Coming off a three-month suspension of public hearings, the DFC Commission of Inquiry today called three people to provide public testimony as they continue to probe into the finances of the Development Finance Corporation (DFC), particularly to unravel the complexities of a questionable $50 million loan the DFC got from the Belize Bank, and two cheques valued together at $28 million for a loan DFC made to the Novelo family to buy out other major transportation providers.
What the Commission and witnesses revealed during today’s session was a wanton lack of adherence to proper procedures when dealing with these multi-million-dollar transactions.
In the case of the $50 million loan to the Belize Bank, which has come up repeatedly during the course of the public hearings, a former DFC employee revealed today that even though she had signed documents to certify the loan, the authority upon which that loan was received is still spurious. There are no certified board minutes to support the decision, and the minutes, to her knowledge, were never confirmed.
Note that this was the same $50 million loan that had to be later reversed, after the International Monetary Fund told the Government of Belize to do so, in the interest of transparency.
Rosalia Moore worked with the DFC from 1976 to 2004, when she resigned her job as secretary to executive manager operations.
The Commissioner asked her to peruse two documents – the secretary’s certificate and resolution for the $50 million Belize Bank loan.
She explained that the legal officer, Ann Wiltshire, who has testified before the Commission, prepared the documents.
It was the sequence of events leading up the certification that raised the interest of the Commission.
Commissioner Merlene Bailey-Martinez, who led the questioning at the hearing, referred to a board meeting on June 30, 2004. The Commissioner asked Mrs. Moore why it was that the resolution and certificate were backdated to March 18, 2004.
What was even more peculiar was that while those documents were deemed to come out of a March 17, 2004 meeting, the minutes of March 29, which had confirmed the minutes of March 3, never mentioned that interim meeting.
She responded that, the board had already indicated that the loan was approved, but due to “oversight,” it was never documented.
She said that the documents were backdated on the instruction of the then CEO, Troy Gabb.
“Did he directly indicate that he wanted you to sign that date?”
“No,” said Moore.
“How was it communicated to you?” Commissioner Bailey-Martinez queried.
Moore replied that it was communicated to her through legal officer, Ann Wiltshire.
Mrs. Martinez further probed: Did she explain why the resolution had to be backdated?
“No…I did not ask,” said Moore.
Moore said that she was given a manuscript for a March 17, 2004, meeting, but she can’t recall by whom, nor could she recall who raised the matter in the June 2004 board meeting, she told the Commission.
“If I could remember, I would honestly tell you,” she stated.
She said that she was asked to sign the documents because the corporate secretary was not in.
Moore also claimed that up until the time she resigned from the DFC, she was unable to get those minutes confirmed, and the document sat on the desk of the chairman until she handed them over at her resignation. She said that she told another secretary, Ms. Pott, about her concerns and insisted that the board had to confirm those minutes of the March 2004 meeting.
In this afternoon’s session, Central Bank Governor, Sydney Campbell, who has worked with this institution since 1981, was questioned about Central Bank procedures and pointedly about the $28 million loan for Novelo’s Limited.
Campbell said that he received the summons to appear before the Commission on Tuesday, January 23, and it was during the process of researching and preparing documentation for the Commission that he found out that two cheques totaling $28 million had been written by the DFC for the Alliance Bank—again another queer occurrence, because, according to Campbell, the Central Bank had long discontinued the use of these cheques. On top of that, the names of individuals appeared on these cheques in addition to the bank’s name.
The cheques were made out to Alliance Bank for Eugene Zabaneh and Novelo’s Limited, Governor Campbell said, adding that this made no practical sense, but because it amounted to a request from the DFC to release funds to the Alliance Bank, the Central Bank honored the documents.
Governor Campbell ruled it a rare “error.”
“I could tell you I researched the matter and these were the only two times that this error took place…” he told the Commission. “The DFC would have to answer why they elected to write the cheques like that.”
“There was no need for that cheque book,” the Governor said, explaining that a written request from the DFC was all that was required to have the funds transferred to the commercial bank.
Commissioner Merlene Bailey-Martinez underscored a very important point – that the $28 million in question went to the bank run by the DFC’s then chairman, Glenn D. Godfrey.
The Commission had gotten a copy of the payment voucher, and today Governor Campbell provided the Commission with copies of the cheques.
Governor Campbell said that even though these cheque leaves had gone through the Central Bank, and Alliance Bank had presented a deposit slip to claim the funds, he did not know of them until he did the research sparked by the summons of the DFC Commission of Inquiry.
“It did not come to my attention… If the individual names were not there, you would say this is a normal way of doing business,” he affirmed.
Glenn Godfrey’s name would come up again in another set of transactions. Today the Commission recalled Jane Longsworth, who has served as the DFC’s securitization officer, to speak about the losses that the public incurred in the securitization of a pool of mortgages from Glenn Godfrey’s St. James National Building Society.
Longsworth said that her then CEO, Troy Gabb, instructed her that St. James would not be picking up the expenses – such as fees and commissions. The Social Security Board (SSB), through former CEO/general manager, Narda Garcia, also refused to pick up the tab, so the DFC—meaning the Government of Belize and hence taxpayers—had to foot the bill.
According to Longsworth, DFC’s expenses increased by $2.49 million, and the reserves it would have had from the transactions declined by about $2 million.
The expenses included the legal fees, and “the discussion was about Mr. Godfrey not participating,” [or paying the fees], Longsworth clarified.
At the same time SSB was assured that they would not be affected, and that the DFC would, in turn, pick up the tab.
What was also peculiar is that, according to Longsworth, the DFC’s board went about business as usual without seeing the Corporation’s financials for over a year, from November 2003 to December 2004.
“At the December 1 meeting, 2004, the financials were presented,” she informed.
Today’s hearing opened with a moment of silence for former chairman, David Price, who passed away in Cuba around mid-December.
It was Commissioner Merlene Bailey-Martinez who took the lead today and asked the bulk of the questions of the witnesses, with her co-chair, Herbert Lord, asking a few questions of clarification.