The Economist The courts overturn a controversial nationalisation
NESTOR VASQUEZ, Belize Telemedia’s executive chairman since 2009, tried to run his country’s dominant telecoms firm as usual on June 27th from its head office in Belize City. But one mile away Dean Boyce, also styling himself executive chairman, sat in a newly established rival office and told bemused employees to take no orders from Mr Vasquez or his team. One page on the firm’s website listed Mr Boyce as chief; another named Mr Vasquez.
This chaotic episode began on June 24th, when Belize’s Court of Appeal ruled that the 2009 nationalisation of Telemedia was unconstitutional. In 2008 Dean Barrow became prime minister. He soon revealed that the government of his predecessor, Said Musa, had signed secret “accommodation agreements” with Belize Telecommunications, which later became Telemedia. The deals limited competition and required the state to make up the company’s shortfall if it failed to earn a 15% return on capital.
In 2000 holding companies controlled by Michael Ashcroft, a member of Britain’s Conservative Party and a life peer who grew up in Belize, bought a controlling interest in Telemedia. Lord Ashcroft’s many businesses in Belize—including BCB Holdings, the parent of Belize Bank, the country’s largest—make him a giant figure in the former British colony, which has 350,000 people and a GDP of $1.35 billion.
Lord Ashcroft’s spokesman has said he had divested himself of all “economic interest” in Telemedia by 2004, and that the firm’s main beneficial owners were an employees’ trust with no elected staff representation and the Hayward Charitable Belize Trust, a Turks and Caicos entity whose trustees are unknown. (Telemedia’s records listed eight corporate parents, five of which shared an address.) But Mr Barrow believed that Lord Ashcroft—whom he called a “determined, ruthless, ambitious enemy”—still controlled Telemedia. Belize Bank had lent Telemedia $22m, while Telemedia owned bonds from BCB firms.
The prime minister first tried to renegotiate the tax clauses with Telemedia. When those talks failed, he got the courts to order the company to make tax payments. Telemedia took Belize to arbitration in London. But the government rejected that arbitrator’s jurisdiction and did not appear, and has not paid the $41m default judgment granted to Telemedia. Parliament then nationalised the company in 2009.
Mr Boyce and BCB Holdings filed a successful appeal. The expropriation was overturned for being arbitrary, disproportionate and lacking proper compensation.
Now it is the turn of Mr Barrow, himself a lawyer, to defend the nationalisation. He argues that the ruling cannot be implemented without a separate enforcement order. He is appealing to the Trinidad-based Caribbean Court of Justice, Belize’s final appeal court. And he plans to get a new, constitution-friendly expropriation passed “in the shortest possible time”—possibly as early as next week.
Meanwhile, control of Telemedia remains up in the air. Within an hour of the ruling Mr Vasquez left the office, and Mr Boyce arrived and held a board meeting. Once it ended, however, Mr Boyce left and Mr Vasquez returned. When Mr Boyce went back to the building late that night, a police guard stopped him from entering.
With monthly bills coming due, even the banks are taking sides. Most will keep sending customers’ payments to Mr Vasquez’s state-run Telemedia office. But Lord Ashcroft’s Belize Bank plans to put incoming payments on hold instead.