Government Writes Off Mortgages; Opposition Says Piñata Politics
Today the government went to the House Of Representatives loaded with goodies: first there was the Social Security Housing Loans and Debt Relief Write Off Motion and then the announcement of decrease in electricity rates.
But, the thunder was stolen in one case and tainted in the other. First, the news of those new light rates was already reported in last night's news, and, second, the SSB write-off has been marred by the controversy of the CEO and other Social Security staff trying to cash in on the programme.
So, before he rushed in with all the political fanfare, the Prime Minister had to explain that those who were not on the list when it was first broached by government at the end of September, 2011 - won't be getting on - which cuts off all the inside traders:
Hon. Dean Barrow, Prime Minister
"I should make one thing clear; the list is the list that I said was given to me as of the 30th of September. No name has come off, and no name has been added; there was a great brouhaha about goings on among staff at SSB. Let me make absolutely clear. And, again, members on the other side will be able to look at the original September 30th list to verify that it is that exact list that is being reproduced now for the House to approve."
"Again there may well be, Mr. Speaker, as we proceed the discovery that one or two of those names on the list may be the names of persons that have died, and their loans as a consequence have been written off by insurance. In that case I will need for SSB to replace those loans, because we have bought 781, at that juncture when that can become clear if there are such instances. We can look at who next there was on the list that was just over $50,000.00 and try to slot them in."
"Mr. Speaker, but you know what happens now. People are saying to me 'what happened to the loans and mortgages that are at DFC?' Well, being always for the people we can promise today that there will soon also be a form of assistance with the DFC mortgages."
"Now Mr. Speaker let me be clear. I don't know whether it will be a complete write off, whether it will be a lowering of the interest rates or a combination of both and so I cannot go beyond saying assistance there will be in one form or another."
"But for now `Mr. Speaker we are happy that so many additional families are benefiting once again from another of the UDP's pro people initiatives. There are some would be spoilers that we called "blue konkas" that have tried to reign on this parade, but it is clear that the joy at what we are doing is not confined only to those home owners that are benefiting directly. All right thinking citizens resoundingly approve of compassion on the part of their government. Compassion that gives a welcome and significant boost both to individual disposable income and to collective economic activity."
"The nominal value of the mortgages being written off is just under 17 million dollars though we have been able to acquire them for 6.9 million because of the impairment factor. Mr. Speaker on behalf of a government that is always for the people I now take pleasure in moving the motion."
And while he got a standing ovation from his side of the house - the opposition was not impressed.
Leader, Francis Fonseca agreed that a write off is a good thing - but there's nothing to cheer about when so many people can't pay their mortgages, while said Musa colorfully likened it to piñata politics:..
Hon. Francis Fonseca, Leader of the Opposition - PUP
"Any relief, Mr. Speaker, offered to struggling home owners- who are for the most part unable to meet their mortgage obligations- is welcome and supported. In fact the great majority of the persons benefiting from the government write off are individuals who were given the opportunity to become first time home owners under the PUP's housing expansion and development program."
"Like all Belizeans we are justifiably concern about the reports that have been forthcoming. About the alleged abuse and so call insider trading by senior Social Security Board managers and staff. Mr. Speaker, purportedly the CEO of Social Security Mrs. Martinez has paid $20,000.00 to the Social Security Board for a mortgage with a loan balance of about $69,000.00. Furthermore, several select members of staff of SSB were advised on what was necessary in order for them to qualify for a write off and were allegedly given recommendations by the CEO of SSB to obtain loans at commercial banks and other lending institutions in Belize to borrow to pay down these mortgages to take their balances below $50,000.00."
"Why has it become a matter for celebration and grandstanding and patting yourself on the shoulder when some 800 Belizean families have fallen into poverty; are no longer able to meet their mortgage payments; have effectively lost hope and given up. Mr. Speaker, these families deserve jobs and economic opportunities, not just handouts."
Rt. Hon. Said Musa, Former Prime Minister
"Most of these homes, Mr. Minister of Works, were built by the People's United Party providing home owners in this country. I think even the Minister of Tourism will agree with me."
"Mr. Speaker, in other words it is the PUP that did all the heavy lifting so that now the UDP government can be generous with assets created by the People's United Party, and, of course, it is being done now in a last hitch desperate effort to try to win votes from these poor people. Now that the election is drawing near, the UDP is trying to take advantage of the situation - dishing out - bursting the piñata. It has become a piñata campaign now. Free ham and turkey. Write off the mortgages; dish out the cash. In other words, the housing department and the representatives of the UDP and the Social Security Fund now have become one big piñata to dish it out."
"The final insult now, as pointed out by the Leader of the opposition, these fat cats in the Social Security, fat cats UDP, yes, in the Social Security Board have been taking advantage of the Social Security write off or at least attempting to. I am happy to hear that when it was exposed - not by the government but by the media, Channel 5 and Channel 7 that exposed this racket that was going on - it was only then that the government through the Prime Minister has now responded to say that they will not benefit. This very same sanctimonious lady, who presided over the DFC Commission of Inquiry, this pious sanctimonious lady who kept talking about corruption here and there with no proof. Now we have the real corruption that was attempted in Social Security Board. That's right."
Hon. Dean Barrow, Prime Minister
"Those on the other side who tried to concentrate their fire on the CEO of the Social Security Board can't get away with that. What it appeared was being attempted by staffers at SSB had and has nothing to do with the government's write off program. In any case what was contemplated could never have happened because from the time I learned of the allegations that were making the rounds I spoke to the Chair of the Social Security Board, and I knew that the Chair was going to convene to deal with the allegations. I also knew that I had the list upon which the contract was concluded, the list on the basis of which I have negotiated. And there was no way anybody would have been able to add to that list without the approval of the government of Belize, and there was no way in the world that the government of Belize would have given that approval. So I am not going to try to defend the CEO, but I do have to observe that the thunderous denunciations of the CEO coming from the member for Fort George is rich, its ironical. If I were the CEO I would take some comfort from the fact that the man who is my greatest detractor is the man whose record is so well known. I listen to the member for Belmopan talking about all the compromises that the member for Fort George made when he was Prime Minister. I should rephrase that - the various ways and the countless individuals to whom he was compromised. And I recollect what Bettie Davis said about that starlet, looking at her she observes to people, 'there goes the good time that was had by one and all.'"
Channel 7
House approves write-off of 781 mortgages worth $17 million
Prime Minister and Minister of Finance Dean Barrow on Friday, January 13, tabled a motion in the House of Representatives for the write-off of $17 million worth of mortgages which he said have an impaired value of $6.9 million. Government has purchased the mortgages from the Belize Social Security Board (SSB), and Barrow today confirmed the list at 781 beneficiaries, “who had originally borrowed $50,000 and below.”
Opposition Leader Francis Fonseca questioned: “Why has it become a matter for celebration and grandstanding and patting yourself on the shoulder when some 800 Belizean families have fallen into poverty [and] are no longer able to meet their mortgage payments?”
Barrow said that the call for help from homeowners increased after the Government “wrote off 9,000 almost 10,000 mortgages” held by the Ministry of Housing last year and some of the mortgage holders whose loans had been transferred to the SSB were saying if government had not sold their mortgages to the SSB, they would also have benefited.
Now that the Government has written off hundreds of loans formerly held by SSB, Barrow went on to declare that assistance is coming to mortgage holders of the Development Finance Corporation (DFC), who have also been “asking about the loans at DFC,” said Barrow.
On Friday, he announced: “There will soon also be a form of assistance [for] the DFC mortgages...” He said he doesn’t know whether it will be a complete write-off, a lowering of interest rates or a combination of both, but he could say assistance will come in one form or another.
National Trade Union Congress of Belize president, Dylan Reneau, told Amandala Thursday that, “A lot of trade unionists benefited from the initial write-off [for $60 million]. They are extremely happy!”
President of the Belize Chamber of Commerce and Industry Kay Menzies pointed out, however, that, “...one way or another, if the mortgage payer is not paying, then the taxpayer must... it is not just workers’ funds but taxpayer money going forward that will have to cover the cost of any effort like this.”
In explaining the history of the mortgages, Barrow said that most of the beneficiaries did not have original mortgages with SSB, but held loans with the Ministry of Housing, the BIMCO, Belize Building Society and St. James Building Society, and they were sold to the SSB, “when SSB was a little more than a feeding trough to Government” under the Opposition People’s United Party. The mortgages were then put in a pool for which advance cash was earned from overseas, through a securitization program.
The debts were principally held by the Royal Merchant Bank of Trinidad and Tobago (RBTT), and Barrow said most of the clients who had the housing mortgages “were not consulted or informed until even after the fact...”
He added that, “They also found their repayment schedule had been altered by the Social Security Board to their disadvantage.”
SSB CEO Merlene Bailey-Martinez told Amandala on Tuesday that SSB had been receiving about 40% of what was due to them from those who held those mortgages. The SSB had to find nearly $300,000 monthly from its pool of funds to meet its payment to the Government.
According to Barrow, GOB pocketed the proceeds of the sale of mortgages to SSB, but the SSB had to take a discounted payout.
Government prepaid some of that $70 million SSB had to service to the RBTT, which was to be repaid to Government by SSB in monthly installments. Those monthly installments now stand at roughly $469,000, with payments due until 2013 and even after this write-off, the SSB still owes the Government about $8 million and is left with about 100 mortgages from the pool, the CEO reported to us earlier this week.
Barrow furthermore explained in the House that the SSB has been repaying in lump sum at the end of the financial year and there is a line item in the budget for those, listed as repayment of securitization monies. For March 2012, said Barrow, the government had budgeted to collect $4 million from the SSB, but SSB had scheduled repayment of $11 million.
SSB will, therefore, not be collecting the $6.9 million but using it to pay for the mortgages as an offset transaction. Government, said Barrow, would still end up with budgeted collection of $4 million. Therefore, the transaction would not dent Government’s cash flow, he added.
Barrow said that the list of beneficiaries tabled in the House is as of the 30th of September 2011: no name has come off, no name has been added. As for “the great brouhaha about the goings on among staff of SSB,” who have been accused of insider trading for trying to benefit from the scheme by lowering their mortgages to fit within the $50,000 ceiling, Barrow indicated that none of them are getting their loans written off in the government pool, and members of the National Assembly can look at the original September 30 list and see it is exactly the list being introduced now for the House to approve.
Fonseca commented on the alleged insider trading scheme on Friday, saying, “...purportedly the CEO of Social Security Mrs. Martinez has paid $20,000 to the Social Security Board for a mortgage with a loan balance of about $69,000. Furthermore, several select members of staff of SSB were advised on what was necessary in order for them to qualify for a write-off and were allegedly given recommendations by the CEO of SSB to obtain loans at commercial banks and other lending institutions in Belize to borrow to pay down these mortgages to take their balances below $50,000.”
Former Prime Minister Said Musa pointed out that many of the mortgages the ruling United Democratic Party has been writing off were issued under his administration, which ended in 2008. He said that the UDP is taking advantage of things by dishing out “piñata goodies,” in the form of the mortgage write-offs and millions spent over the X-mas “ham and turkey” giveaways. Musa called it “a piñata campaign,” saying that “...the Housing Department and the representatives of the UDP and the Social Security Fund now have become one big piñata to dish it out.”
Amandala
PKF To Investigate SSB Insider Trading
The internal auditor has started its review of Social security's insider trading scandal. Today staffers were notified by the acting CEO that starting today,
the accounting firm of Panel Kerr Foster had launched the investigation of SSB's staff housing loans.
The notice informs them that selected staffers will be interviewed, and they will be notified of this via letter from the accountants.
Those interviews are expected to be conducted next week - meaning that that the two week administrative leave for CEO Merlene Martinez and internal auditor Denise Mahler will likely have to be extended.
Chairman Lois Young had said that they would remain suspended until the investigation is completed.
Channel 7
And so that left it in the hands of the Social Security Board of Directors - which met this afternoon at Social Security's Belize City Office.
"Well, we had a long and thorough meeting, and we realize that we need to investigate further. We're going to have an investigation conducted independently of the Social Security Board, and in the meantime, we have suspended the Chief Executive Officer and the Internal Auditor for 2 week initially, and in any event, until the investigation is completed."
There is a major shakeup in the Social Security Board tonight and it is the first of a kind. The Board of Directors at an emergency meeting today, recommended that its C.E.O. Merlene Bailey be suspended from her duties at S.S.B. This comes on the heels of a story we broke on Friday of insider trading at the S.S.B. The board has also recommended that the internal auditor, Denise Mahler, should be suspended and that an independent audit should take place forthwith to determine whether there was any financial wrongdoing with S.S.B. money. The emergency meeting, which started at one-thirty today concluded after five and only dealt with the issue at hand. The board determined that Bailey had acted inappropriately when she encouraged her staff, including top management, to reduce their loans to be able to participate in the write-off of seventeen million dollars owed to Social Security in housing loans. More than a dozen of S.S.B.’s staff members, we are told, reduced their loans to qualify.
Social Security's Board of Directors held an emergency meeting today to address allegations that senior management and other employees of social security have qualified themselves for the Prime Minister’s mortgage forgiveness program. SSB Chairman, Lois Young, verified what the People’s United Party had said in their press release sent yesterday that "certain select members of staff of the SSB have obtained loans at commercial banks and other lending institutions in Belize, to pay down these mortgages, to take their balances below $50,000 in order to benefit as well." In speaking with the media yesterday, Lois Young referred to it as "insider trading” when certain employees at Social Security, privy to the proposals in 2011, may have taken advantage of that information. Today, the board looked at a list of staff member's mortgage balances which were reduced to fifty thousand dollars or less after the date when the first request was made by government. At the end of that meeting today, two senior staff memebers were suspended and an investigation is being set in motion. Geovanni Brackett reports. 
Chairman Lois Young says they will remain on suspension for two weeks or until an independent investigation is completed.
In the meantime, we understand there has been a mood of stunned disbelief at Social Security as Bailey-Martinez is known to be strict and scrupulous, but has now fallen from grace with a mighty thud - with the tremors resonating all through the organization.
A terse communiqué sent to staff this morning from the executive secretary simply informs them that Leticia Vega - the head of the office of Strategic Management is holding over as the Chief Executive Officer and Carol Moss is holding over as Manager of the Internal Audit department until further notice.
Whatever the case, the Ministry of Finance's list has been finalized and tomorrow the house is expected to approve the write-off of 6.9 million dollars in mortgages - which is the present value of the 17 million in mortgages 0- many of which are impaired.
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