The Central Bank of Belize and The Belize Bank are locked in a court battle which could have a significant effect on how the country's largest bank does business.
According to an article appearing in today's Guardian, The Central Bank has blown the whistle on the Belize Bank for engaging in what is known as Parallel Banking. It's a situation where the bank conducts transactions between The Belize Bank and its affiliate Bank in the Turks And Caicos.
It has come prominently to the fore in a case involving the holdings of the Luke Espat Group. According to the Guardian, that Group's collective debt is an astonishing 190 million Belize dollars - a figure which has been confirmed to 7News by others with knowledge of the case. The article claims that 150 million dollars of that debt covering performing assets such as the Port of Belize and Renaissance Tower has been stripped out of the overall debt, sold to a company called Private Investment Limited and transferred to Turks and Caicos, while non-performing assets such as Croc Land, Indeco Enterprises and others have been left to languish on the Belize Bank's books.
The Guardian reports that The Central Bank has instructed the Belize Bank to end the parallel banking practice generally and specifically to bring back, or buy back those prime Luke Espat loans but, the Guardian reports, the Belize Bank has balked at the directive.
The Belize Bank has now gone to court claiming that The Central Bank does not have the authority to order the parallel banking to stop.
But because sensitive banking details are involved, the Belize Bank has asked the court for and gotten an injunction to prevent anyone from accessing papers that have been filed in the case.
Bank President Phil Johnson told us today that he could not comment but the matter is before the courts.
The substantive trial begins on March 23rd.