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Saturday, April 13, 2024

To – David

“THE CANDLE MAY GO OUT,BUT THE MEMORY...

Young sailors stand on the shoulder of a Master and Commander: Charles Bartlett Hyde

Photo: (right) Charles Bartlett Hyde Contributed: Harbour Regatta...

Storm clouds!

A tribute to C.B. Hyde Saturday, April 6,...

Strange creatures

EditorialStrange creatures

“Still they go unpunished and unaccused of any crime,
While on the backs of the ordinary man these vultures climb.
They use their riches and their power, make a mockery of the law,
And have the law protect them same time…”

— from “Good Citizens” by The Mighty Sparrow

Sunday, December 18, 2022; Monday, December 19, 2022

Almost every week in the local newspapers, there appears at least one advertisement informing the public about the dissolution of an “International Business Company.” It’s gibberish to most of us, and we quickly move on. Now and then, as on page 4 of this Sunday’s issue of The Reporter, we come upon an ad listing a number of such dissolutions. As is normally the case, the company names are given, the date when each dissolution took place, and the name of the registered agent for the companies. In this case, the “Registered Agent” is one “Anacton Consult Group Limited.” The company names are weird-sounding already, but even the name of their agent sounds like some “hocus pocus.” We have “Camburg Holdings Limited”, “Rosman Investments Limited”, “Havenin Finance Limited”, and “Lumberton Holdings Limited,” all being dissolved on “30-Nov-2022”; “Whiteshell Holdings Limited” on “06-Dec-2022”; “Interos Development Limited” on “07-Dec-2022”; and “Danburg Holdings Limited” being dissolved on “08-Dec-2022.” All were reportedly “dissolved and struck off the International Business Companies Register with effect from the date indicated.”

It’s a peculiar occurrence that raises many questions in our uninformed minds. Why so many companies being “dissolved”? Doesn’t it cost a significant sum just to register a company? Are these many businesses all going broke at the same time? What’s going on? And what do these “international business companies” (IBCs) have to do with us ordinary citizens of Belize anyhow?

Well, we gather that some Belizeans do get employment in the offshore industry. And our government collects substantial sums of money for registering these companies in Belize, dollars that help government pay its bills, which include the goods and services provided to us, the Belizean people. But there is a lot we don’t know about these financial “creatures”, and it would be good if some down-to-earth explanation would be given to us innocents by our government officials. What jumps out at us when we google “IBC” is that, like at sterliingoffshore.com, IBCs generally are “100% tax exempt on all forms of income, gains and similar with no withholding taxes.” And, “Usually may not earn income from domestic sources.” For a hardworking taxpayer, those are matters of concern and curiosity. Already having so much trouble with giant financial sharks that we think we know (Ashcroft and BSI/ASR), could we be vulnerable to getting the “shaft” from these financial monsters?

Sometimes we citizens get the feeling that our government officials and top technocrats are operating at levels way above our heads and ability to understand what they are doing. And sometimes we are left to wonder if THEY knew what they were doing.

Take the matter of privatization, for example. Back in the late 1980s and into the 1990s, our leaders were boasting about the great benefits our country could gain by following the worldwide trend towards a thing called “privatization.” So, our leaders thought about privatizing the government hospital, but quickly realized that government had to hold on to this critical responsibility. So, instead, the management system was modified, so that the KHMH began to be run like a business, with a C.E.O. and a board of directors. But since then there has been a lot of grumbling about the inadequate flow of resources to satisfy the needs of poor people, who often suffer because of lack of money to pay for prescribed medicines and services. Meanwhile, government has been working on the NHI (National Health Insurance) program; but we haven’t gotten it all right yet.

Privatization was more aggressively implemented with our major utilities – WASA (now BWSL), BEL and BTL. And, while there was an initial surge of cash flow from the sale of these assets, it was quickly realized that it was a mistake putting majority control into big corporate hands; things were not working out for the betterment of the Belizean people, and the situation had to be reversed. Perhaps the privatization strategy worked well in some more developed countries, but it backfired somewhat in Belize. As observed on elibrary.worldbank.org, “private ownership alone is no longer argued to automatically generate economic gains in developing economies; pre-conditions (especially the regulatory infrastructure) and an appropriate process of privatization are important for attaining a positive impact.”

The situation is discussed further by Ashutosh Pandey @blogs on indiatimes.com. He defines privatization simply as “The transfer of ownership, property, or business from the government to the private sector”; and it can involve a “process in which a publicly-traded company is taken over by a few people.” While there are obvious benefits: “the creation of wealth” as “the cost of production is reduced and profits are maximized” because “companies have a profit incentive to cut costs and be more efficient”; there are also disadvantages. And he begins by stating that “One important disadvantage to recognize is the opportunities for bribery and corruption that come with privatization. Typically, private companies are less transparent than government offices, and this reduced transparency paired with a drive for profit can be a breeding ground for corruption.” (Underlining ours.) Need we say more? He elaborates with an example of the UK in the 1980s that rings eerily of our situation at home. He said that in the UK “the increasing inequality of the eighties was, in part, due to privatization. The government was selling off state assets (owned by everyone) to a wealthier subset of the population, thereby increasing the gap between the rich and the poor.”

That is a much more involved topic than we are equipped or have the space here to exhaust. Our point here is to spot the light on an issue that needs further investigation and discussion, before we get burned, as we have in the past by accepting the situation only at face value as presented by our political leaders.

We want our Boledo back! That was the cry of most Belizeans. And that cry was echoed in the House by no less that the sitting Deputy P.M. And then we heard about ten-year contracts issued by the previous government; and a strange-sounding company name; and still we have not gotten to the names of the directors of the company that is supposed to hold our Boledo contract, because of legal confidentiality restrictions surrounding the company registry.

So now, while secrecy surrounds these IBC creatures with the strange-sounding names, we are told that a few of our own local business folks have been using a loophole in that same company registry law to cloak their business companies in secrecy also.

So now, we can’t get our Boledo back, it seems. And we don’t know who has it, his/her name, at least. And the proposed solution to our problem, as presented to us with the “Belize Companies and Corporate Affairs Registry (BCCAR),” looks like no solution at all. Everybody can have secrecy now, because any local business can be registered as an IBC. Is that what it is? The Belize International Financial Services Association (BIFSA), whoever they are, seems very happy with the idea. Please enlighten us some more, GoB?

Our P.M. spoke proudly of the $250 million saved by the Blue Bond deal with the Nature Conservancy, and another $250 million to be saved by renegotiating our Petro Caribe debt. Wonderful news! But we also need to be sure that, while we benefit from providing tax shelters for foreign IBCs, we don’t give it all away by opening wide the door for elite Belize passport holders to dodge their transparency and tax obligations to the detriment of poor hardworking Belizeans.

Peace and love to all this Christmas and New Year!

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To – David

Storm clouds!

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