When historians consider Kremandala and the challenges the organization has had to overcome, more than likely they will take the view that the claim of $262,664.20 “excluding penalty interest” by Sagis Investments Limited, through their attorneys, Barrow and Williams, was the greatest threat the Kremandala organization had to face. In deciding on this, they will give thought, no doubt, to the circumstances surrounding the claim. They will also seek answers to a number of questions including: What was the nature of the business of Sagis Investments Limited? Did it have affiliates? Who or what entities were its main shareholders? What gave rise to the Sagis claim? Who were parties to the original loan? What requirements had to be met? Why were collections delayed? On the last question, they likely will consider any special circumstances that may have prompted the claim, including who or what organization(s) possibly stood to benefit.
The responses to these questions and results of any other research they may undertake, will determine their conclusion with respect to the claim: was the claim in the normal pursuit of business, or, as many believe, was it part of a plot to silence KREM?
Without research, and perhaps even with research, answers to all the questions historians may pose may be difficult. We can provide, however, a general background to the claim, as far as it relates to Kremandala. We can also look at the “apparent implications” of the events described in the article “From The Publisher” in Amandala of Sunday, April 8, 2007.
BACKGROUND
The Kremandala organization has provided a forum for debate and discussion for over a decade. Through their widely popular program, “Wake Up Belize,” the organization has featured and promoted the views of “ordinary folks”, from the indigenous Maya of distant Punta Gorda to the Mestizo of northern Belize. The issues discussed have ranged from sports to governance and have seen the participation of a cross-section of Belize including doctors, lawyers, accountants, politicians, civil servants, unionists, labourers, and the unemployed. No topics have been exempted, no decisions un-analyzed, and no views rejected, save perhaps political rhetoric. The mighty have seen themselves “undressed,” politicians and aspiring politicians exposed, and the uncommitted berated. In the pursuit of nationalism and the interests of the people, egos have been bruised – great and small, foreign and local.
But thirteen years ago when KREM sought a loan from the Belize Bank, no one could foresee what the organization would have morphed into today. A struggling organization promoted and subsidized by her sister organization, Amandala, KREM’s very future was perhaps in doubt. Thus when KREM presented itself to the Belize Bank in 1994, it was not as a major player in the society.
THE 10% CONDITION
According to the publisher, in 1994 when Kremandala approached the Belize Bank for a loan of $75,000.00, one of the conditions that had to be met was a sale of 10% of the publisher’s shareholding. Now while a lender will determine the terms and conditions pertaining to loans, it is unusual to require that the borrower company “redistribute” share ownership.
This requirement, therefore, gives rise to a number of questions: Why a lending institution, and a bank at that, should make a loan agreement conditional on a 10% stake in any organization? Of greater significance, why make that requirement on an organization that was being subsidized and which showed no immediate prospects of profits? Why insist on ten percent? Why not insist on nine, or eight, or twenty, or fifty one percent for that matter?
While the reasoning behind the requirement is not specified, the significance of a ten percent holding ought not to be lost on anyone today. All it took was a minimum tenpercent stake to enable the investigation of Prosser’s BTL by interests hostile to Prosser. But thirteen years ago there were no government-associated elements hostile to Kremandala, or so we believe.
THE $262,664.20 CLAIM
The $262,664.20 claim again is, at the very least, thought provoking.
The correspondence from Barrow and Williams indicates that the debt of $262,664.20 owing to Sagis Investments limited excludes penalty interest; it is probable that it also excludes legal fees, which can run as high as 20% of the debt and are usually charged to the debtor. Further, does “penalty interest” refer to the special “default interest” charged by banks in respect to certain promissory notes and which runs in the region of twentyfour percent? A debt of $30,000 (only) compounded at an interest rate of 18% per annum over thirteen years will generate a balance of approximately $257,970.00; compounded at a “default rate” of say 24%, and it will generate a balance of $491,580 dollars. These are two possible scenarios, if $45,000.00 of a $75,000.00 debt had been immediately settled. But dealing with figures, the possibilities are almost infinite; only a study of the actual account and the rates applicable would provide with exactitude how the figures were derived and what may be the final product.
So what do we know?
We know that the treatment of the loan itself is at the very least unusual, if not inconsistent with standard behaviour. An organization with strictly business designs does not normally wait near on thirteen years to pursue a debt. Collections are the lifeblood of an organization and to delay is to run the risk of action being barred if not brought within the period laid down in the Limitation Act (Chapter 170).
Normally debts are statute barred after six years from the date the debt was due to be paid; however, in the case of mortgages and charges, the Act limits the period to twelve years. Section 24(1) of the Act, which relates to “Limitation of action to recover debts secured by a mortgage or charge,” reads as follows:
“No action shall be brought to recover any principal sum of money secured by a mortgage or other charge on property, whether real or personal, after the expiration of twelve years from the date when the right to receive the money accrued.”
If we accept the basic premise, that the debt is within the prescribed limits and therefore enforceable, we are prompted to ask: why was KREM being “specially treated?” Why was collection delayed until the debt compounded into a state where it is virtually impossible to pay? Is this just a matter of oversight? Did elements in both KREM and Sagis coincidentally overlook the payment? What are the implications if the debt is confirmed and Kremandala is unable to pay?
Section 130 of the Companies Act provides some indication as to the likely outcome in the case of the last question. The relevant portion of this section reads: “A company may be wound-up by the court if the company is unable to pay its debts.” The Act goes on further under section 131 to define when a company is deemed unable to pay its debts. There are several subsections, but of particular relevance is Section 131 subsection (a) which states:
“A company shall be deemed to be unable to pay its debts if
(a) a creditor, by assignment or otherwise, to whom the company is indebted in a sum exceeding two hundred and fifty dollars then due, has served on the company, by leaving the same at its registered office, a demand under his hand requiring the company to pay the sum so due, and the company has for three weeks thereafter neglected to pay the sum, or to secure or compound for it to the reasonable satisfaction of the creditor…”
But events have not fully played out for Kremandala. Until this occurs, then, we can only speculate on the outcome and how historians will view the circumstances leading up to the end state of affairs. Most likely, though, one of two views will prevail: that events were all the result of a series of “accidents” and “oversights” culminating in the final outcome, or that there were forces out there (inside and outside of Government), bent on “silencing” KREM, that have been paving the way all along. The future will tell.