??We should be able to move forward expeditiously to conclude this transaction and get it behind us,? Hon Godfrey Smith, Minister of Information and Foreign Affairs remarked. He said that GOB hopes to conclude the sale within the next few weeks.

The Ministers reasserted GOB?s claim that it intends to sell 5% of BTL?s shares to the general public and 20% to BTL?s workers. They said that if the BTL workers do not buy the 20% shareholding, they would also be offered to the Belizean public.

With the Miami court affirming that Jeffrey Prosser is entitled to only two directors on BTL?s board, there remains 6 seats that GOB and Ashcroft now share between them in an even 3-3 split. However, Attorney General, Hon. Francis Fonseca, confirmed today that there is the possibility that with the impending sale of shares to Ashcroft?s ECOM Limited, Ashcroft could soon return to a controlling position on BTL?s board, as he may get at least one more director on BTL?s board.

No money for Prosser, but what about Ungaro?s US$50,000 a day fine?

At the same time, GOB boasts a resounding victory in the United States District Court in Miami, Florida, having finally won against Prosser?s Innovative Communication Corporation, which was seeking damages in the region of US$24 million from the Government of Belize.

What is unclear is whether the judge, Ursula Ungaro-Benages, would cancel the US$50,000 fine against GOB, which she levied after she ruled that GOB had violated her order to convene a board with 4 Prosser directors and 4 GOB directors.

The fine began to be levied as of March 31, 2005, and up to the day of her ruling would have stood at US$6.9 million, or BZ$13.8 million.

In her ruling delivered Tuesday, August 16, Judge Ungaro said that she had ?vacated? her preliminary injunction, out of which her order stemmed. She ruled that after having heard the entire case, she has found that her first conclusion was wrong and Prosser is only entitled to two directors, not four as she had initially ruled.

?I will perhaps hazard my own personal view, my own personal legal assessment, which is this: If the basis upon which you found us in contempt and fined us falls away, that is, that we did something wrong and you actually found out that we did not, then to my mind, to my way of thinking, that falls away as well. But the judge did not specifically say so in the judgment,? Minister Smith told the media.

He further remarked that GOB considered Ungaro?s ruling to be a landmark decision, important for the Government and people of Belize.

The judge found that contrary to ICC?s claims, GOB did not act improperly when it removed Prosser?s directors from BTL?s board on February 9, and installed its own.

Prosser?s default inexcusable, says Judge

Prosser had defaulted on payment of a US$57 debt to the International Bank of Miami (TIBOM) for a loan that GOB had gotten to buy 52.45% interest in BTL from Carlisle Holdings Limited (now BB Holdings Limited), a company controlled by Michael Ashcroft.

When GOB closed the sale with ICC on March 31, 2004, its local subsidiary, Belize Telecom, gave GOB two Promissory Notes, which were not secured by any collateral. The total value of the notes was close to US$90 million and ICC guaranteed them, according to Ungaro?s ruling.

On April 26, 2004, Prosser paid US$28.5 million on the Promissory Note that was due in August, 2004, and four days later, made an agreement with GOB to assume payment for the Miami debt. The Carlisle shares were pledged as collateral when ICC assumed responsibility for the loan, the ruling further explained.

When ICC defaulted on its November 22, 2004, bullet payment for US$51 million, GOB rolled over the debt and gained possession of the Carlisle shares, but extended Prosser?s payment deadline to February 7, 2005, which he again failed to meet. So on February 9, 2005, GOB assumed control of BTL.

Ungaro?s ruling stated, ?The court finds that the Plaintiffs [ICC] inexcusably defaulted on their obligations under the Payment Agreement and the Share Pledge Agreement when they failed to pay the Government $51,315,555.56 on November 22, 2004 and then failed to cure such default by the Government?s extension date of February 7, 2005.?

She also concluded that ICC?s appointment of directors and former managing director, John Vondras, violated BTL?s Articles of Association, a legal instrument that governs how the company should be run. Overwhelmingly, ICC lost on its major claims before the court.

US$200 million arbitration pending; ICC vows appeal

In addition to taking the matter before the Miami court, Jeffrey Prosser has called for international arbitration of US$200 million against the Government of Belize, and his company said today that they intend to appeal Judge Ungaro?s ruling.

?We believe that there is a basis for immediate reconsideration or appeal to the 11thCircuit, which we intend to do expeditiously,? said Prosser, via a company release. ?We intend to do everything we can do to protect our investment, including continuing litigation and arbitration already filed of our claim of more than US$200 million in damages for the government?s breach of its written, contractual promises that caused Innovative to acquire BTL and make these investments.?

However, Belize?s Attorney General, Hon. Francis Fonseca, said that Prosser would be best advised to stand down:

?I think Belize Telecom/ICC would be well advised to review their position on that matter. I think, again, we?re standing on strong ground, but we are doing everything we can to defend that issue. We?re following the procedure with the arbitration and again, certainly this judgment coming from the Florida court strengthens our hand, we believe, with respect to that arbitration. So we believe that is a matter that we can settle,? said Fonseca.

You are not allowed two bites at the same cherry under our law, Smith added. He said that in his view, ICC would be very hard pressed to find success in re-litigating, in a different forum, basically the same issues.

Who will be stuck with the $2 million legal bill?

The Ministers said that Hunton & Williams, the law firm that has represented Belize in the Miami case, would go back to the court to clarify the issue of the US$50,000 per day fine and legal costs that GOB has incurred in the case. Fonseca said that their lawyers have advised them to apply to the court to have ICC pay costs, which, according to him, was just under $2 million at the end of June.

Uncle Sam steps in for GOB

Incidentally, on the day of Ungaro?s ruling, Tuesday, August 16, the United States Government (Department of Justice) applied to the 11thCircuit Court in Atlanta to join in Belize?s appeal of Ungaro?s fine.

Smith read from the application: ?The appeal raises the question whether a district court that exercises jurisdiction over a foreign sovereign under the Foreign Sovereign Immunities Act has jurisdiction to order monetary sanctions for contempt of court, because the imposition of monetary sanctions against foreign sovereigns has possible ramifications for the foreign relations of this nation [meaning the US Government] and also has potential implications for reciprocal treatments for the United States Government by other nations??

?I think that?s important because as well, a few weeks ago, some of the stations carried all these wild threats made by Mr. Prosser as to what he would do and how he would embarrass the Government, all kinds of things about visas and so on, which we didn?t take very seriously I must say,? he further commented.

Prosser holds Special Share but still owes over US$5 mn, GOB claims

On Thursday, August 11, ICC had filed notice in Ungaro?s court calling on her to double Belize?s fine from US$50,000 to US$100,000, because ICC argued that GOB had passed laws in the National Assembly to take away the Special Share, which ICC now holds but GOB has tried to get back. The Special Share is what gives ICC its remaining 2 seats on BTL?s board.

GOB claims Prosser is not entitled to the share, because he has not paid for it. Prosser disputes the claim. In all, GOB claims that ICC owes it over US$5 million for unpaid shares, as well as fees and costs associated with the Miami loan. Prosser, on the other hand, claims that this bill has been settled due to money Carlisle Holdings took out of BTL before its exit from BTL last year.

According to Fonseca, GOB is getting legal advice on how it should pursue the matter.

?On the issue of what the Government of Belize is doing about monies owed by ICC/Belize Telecom, that is something that we?ve had under discussion with BTL?s lawyers and Government?s attorneys and it?s something where we?re seeking legal advice on right now,? Fonseca said. ?I think it?s certainly something we need to take up here in Belize, in our own courts. There are really many other issues coming out of the audits that have been prepared for BTL that raise many legal questions about Mr. Prosser?s/ICC?s tenure at BTL, and I think we have to look at those very seriously and address those with a sense of urgency??

Smith told the media that GOB ?stuck its neck out too far? for Prosser and made ?very lavish concessions.? Fonseca said that no one should feel sorry for Prosser.

Who?s stuck with Intelco?s debt?

On his part, Prosser claims that GOB did not come through on many of its promises and left him holding a bag of Intelco debt of US$27 million.

Under Prosser?s term as chairman of BTL, and while Belize Telecom was BTL?s parent company, BTL bought out Intelco?s debt from the Royal Bank of Trinidad and Tobago (RBTT) and BT promised the US$27 million debt would be cleared by the end of June, 2005. The debt, which BT assumed from RBTT to facilitate the transaction, was secured by the BTL shares it had gotten from Government, including the Special Share.

The plan to eliminate BTL

Another interesting revelation in the Ungaro ruling was that GOB and ICC had entered into a Master Agreement on March 31, 2004. This is a separate agreement from the now public Share Purchase Agreement, signed on the same date.

Under that Master Agreement, Belize Telecom (identified then as NewCo) was to purchase BTL?s assets and liabilities, effectively liquidating BTL. There is no mention in the judgment of what would have happened to BTL?s 1,200 minority shareholders.

This sheds some light on what actually occurred last October, when ICC proposed to minority shareholders that BT would take over BTL?s operating assets and liabilities and leave enough money in BTL for minority shareholders to pay themselves for the value of their shares. This would have been the end of BTL as we know it, and BT would, thus, have been the new telecommunications giant.

Did Intelco?s and GOB?s debt troubles change things?

The plan was abandoned after it met stern resistance from minority shareholders, but there is no certainty that that was the reason why the move was abandoned.

Around the same time Intelco ran into trouble with its RBTT debt and Prosser defaulted on the TIBOM US$57 million debt. Prosser and GOB entered a new agreement, giving him an extension to pay his debt. A month later, Prosser?s Belize Telecom picked up Intelco?s debt.

GOB, which was grappling with its own debt obligations, immediately rolled over the TIBOM debt into a 7-year bond, adding to the BTL loan some of its other debt to the bank. It was not until February, 2005, after Prosser?s second default, that GOB got the approval of the National Assembly for the new TIBOM loan. TIBOM had turned over the Carlisle shares to GOB after GOB rolled over the loan, but GOB did not oust Prosser and his directors until the second default. That?s when Prosser took GOB to the Miami court.

Prosser blames GOB for default

He claimed that it was GOB?s fault that he could not get money from the RBTT to pay for the Carlisle shares, because GOB failed to keep its promises to make certain legislative and regulatory changes in the telecommunications industry, including outlawing Voice Over IP, a cheap way of making phone calls over the Internet.

Ungaro rules for Belize

In responding to ICC?s claim, Judge Ungaro cited the ?act of state doctrine,? which means that acts performed within another state?s jurisdiction should be recognized and respected by other states, even if such acts violate international law, or other states? public policy.

Judge Ungaro did conclude that GOB had breached the payment agreement it had with ICC by not crediting ICC for $4 million worth of payments on the TIBOM debt, made between May and September, 2004; however, she awarded ICC only nominal damages, which is a small sum awarded to a plaintiff for a loss that cannot be quantified, sometimes a mere $1.00.

She also said that ICC failed to convince the court that GOB caused BTL to enter into disadvantageous contracts with other parties and failed to use ?reasonable care in the custody and preservation of the collateral,? meaning the BTL shares it had repossessed after Prosser?s default.

Most importantly for GOB, the court found that GOB?s move to change BTL?s board of directors on February 9, 2005, was legal.