government are the SpeedNet/SMART-BTL agreements unearthed thereafter—deals “cut by the de facto if not de jure (by law) owner of both Telemedia (before the nationalization) and SpeedNet/SMART,” meaning British billionaire Michael Ashcroft.
While there were four agreements in all, Barrow pointed specifically to two of them as “scandalous” – the interconnection agreement and the tower lease agreement, both dated 2004.
“The rates at which those agreements were given, in my view, are scandalous,” he told the media.
Barrow did not take issue then with the master agreement, which includes leases for ARCOS capacity, national transmission links, and internet service; and the “payphone room” agreement, which provides SMART with rental of the BTL’s Payphone Room at the International Building at its St. Thomas Street headquarters in Belize City.
(For context, note that SMART’s system and services are routed through BTL, and do not exist independently of the company.)
Barrow went on to detail some figures: international calls to Smart mobiles have to go via BTL’s platform. BTL gets 18 cents (USD) for a call to a SMART mobile. The split with SpeedNet for calls ending on a SMART phone is BTL 4.5 cents (USD); SMART 13.5 cents (USD). The cost of service to BTL is already 7 cents (USD).
“When you factor that in, you see how absolutely outrageous the interconnection agreement is,” said Barrow. “Furthermore, it appears to be of unlimited duration.”
He then turned to the tower lease agreement, slated for 15 years from 2004, with the option for consecutive 5-year renewals.
“SpeedNet gets on every BTL tower it wishes at a princely fee of $1,000 per month for each site,” Barrow noted.
The assessment of the government-appointed BTL board, said Barrow, is that SMART should pay at least $5,000, depending on the location of SMART antennas on BTL towers.
SpeedNet claims, though, that the tower rental fees are “fair and reasonable in comparison to the fees paid by SpeedNet to non-Telemedia tower owners.”
Several media houses report that SpeedNet had issued a press release on Friday (none was sent to Kremandala’s newsrooms), refuting PM Barrow and calling his statements “unfounded” and intended to sway the public against the company to give Telemedia an advantage.
SpeedNet further claimed that the contracts that Barrow took issue with were “arms length transactions” – this despite the fact that the current owner of SpeedNet also controlled BTL at the time the agreements were signed, sealed and delivered.
“That Telemedia would disadvantage itself vis-à-vis a so-called competitor; that Telemedia would prejudice itself so fundamentally vis-à-vis a competitor, makes absolutely no commercial sense,” said Barrow, categorizing the machinations as “diabolical.”
Referring to a move by the Ashcroft group to detach Great Belize Productions and Channel 5 (along with a building on Coney Drive) from under Telemedia’s umbrella, before the takeover was effected, Barrow announced that, “Telemedia will sue with respect to Channel 5 and the fact that that was given over to this company in a way we don’t think was proper.”
The idea is to proceed with a proper valuation of BTL, before they move on to publishing a prospectus and selling shares to the Belizean public, he furthermore explained.
Barrow made no apologies in suggesting that as a matter of nationalism, people should see which of those companies they ought to be patronizing.
The dispute between the Barrow administration and the Ashcroft group had been spawned out of a series of agreements, dubbed the accommodation agreements, signed under the Said Musa administration, which, among other things, promised BTL a monopoly for Voice over Internet Protocol (VoIP), and assured the company a 15% rate of return.
Barrow, who has said he would not honor those agreements, referred back to them today, putting it in a new context to argue that BTL, at the time of the signing of such agreements, did not care what it was giving away to SMART and the losses that it would incur, because even if the company failed to be profitable enough to make the 15% return, the agreements would ensure that taxpayers foot the bill – clearly a win-win situation for both telephone companies controlled by the same hand:
“SMART, as a consequence of these grossly unfavorable arrangements—unfavorable to Telemedia, favorable to itself—will be able to make lots of money. The profits from which would go into the pockets of the person that ultimately controls SMART.
“Telemedia would stand ultimately to lose as a consequence of these arrangements. But it didn’t matter to that same person who controlled Telemedia because he would then come to us and say under the accommodation agreement, Telemedia has not made a 15% rate of return. You get it from Belizean taxpayers and put it in my pocket!”
Barrow said the agreements, as far as he could see, were not approved by the Public Utilities Commission (PUC). SpeedNet, however, claims that they were.
While that dispute continues to unfold, the Ashcroft group maintains its claims for the LCIA awards totaling $82.6 million against the Government of Belize. The Ashcroft group has additionally claimed that they are due US$300 million as compensation for their BTL shares.
Financial Secretary Joe Waight told Amandala this week that the Government has already received “notices of claim,” which they are seeking to verify.
Prime Minister Barrow, who says he would not pay the LCIA award and has challenged at least one in the Supreme Court, has said on record that Telemedia was valued at probably half the claimed figure.
He had also told us that whatever reduction in value the former shareholders had caused when they removed Telemedia’s assets would be deducted from the claims of the former shareholders of Telemedia.
Via Statutory Instrument 104 of 2009, the Government took over the BTL shares of BB (or BCB) Holdings Limited, BTL International Inc., BTL Investments Ltd., ECOM Limited, Mercury Communications Limited, New Horizons Inc., Sunshine Holdings Inc., and Thiermon Limited.
However, Hayward Charitable Trust and Dunkel International Investments Limited have claimed to be the owners of those former BTL shareholders. Allen & Overy, attorneys for the companies, have told the Government of Belize that if the dispute over Government’s takeover of Belize Telemedia Limited (BTL) is not amicably resolved, they would submit the dispute for international arbitration under UN rules, citing a UK-Belize investment treaty.
Though Michael Ashcroft has claimed that he had had no financial interest in Telemedia prior to the government takeover, Prime Minister Barrow continues to contend that he is the mogul behind those aforementioned entities:
“Lord Ashcroft can holler until the cows come home that he is not or he was not the owner of BTL, that he is not the owner of SpeedNet, that these famous or infamous trusts are in fact the owners of the two companies.
“Those trusts are controlled by trustees and the trustees are in turn controlled by some corporal body and I have absolutely no doubt in my mind that that body is Lord Michael Ashcroft. So I don’t want to hear any foolishness about, ‘Oh, I have no economic interest…,’” Barrow said imitating a British accent. “Please, that is most upsetting and irritating…”
(For details on the BTL-SpeedNet agreements, see article titled, “The BTL-SpeedNet relationship and rates”, published in the Sunday, October 4, 2009, issue of Amandala.)