London Court Dismisses Belize Bank Appeal

The Government of Belize has scored a major legal victory against the Belize Bank at the London Court of International Arbitration. The 107 page judgment dismisses all the claims of the Belize Bank against the Government of Belize arising from a 2008 agreement. That was an oral settlement agreement between the Musa administration and the Belize Bank, in which then Prime Minister Musa agreed to divert US$10 million – half of the Venezuelan Housing Grant - to the Belize Bank to settle the UHS debt.

The Barrow Government recovered the money in August of 2008 – but not without a fight in court and the threat to arrest the President of the Belize Bank, Phil Johnson. The court found that that the Central Bank of Belize acted properly in getting back the money

And that’s why the Belize government is especially pleased with the judgement and sent out a release trumpeting its victory. It dismisses the Belize Bank’s claim that the US$10 million transaction was lawful; and also dismisses its claim for damages against the Government of Belize for taking back the money. The London court also frowned on the actions of then Prime Minister Said Musa, AG Francis Fonseca and Home Affairs Minister Ralph Fonseca, as well as the conduct of the Belize Bank.

The judgment declares that the Venezuelan money, “should have been paid into the (Belize) Consolidated Revenue Fund……….before any transfer could be made ……..The oral agreement (between the Musa administration and the Belize Bank) therefore violates....the Belize Constitution and section 3 of the Finance Act.” The tribunal also found that one of the fundamental objectives of the 2008 Settlement Agreement between the Bank and the Government of Belize…….”was to ensure that the existence of the Venezuelan Funds remained concealed from the National Assembly and the Belize public so that the controls set out in the Finance Act could be avoided…...”

It’s a damning judgment for the bank and the last government but there’s still that pound of flesh – which is the original $33.5 million Universal debt guaranteed by the Government of Belize. Then PM Musa had also signed a secret Settlement Deed and Loan Note covering that and the Tribunal has reserved its judgment on the validity of that for a later date.

The Belize Bank has to believe that those agreements are valid. The Bank today sent out a press release stating that it still remains “out of pocket” for the money it loaned to Universal and the Bank says it hopes fully recover the money it is owed. The Bank says that despite the London ruling, it will also challenge the Central Bank's role as a civil enforcer and not a regulator in getting back the US$10 million. That matter will be taken up at the Banks and Financial Institutions Appeals Board.

A related matter is that the US$10 million has been all but fully disbursed on housing assistance loans. We’ll have an update on the funds for you a little later on in the news.
Live and let live