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#515708 - 07/02/16 10:21 AM Half-a-billion bucks for BTL!
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The saga surrounding the exorbitant cost of telecommunications liberalization in Belize—which has ballooned because of the tumultuous and litigious landscape that emerged after the Government of Belize moved in 2001 to end the telecommunications monopoly—still has some observers awed with disbelief. The country’s premier telecommunications provider, Belize Telemedia Limited (formerly Belize Telecommunications Limited) has endured privatization, liberalization, and a series of government-brokered deals and takeovers—and Belizeans are still counting the cost.

Seven years ago, when the Government of Belize took control of Belize Telemedia Limited from a group of companies controlled by British billionaire Lord Michael Ashcroft, Dunkeld, one of his Turks and Caicos companies, triggered foreign arbitration claiming between $300 million and $600 million.

The presiding arbitrator was Albert Jan van den Berg, who heard the matter along with the arbitrator appointed by the claimant: John Beechey, and the arbitrator appointed by or designated by Belize, Rodrigo Oreamuno Blanco, at the Permanent Court of Arbitration in the Hague in the Netherlands as a dispute arising under the Belize-United Kingdom Investment Treaty of 1982.

Allen & Overy, a law firm representing the Ashcroft group, has indicated that Barrow was the one who signed the exchange of notes for the said treaty back in 1985, when he was Minister of Foreign Affairs.

The tribunal this week ordered the Government to pay Dunkeld US$100,138,726, which it said was the value of its interest in BTL as at 25 August 2009. Of that amount, US$59,984,641—60% of the award—is attributed to the value of the Accommodation Agreement.

The Government also has to pay compensation to the BTL Employees Trust, and although the workers never controlled that company, Barrow said Wednesday that the workers should get a portion of the compensation paid to that trust. He told the press that the total compensation payable for the share value is BZ$255.6 million—not including interest.

The shock of this week’s revelation was somewhat mitigated by prior warnings that the decision would soon come. The news on Tuesday, June 28, was that the nationalization of Belize Telemedia Limited (BTL) back in 2009 had come at a grand total cost of nearly a half-a-billion dollars, although the history of the dispute—unresolved for more than 7 years—was fuzzy in many people’s minds.

Today, there were some questions that Belizeans want to have answered. First among them was, why did it have to come to this? The second was, how will the Government pay?

According to Prime Minister Dean Barrow, his government had moved to nationalize BTL back in August 2009 to put an end to battles between the Government and the Michael Ashcroft-controlled BTL.

The accommodation agreements also covered BTL’s acquisition of $19.2 million worth of assets, formerly owned by the companies affiliated with Glenn D. Godfrey, which the Said Musa administration persuaded BTL to acquire. (For more information, see our online post: http://amandala.com.bz/news/behind-the-accommodation-agreements/)

“Lord Michael Ashcroft is an extremely powerful man. His net worth may well be equal to Belize’s entire GDP. He is nobody to cross…, “ said Barrow.

In announcing the nationalization of BTL, Barrow had said: “There will thus be no more Telemedia awards against us; no more Telemedia court battles; no more debilitating waste of government’s energies and resources; and there will be no more suffering of this one man’s campaign to subjugate an entire nation to his will.”

The fact is, though, the litigation has still not ended. Instead, there have been even bigger awards against the Government of Belize, and as we speak, the Government of Belize is trying to fend off efforts by the Ashcroft group to have the United States enforce multiple arbitration awards against Belize. The tab is no longer tens of millions—it is now hundreds of millions.

With respect to this week’s arbitration ruling, Barrow has indicated that in his view, it was a win for his government and he has no regrets.

“Very simply, we believe we will have no difficulty, especially in view of the excess liquidity in the financial system; getting all the money locally by way of issue of government paper, bills and notes. And the 40% that has to be converted into US and send abroad will also be fairly comfortably covered by Central Bank reserves,” Barrow said.

Last year, the Government paid a partial settlement to the former owners of BTL of US$32.5 million (BZ$65 million), plus US$48.5 million to the British Caribbean Bank for the loan the Government of Belize took when it nationalized BTL. Originally, the loan was for US$22.5 million, but because of the loan, the bank held BTL’s primary assets, which the Government had to acquire to accomplish the full takeover of the company and its assets.

The arbitration panel has also awarded certain costs associated with the arbitration expenses to the claimant. The parties are to bear their own costs of legal representation, but the panel ordered that the Government pays certain costs to the claimants for proceedings before Belize’s courts. In his summary of the costs of the award, Waight said that legal costs amount to $7 million.

BTL’s shareholder equity, according to its audited financials, during the year that Government took control of the company was BZ$165.9 million. Its assets were valued at BZ$317 million. However, the foreign arbitration panel which handed down its decision this week fixed the company’s equity value at US$270.9 million (or BZ$541.8 million)—that’s including the concessions which the Musa administration gave to BTL, while under Ashcroft’s control, to which the tribunal attributed 60% of the award, which factored in both present and future benefits of what would apparently have been a highly favorable 30-year concession.

The Ashcroft group initially claimed US$298.70 million, or roughly BZ$600 million. Dunkeld’s assumption was that the Accommodation Agreement would be in effect until 2034, the duration of Telemedia’s renewed license plus two years. The agreement guaranteed the Ashcroft companies which held interest in BTL a 15% rate of return and when BTL did not meet those promised profits, the Government would compensate through tax set-offs. The agreement also involved restrictions on public access to Voice Over Internet Protocol (VoIP)—restrictions which were reversed in April 2013.

“I wish to make clear at the outset that I place blame for that accommodation agreement portion of the award; which is 60% of the total, I place blame for them squarely on the People’s United Party. The accommodation agreement portion of the award is not to go to those former shareholders; instead that money (less expenses) is to be paid by us in Belize Dollars and is to remain and be spent in Belize,” Barrow announced.

Today, Opposition Leader Johnny Briceño told the press that Barrow knew all along that Belizeans would be saddled with a half-a-billion bill but he resisted paying compensation until last September because of his ego, in his quest to win a third term in office. He said that the nationalization amounted to Government buying “pus eena bag…” since the company is valued far less than what Government now ends up paying for it.

Barrow noted that half of the award is payable within 10 business days: 60% of it in Belize currency and 40% in US currency. The second half is due within 12 months. He said that they will borrow funds from the local market by issue government paper, in the form of treasury bills and notes at a lower interest rate than their previous issue.

Furthermore, he told us that the Government is currently selling $60 million in utility shares: $55 million to the Social Security Board and another $5 million as a separate offering.
SSB chair Douglas Singh confirmed to Amandala that SSB will buy $15,000,000 shares in BTL and another $40,000,000 shares in Belize Electricity Limited (BEL). (BTL shares attract a much higher dividend than BEL shares.)

In wrapping up his statement on Wednesday, Barrow announced that, “Even after that there will still be a little more headroom for selling additional shares in BEL, and a lot more headroom for selling additional shares in BTL. We anticipate being able to raise another $75 to $100 million if we go that way, so that borrowing for the award will be greatly lessened as a result.”

It remains to be seen how many of those shares will actually remain as property of the Government of Belize after the transactions are concluded.

When the Government acquired BTL, it held a supermajority of roughly 95% of those shares. In 2010, it divested itself of some of those shares, at $5 a share, leaving it with a shareholding of 63.4%. By contrast, the Government was offering the former shareholders $1.46 a share.

Additionally, the Government’s 70% shareholding in BEL was last year reduced to 36.9% after it returned 33.3% of those shares to Fortis Inc. of Canada in a settlement agreement that saw the Government paying compensation of US$35 million. The planned purchase of more BEL shares by Social Security Board would see the board’s stake in BEL increase from its current shareholding of 26.9%.

Singh told Amandala that the board has already approved the purchases based on a recommendation from its investment committee to proceed, and they are now working out the final details with the Government, as they cannot pay more than the value that the SSB has set for the shares, based on the earnings per share. Government is selling the shares to pay compensation to the Ashcroft group.

Financial Secretary Joseph Waight said that Parliament has already given authority to proceed and the Central Bank will create an account for the Government to deposit the US currency it needs to pay the portion of the award due next week.

Barrow said that the former BTL shareholders were demanding over $10 per share as compensation, and since they could not agree, the matter had to be settled via litigation. He also said that the former owners were fighting to get back the company.

Five Ashcroft companies, BCB Holdings, Ecom Limited, Mercury Communications Limited, New Horizons Inc., and Thiermon Limited, all filed claims for BZ$10.23 per share, based on a valuation by PricewaterhouseCoopers LLP reported on 17 December 2010. The arbitration panel found that the value of Telemedia as of 25 August 2009 was BZ$5.6547 per share, of which BZ$3.3873 is attributed to the value of the Accommodation Agreement. That was one bitter pill in the award. Another was the interest awarded at 8.34% compounded quarterly. Financial Secretary said that the interest portion amounts to BZ$198 million.

Belize court records indicate that Waight had filed for the court to determine compensation after the parties were at loggerheads over the value of compensation. Seven years later, the PCA-based tribunal ruled in favor of the former owners, awarding them a substantial amount for the accommodation agreement which the Barrow administration had repudiated back in 2008. That decision by the Barrow administration not to accept those agreements which he said were given secretly by the Musa administration sparked a new wave of litigation, first resulting in a separate arbitration award against the Government handed down by the London Court of International Arbitration (LCIA).

As we write, Belize Social Development Limited (BSDL), the company to which the former shareholders assigned the award before nationalization, is trying to have that arbitration award of BZ$38 million enforced against Belize in the USA.

Barrow told the press Wednesday that he is certain that the Government will not have to pay that award; as the saying goes: “Only time will tell!”

Amandala

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#515967 - 07/14/16 09:43 AM Re: Half-a-billion bucks for BTL! [Re: Marty]
Marty Online   happy

GOB Finances Strain to Cough Up 190 Million For Ashcroft Alliance

190 million dollars – that's how much the Government of Belize had to pay the Ashcroft Alliance today as partial payment for the BTL final settlement.  The government had announced that half would be paid within 10 business days of the decision from the Permanent Council on Arbitration.  Government paid 60% - or 114 million dollars of the total in Belize currency and 40% in US dollars – amounting to 38 million US dollars.  The Belize currency was raised through the selling of government treasury bills and notes, while the US currency came out of the Central Bank Reserves. 

It's a serious strain on government's finances and hard currency reserves – and they'll have to do the same thing in a year's time when the final 190 million is due. 

Reports tell us that there is already a dispute with the Ashcroft Alliance over that 114 million paid in Belize currency.  Reportedly, they have requested that it be paid in US dollars – but government refused because would put a serious strain on the Central Bank reserves.

Channel 7


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#516026 - 07/16/16 12:00 PM Re: Half-a-billion bucks for BTL! [Re: Marty]
Marty Online   happy

GOB raising funds to pay Ashcroft from treasury notes and bills

The Government of Belize is raising funds on the domestic market to finance the payment of the arbitration award amounting to nearly half-a-billion dollars to the Ashcroft group of companies, whose shares the Government of Belize assumed when it nationalized Belize Telemedia Limited (BTL) back in 2009. As we reported last week, the balance, after subtracting the $65 million paid as an initial installment last September, is roughly $395 million, and half of that is due by today, July 13, 2016.

The Government of Belize is making use of the increased liquidity in Belize’s financial system—but this would also translate to a marked increase in the public debt stock, from about 82% last year to about 92% by the time the payments are settled.

We asked Ervin Perez, Managing Director, Legacy Fund, for the current liquidity data. Citing the Central Bank’s Weekly Monetary Aggregates, Perez told us that as of June 15, 2016, the amount of excess liquidity (in terms of hard cash) in the system is $451,802,000, up about $81 million from the same time last year.

How will the offering of treasury bills and notes work? Financial Secretary Joseph Waight told Amandala that the Central Bank, the Government’s fiscal agent, will purchase the Government’s notes and bills in the first instance and then on-sell them to institutional investors via a bid process. Those could include the commercial banks and insurance companies.

The offering of treasury notes and bills, said Waight, is close to $200 million—$185 million in T-notes and a smaller portion in T-bills.

The difference is, the treasury notes have a fixed, longer term and they vary in maturity from 1 to 10 years. The interest rates also vary: 3% for the 1-year notes, 4% for the 5-year notes, 4.5% for the 7-year notes and 5.25% for the 10-year notes.

Waight said that these rates are reflective of the current interest rates on the market. The interest would be paid to note holders semi-annually, every 180 days.

The bills, on the other hand, mature in 90 days. They are sold to purchasers at a discount on the face value. For example, a bill for $100 could be sold at $98, for a gain of about 2%. These, Waight said, are mostly held by banks and it’s a way to manage their liquidity.

Amandala understands that the Belize Social Security Board, which had initially been asked by the Government to purchase $55 million worth of shares in BTL and Belize Electricity Limited (BEL), is considering purchasing some of those financial instruments from the Government. The share offering is being reconsidered, at least for the time being, according to Waight.

He told us that the Government has been getting a combined revenue stream of about $10 million a year, about $7 mil of it from BTL.

“The Government has taken the position not to proceed with any proposed sale of shares, but rather to retain its shares for itself and to therefore maintain the ownership of those shares and then be beneficiary of dividends or income, rather than sell the future stream of income,” Waight said.

Those receipts, Waight said, would help to meet commitments to holders of the treasury bills and notes.

Waight explained that Dunkeld International Investments Limited (which held 34 million shares in BTL at nationalization) is to receive two-thirds of the funds, while the remainder is to go to the BTL Employees Trust, another Ashcroft-controlled entity which held roughly 11 million shares at nationalization.

Dunkeld is the investment arm of Hayward Charitable Trust—the entity to which the Government would propose projects for Belize in line with the settlement agreement provision, which stipulates that the portion of the compensation attributed to the accommodation agreement (roughly 60%) would be payable in Belize dollars and spent on projects in Belize.

“Their consent would not be unreasonably withheld,” Waight said.

On a final note, after the Government pays the second portion of the arbitration award in 12 months, Belize’s debt to GDP ratio will be pushed to a high of 91-92%, according to figures provided by the Financial Secretary. This week’s payment, which will be met from domestic borrowing via the offering of treasury notes and bills, will increase the debt burden to about 86%.

This year’s report of the International Monetary Fund on Belize said that Belize’s public debt stock had “climbed to 82 percent of GDP after a one-off payment related to a settlement of a loan to one of the nationalized companies [speaking of the loan from the British Caribbean Bank to BTL which the Government had also acquired at nationalization], an increase in public sector wages and transfers and a large overrun in capital expenditure.”

Amandala


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#516180 - 07/24/16 10:56 AM Re: Half-a-billion bucks for BTL! [Re: Marty]
Marty Online   happy

BTL Compensation Award Update

The Government of Belize (GOB) informs that a dispute has arisen between the Government and the Ashcroft Alliance over the recent BTL compensation award handed down by the Permanent Court of Arbitration.

GOB, after the most careful examination by a number of its experts, argues that the wrong rate of exchange was applied by the Arbitral Tribunal in arriving at its ultimate compensation figure. GOB also submits that the Tribunal's calculation of interest was mathematically incorrect. Both mistakes by the Tribunal prejudiced GOB and resulted overall in larger sums being awarded than were justified. GOB has 30 days from the date of the award to seek rectification, and its overseas lawyers have now prepared and are filing the relevant application.

For its part, the Ashcroft Alliance questions the currency split used by GOB last week in making the first half payment of the award. It will be recalled that the award was divided into two by the Tribunal, with 40% of the total representing the non-Accommodation Agreement portion and 60% representing the Accommodation Agreement portion. The latter, according to the Settlement Agreement, is payable in Belize dollars and can only be spent to fund projects in Belize for the benefit of the people of Belize. The 40% is payable in United States currency and belongs entirely to the Ashcroft Alliance as compensation for the acquisition of their BTL shares.

Thus, GOB last Wednesday paid half of that unrestricted 40% of the award in US dollars to the Alliance, and half of the Accommodation Agreement 60% portion of the award in Belize dollars in trust for the people of Belize. But the Ashcroft Alliance now contends that half of the total award, and not just the 40%, should be paid in US currency. Apart from the foreign exchange implications, such a position would also short the Belize dollar portion reserved for the people of Belize.

The Alliance has now applied to the Caribbean Court of Justice for an interpretation supporting its contention. But that is a contention which would utterly violate the Trust set up for the people of Belize with the Accommodation Agreement money, and significantly reduce the number of projects to be funded for their benefit.

GOB will therefore employ all its will and all its resources to resist and defeat this new perfidy that the Alliance is attempting to perpetrate.


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#516291 - 07/29/16 11:14 AM Re: Half-a-billion bucks for BTL! [Re: Marty]
Marty Online   happy

The Storm After The Settlement

6 days ago, we told you about the new quarrel between the Ashcroft Alliance and the Government of Belize over BTL. They're arguing over US dollars, and they can't agree about how exactly the Arbitration Award should be paid.

The Government paid the first half of the nearly half a billion dollar judgment debt, with 40% in US dollars and 60% in Belize dollars. The Ashcroft Alliance is complaining that this wasn't what was agreed to - they want the whole thing in US dollars. So, the Alliance immediately filed suit at the Caribbean Court of Justice asking the court to interpret the decision once and for all, and to make binding orders that the Government will have to abide by.

The Government also has its own counter-claim that the Arbitration Panel used the incorrect math to calculate how much the total Arbitral Award should be. They're contending that the Panel used the wrong rate of exchange to arrive at the compensation figure, and that the calculation of interest is also wrong. The Government says, quote, "Both mistakes by the Tribunal prejudiced GOB and resulted overall in larger sums being awarded than were justified." End Quote.

So, just when everyone thought the fight over BTL was over, the two sides are at it again before Caribbean Court of Justice. The first case management conference for this US Currency fight was held this morning via teleconference.

After the hearing, we spoke with Government attorney Denys Barrow, and we asked why this quarrel is so urgent:

Denys Barrow, SC - Attorney for GOB
"Why we are here is this; the settlement agreement made provision that the sum awarded by the arbitrary tribunal would killed it - would bring to an end the question as to compensation and that award was in fact handed down and everybody agrees as to what is the total. But remember the settlement agreement was made with a provision in it which says that there is a restricted amount and the restricted amount is the amount which the arbitrary tribunal said represented the enhanced value of the shares provided by the accommodation agreement. So the settlement agreement is that that enhanced value, that will be a restricted amount and that will be for the benefit of the people of Belize. The unrestricted amount will be for the benefit of Dunkeld and the other Ashcroft related entities. So the distinction between restricted and unrestricted amount. The expectation when they made the settlement agreement was that the amount per share, which the tribunal would award, would have been greater in favor of the unrestricted amount. Greater in favor of what is to go into Ashcroft's pocket. It turned out to be exactly the opposite. They were expecting that it would be something like 70% to Ashcroft, 30% to the people of Belize. As you now know what the tribunal decided is its 40% to Ashcroft and 60% to the people of Belize. The issue now is that Ashcroft says but the agreement provides that I was to get 50% of the total award upfront. The problem is that if it had gone as was expected 70/30, then you could get 50%, because that would still leave another 20 to go along with the 30 to towards the people of Belize."

Of course, the Ashcroft Alliance doesn't agree with the Government's interpretation, and today, Dunkeld International's Attorney, Eamon Courtenay, explained how this quarrel over US dollars impacts his clients:

Eamon Courtenay, SC - Attorney for Ashcroft Alliance
"Well what has happened is that government agreed under the settlement agreement that was signed last year September that it would pay 50% of the arbitral award within 10 days of the award being published. That was the 13th July. That was to be paid in US dollars and we said there is absolutely no doubt about that in the agreement. The government did not pay it in US dollars. They paid a portion of it in Belize dollars and a portion in US dollars. The companies who are entitled to the payment have come to the Caribbean Court of Justice to say we are asking you to construe the agreement and if you agree with us to made an order that the government pays the balance in US dollars and the Belize dollars portion would then be paid back to government because that was not a part of the agreement."

"This morning the Caribbean Court of Justice commence the hearing and indicated that they want full submissions, they want further evidence and they are going to hear it on the 19th August. The government has indicated essentially that even if the Caribbean Court of Justice orders that, my clients are entitle to be paid in US dollars, but the government is not in a position to make US dollars available. As I understand the government's position the government of Belize does not have the US dollars available to make the payment and the Central Bank is not prepared to sell the government of Belize the US dollars to make the payment."

"So, we are going to have a very historic standoff between a court, if they agree with us saying that you should pay in US dollars and the government saying I don't have it and the Central Bank saying I have but I will not sell it to the government of Belize."

"I would just remind people that this arose out of an acquisition of property and the constitution says you are to be compensated. The government that the arbitrators were to determine it. The government agreed that they would pay 50% in 10 days. They agreed that they would pay it in US dollars and now that the time has come to pay, they are saying we are broke. That does not absolve you of your legal obligations."

As you may have noticed, Courtenay claims that the Government revealed in today's hearing that the Country cannot afford to pay the arbitral award with the amount of US currency that the Ashcroft Alliance is claiming. So, the press asked Denys Barrow if this is true, and he did confirm that. Here's that back and forth:

Reporter
"I was made to understand however that with regards to this particular application the government is essentially saying that it doesn't have the amount being requested in US currency and the Central Bank is not forthcoming with providing government that amount. Correct?"

Denys Barrow, SC - Attorney for GOB
"That is also a significant part of it. But more fundamental is the part which I mentioned. But almost equally significant, is that government says we have gotten from Central Bank, I think 29 million. We have consulted Central Bank and Central Bank has in fact written a letter to the financial secretary setting out I think in 4 pages exactly why they cannot find 70 million or any really other significant portion of money in US dollars to sell to the government now to pay to Ashcroft."

Both sides will make an appearance before the CCJ at their Headquarters in Port of Spain, Trinidad. That hearing takes place on August 19, and we'll tell you how it goes.

Channel 7


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#517687 - 09/20/16 06:59 PM Re: Half-a-billion bucks for BTL! [Re: Marty]
Marty Online   happy
This morning the Caribbean Court of Justice advised the Government of Belize & the previous owners of BTL to work out a settlement of the arbitration award outside of court.
We'll have the reaction of the legal counsels for both parties tonight in our newscast.

News 5

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#517698 - 09/21/16 11:02 AM Re: Half-a-billion bucks for BTL! [Re: Marty]
Marty Online   happy

GOB And AA Fight Over Compensation In USD: CCJ Says Work It Out

For almost 2 months, the attorneys for the Government of Belize and the Ashcroft Alliance have been preparing for a hearing before the Caribbean Court of Justice. As we told you in July, they've settled the Government takeover of BTL, and the bill for it to be nationalized is a half a billion dollars. But, they still can't agree how the award should be paid. On July 13, the Barrow Government made the first half of the payment of just over 130 million dollars in Belize currency, and just over 30 million dollars in US currency.

The problem is that the Ashcroft Alliance is complaining that this was not what they signed in the Settlement agreement at the Permanent Council on Arbitration. They say that payment should be strictly in US currency, but Government had a different interpretation and paid the majority in Belizean dollars.

So, they took the case to the Caribbean Court of Justice for them to settle it. That hearing happened today where Denys Barrow and Eamon Courtenay was allowed an hour each to make their case before Justices Jacob Wit, Rolston Nelson, and Winston Anderson. When that hearing was over, we spoke to both sides right outside of the court:

Eamon Courtenay, SC - Attorney - Dunkeld/Ashchroft Alliance
"Our position is that the settlement agreement required the government to make all of that amount in US dollars. The government disagree. As a result we brought an application to the Caribbean Court of Justice seeking a declaration from the court that the government is oblige to make a payment all in US dollars and 2) to order them to pay that amount in US dollars. The court heard us, Mr. Barrow and myself for an hour each this morning and at the end of it the court did not make a ruling. It told us to go away and suggested very strongly that the matter should be settled, that the indication, not a decision and I want to be clear, was that we are entitled to be paid in US dollars and therefore the party should try to resolve it."

Denys Barrow, Attorney for GOB
"Today's hearing concern an application by the Dunkeld/Lord Ashcroft related entities to have an interpretation given to the settlement agreement which would allow them to get an amount greater than what the government says is due to them. It would allow them on their view, their interpretation to diminish the amount of the award which the parties have agreed should go for thr benefit of the people of Belize."

Court: Settlement Was Poorly Drafted

As you heard, the attorneys for the Government and the Ashcroft Alliance are expected to try to make earnest attempts at settling the payment terms out-of-court. If they cannot do so, they will go back before the CCJ on next week Thursday, when the court will give a decision.

But, should this currency fight between them actually be happening? That's what we asked both sides because we told you, this fight has been ongoing for 7 years now. The Settlement at the Permanent Council on Arbitration was supposed to the end-all for the BTL saga. But, in less than a month after it was finalized, the Government and Ashcroft were back to quarrelling before the Court.

Well, after the CCJ heard from both attorneys on their diverging interpretation, the judges found the source of the problem: they say the BTL settlement agreement was poorly drafted. The attorneys, trying to anticipate all the variables surrounding this settlement, tried to tie up all loose ends. What they ended up doing, however, is to create a confounding mess of clauses which is open to different interpretations, based on which side is reading the document. It was also revealed that the terms of this benefit for the Belizean public was not carefully carved out. You'll remember it as the centerpiece of Prime Minister Barrow's sales pitch as to why the half-a-billion dollar settlement was still not so bad. The Government's position is that part of the award, 60% to be exact, is to be paid in Belize dollars into a Trust to be spent on projects for the Belizean people. Denys Barrow tried his hardest to convince the CCJ judges that this was the spirit of the compromise from GOB, but at the end of today's hearing, they were not convinced, simply because the document does not explicitly state this.

Here now is the CCJ Judges talking about the knotted wording of the BTL judgment:

Courtenay also made the point that all the attorneys in the case perused the documents, made comments on it, and nobody red-flagged these issues with the agreement.

Did GOB Ignore Letter of Agreement by Paying in BZD?

According to Government Attorney Denys Barrow, that was the reason why the Government completely ignored the Ashcroft Alliance's terms for the first partial payment. Instead of paying in US currency - as requested by the Alliance, they decided to pay the majority of it in Belizean dollars.

Today, we challenged him on that, and here's how he put it:

Denys Barrow, Attorney for GOB
"It called for the first 50% to be made purely in US Dollars and purely on the assumption that what would be left in the other 50% would be sufficient to yield the accommodation agreement value. That turned out to be wrong and therefore government decided you can't get 50% in US dollars. You will get only 50% of that US dollar portion that you are due now."

Daniel Ortiz
"People have criticized the Barrow administration for ignoring the rule of law, that their favorite term and ignoring the courts and in this particular instance you all signed something for this settlement and did something different. It gives credibility to that criticism."

Denys Barrow, Attorney for GOB
"Yes, but Daniel you are confusing a number of things, ignoring court rulings, I haven't heard anybody says anything about ignoring any court rulings. The settlement agreement is not a court ruling. That is an agreement between the parties. So for the Barrow administration to follow the line which it thought was available to it in the face of an agreement which the court says was badly drafted and needed perhaps rectification, the Barrow administration simply followed a line which it though was most beneficial for the Belizean people."

Reserves Reserved For Who?

Today, the topic of the Country's Foreign Reserves did come up in the hearing. But, the CCJ judges didn't appear too impressed by the argument that the Central Bank Governor is worried that to pay out 70 million dollars more in US currency will strain Belize's foreign obligations to the breaking point.

You'll remember that letter that Glenn Ysaguirre wrote to Financial Secretary Joseph Waigh back in July saying quote, "…It is necessary to advise all concerned that it would be destructive for the economy of Belize if the Central Bank were to even attempt to facilitate any such requests to facilitate for an additional amount of foreign currency, given the currently level of official foreign reserves and other external demands facing the bank…the Central Bank…must…exercise careful management of the international reserves by balancing the foreign exchange needs of the Government against those of the domestic banking system, and the wider private sector. " End Quote.

We asked both sides about that today, and here's what they had to say:

Denys Barrow, Attorney for GOB
"The governor has to make a decision as to what US dollar amounts it will allow to be paid in priority to what. So we need to pay for instance, to import oil. We need to pay to import food stuff. We need to pay to import essential items. We need to pay the super bond. There is obviously in all instances a decision which needs to be made by the Central Bank."

Eamon Courtenay, SC - Attorney - Dunkeld/Ashchroft Alliance
"First of all we dispute that. That's the first point. The letter from the Governor of Central Bank set out certain payments that he says the Central Bank has decided that they are going to pay in priority to my clients' amount that they are to get. I think you would have heard the presiding judge strongly intimate, what does that have to do with anything? When he referred to the letter from the governor of central bank. He says, it sounds to him like a tenant saying to his landlord I owe you the months' rent, but I can't pay. What is the point of that? In other words, the government cannot bind itself to an agreement to pay US dollars and when the time comes it simply say we are going to pay other debts. This is a charge on the consolidated revenue fund. It has priority and I am confident that the court is going to order the government to pay the amount in US dollars."

Denys Barrow, Attorney for GOB
"If it was a case that there was an abundance of US dollars in the system, it wouldn't matter to the government whether to pay in Belize Dollars or US dollars. There is no benefit to the government to not pay in US dollars. The only reason for not paying in US dollars, would be because of the crunch it would cause upon the domestic banking system and the ability of people like each of us to get US dollars."

Courtenay told us that if indeed the country's Foreign Reserves cannot handle such a payment, it is the responsibility of the Government to come to the court and explain this, along with a plan for installment payments. He said that his clients would also carefully consider these matters should the Government do so in the correct forum.

GOB Will Have to Go Into Red To Make Second Payment

And, while the Foreign Reserves may not be able to accommodate this US currency payment, the Financial Secretary told us today that to make the second payment next year, the Government will have to borrow 150 million dollars.

Here's how he explained it:

Joseph Waight, Financial Secretary
"The unfortunate thing is that we would have to borrow the money to pay it and then that increase your debt and that increases your debt service. If you have to borrow another 150 million for the next payment, and you borrow money at 3%, you are looking at 4.5 million dollars more in debt service and of course you have to repay. So it adds up very quickly."

Daniel Ortiz
"Are you saying at this time that the government will have to borrow to make the next payment?"

Joseph Waight, Financial Secretary
"Yes."

Daniel Ortiz
"What is that value exactly?"

Joseph Waight, Financial Secretary
"I'd say about 150 million dollars more and you would have to find ways of meeting the debt service and also amortizing that debt overtime. There are 3 arbitration awards that were in favor of or against the government of Belize, substantial amounts. The claimants have taken the cases to the US court system. It's gone as far as the US court of appeals which have upheld the awards. We are now going to final court which is US Supreme Court. Belize has applied to the US Supreme Court to hear the case. US Supreme Court has not determine yet whether they would hear those cases or not, If they do, I hope they find in our favor. I think we have accompanying arguments. If they don't hear the case well I guess it's another year of enforcement, which is another thing."

Daniel Ortiz
"What is the value of those external awards combined?"

Joseph Waight, Financial Secretary
"Combined we are looking at 100 million Belize dollars."

Later on in the news, you'll hear exactly why the Financial Secretary says that the Government cannot pay that final 3% salary adjustment to the teachers and public officers at this time.

Channel 7


How Will B.T.L. Arbitration Affect Belize’s Currency Position?

There were differing views on whether the Government can adhere to paying the remaining portion of the award due to Dunkeld in U.S. dollars, and should have paid the first instalment in Greenbacks. As we previously reported, the Central Bank’s Governor, Glenford Ysaguirre, wrote Financial Secretary Joseph Waight on July twenty-second, reporting that, “The Dunkeld and Trust requirements would take the demand up to U.S. two hundred and sixty-three million. A recent increase in net outflows has caused the gross official reserves to shrink from U.S. five hundred and thirty-four point seven million one year ago, to U.S. four hundred and twenty-two million today. To address the demands above, along with the additional demands of Dunkeld and the Trust, would immediately push the reserves to crisis levels.” He added that such a move would be destructive for the economy of Belize. Even as Denys Barrow told us it was a question of priorities, Dunkeld and its attorney Eamon Courtenay are not exactly in a mood to be forgiving.

Eamon Courtenay

Eamon Courtenay, Attorney for Dunkeld International Investments

“The letter from the Governor of the Central Bank sets out certain payments that he says that the Central Bank has decided that they are going to pay in priority to my client’s amounts that they are going to get. Now the amounts that he spoke about included repatriation of profits for some multinational, monies to be paid to some bank in Belize, and that sort of thing. Let us not forget what we are talking about: compensation for the acquisition of property, a constitutional right. And if you were in court, I think you would have heard the presiding judge strongly intimate, what does that have to do with anything? When he referred to the letter from the Governor of the Central Bank, he said it sounds to him like a tenant saying to his landlord, ‘I owe you the month’s rent but I cannot pay’ – what is the point of that? In other words, the Government cannot bind itself to an agreement to pay in U.S. dollars and when the time comes simply say, ‘We are going to pay other debts.’ This is a charge on the Consolidated Revenue Fund; it has priority, and I am confident that the Court is going to order the Government to pay the amount in U.S. dollars.”

Denys Barrow

Denys Barrow, Attorney for Government of Belize

“These priorities are dictated or decided upon by the Government of Belize; they are decided upon by the Central Bank of Belize. I think the Governor makes the point that at this point last year, our foreign reserves at this stage were at five hundred million; this year the foreign reserves are at four hundred million – this is before Hurricane Earl. So when people can’t get foreign exchange at the bank, the pressure is upon the entire domestic economy, upon the entire banking system, to produce foreign exchange. The Governor has to make a decision on what U.S. dollar amounts it will allow to be paid, in priority to what.”

Courtenay said that his client would look at any proposal that the Government makes for settling this aspect of the award. Barrow meanwhile stated that Government has never shirked from paying any aspect of the award, subject to the financial crunch that the country is currently in.

Channel 5


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#517755 - 09/23/16 11:15 AM Re: Half-a-billion bucks for BTL! [Re: Marty]
Marty Online   happy

P.M. Plays Down Concerns About Extra Borrowing for B.T.L. Settlement

Dean Barrow

Tuesday’s hearing at the Caribbean Court of Justice addressed a number of issues with regard to the Settlement Agreement for Belize Telemedia Limited, including the issue of paying back the former owners of the telephone company, represented by Dunkeld International Investments and the B.T.L. Employees Trust, in U.S. dollars. The attorneys for Dunkeld and the Trust argue that the payment due on thirteenth July should have been made all in U.S. dollars and not the currency split as argued by the government. The Prime Minister shied away from any question related to why the ratio for repayment of the portion of the payment attributed to the Accommodation Agreement flipped so drastically, but assured that the one hundred and fifty million Government is borrowing to help meet the second tranche is from domestic sources and easily repayable.

Prime Minister Dean Barrow

“We didn’t know what the arbitration award would be, but from the time the award came down, we knew that we would be paying in two tranches. The first tranches in year one and the second tranche in year two so we borrowed enough to meet the first payment and it is clear that we will have to borrow to meet the second payment. This is all domestic borrowing by way of the treasury bills and notes. So we are perfectly prepared to do that next year when we will need to make that second and final payment.”

Reporter

“Are you worried that the once hundred and fifty million dollars that—it seems to be a huge burden—that the Belizean public may turn on you, given when they start to feel the pain of that one?”

Prime Minister Dean Barrow

“But this is domestic paper that government is well able to service. it serves the purpose as well of trying to mop up some of the excess liquidity in the system and it gives the banks and  financial institutions another vehicle for investing in the sorts of…complying with their requirements in terms of the holdings of assets that they must have in their portfolio.”

We will have more from the Prime Minister on Friday on the future profitability of B.T.L.

Channel 5


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#517770 - 09/24/16 11:01 AM Re: Half-a-billion bucks for BTL! [Re: Marty]
Marty Online   happy

Second Payment, A Pecuniary Pain For GOB

The PM spoke to us after a nearly five hour meeting with the Teachers Union, which went late into the evening. That's why he was only willing to take a few questions. We did use the opportunity to ask about how the Government intends to make the second payment to the Ashcroft Alliance.

Coming out of Tuesday's CCJ hearing, Financial Secretary Joseph Waight told us that the Government will have to borrow 150 million dollars to make the second payment.

We asked the Prime Minister to explain:

Daniel Ortiz, 7news
"Was this in the works from the time this settlement was on the horizon?"

Rt. Hon. Dean Barrow - Prime Minister
"We didn't know what the arbitration award would be, but from the time the award came down, we knew that we would be paying in two tranches. The first tranches in year one and the second tranche in year two so we borrowed enough to meet the first payment and it is clear that we will have to borrow to meet the second payment. This is all domestic borrowing by way of the treasury bills and notes. So we are perfectly prepared to do that next year when we will need to make that second and final payment."

"This is domestic paper that government is well able to service. it serves the purpose as well of trying to mop up some of the excess liquidity in the system and it gives the banks and financial institutions another vehicle for investing in the sorts of…complying with their requirements in terms of the holdings of assets that they must have in their portfolio."

We also asked him if he is concerned about any political backlash when the time comes to start making those loans, and here's how he put it:

Daniel Ortiz, 7News
"Are you worried that the once hundred and fifty million dollars that - it seems to be a huge burden that the Belizean public may turn on you, given when they start to feel the pain of that?"

Rt. Hon. Dean Barrow - Prime Minister
"Bottom-line, we are now free and clear in terms of our ownership of BTL. I repeat that that is a company that will more than be able to pay this bill, this debt that we have to incur for its ownership and over the long haul we are going to come out ahead. Generations to come, the ownership of BTL is forever. The earnings from BTL will not just pay for what we have to borrow now, but will see us coming out indubitably and resoundingly on top. This is a good deal, this is not like the super bond where you owe 1.1 billion dollars and you get nothing for it and you have nothing to show for it. This is an asset that even now is worth well over half a billion dollars and as I said in terms of the prospects for the profits that the company will make, we are well ahead of the game, we are well clear in terms of coming out resoundingly overwhelmingly on the plus side of the equation."

Dodgy Drafting on BTL Settlement Opens Up Huge Hard Currency Dispute Between GOB and AA

On Monday's news, we brought you coverage of the Caribbean Court of Justice's teleconference hearing trying to resolve the latest fight between the Barrow Government and the Ashcroft Alliance over BTL. They can't agree on whether the half a billion dollar settlement should be paid in US Dollars, or Belizean dollars.

Now, while a fight over currency may appear trivial, it is important because the currency determines who gets a bigger piece of the pie for the final settlement - and it also determines how easily government can pay it.

Now, to understand it all - we have to back to the infamous Accommodation Agreement, signed by the then Musa Administration, which ultimately triggered the nationalization of BTL, and that led to the prolonged legal battle between the Ashcroft Alliance and the Barrow administration. Well, to try to settle it, they both agreed to let the arbitrators at the Permanent Council on Arbitration determine the value of the shares that the Government took away from the Alliance. It was expected that the Accommodation Agreement would drive up the value of the final settlement figures, and so, the two sides agreed that there would be a separation of the value between the book value of the, and the additional value derived from the Accommodation Agreement.

The Government and the Alliance settled on the principle that whatever value was assessed for that infamous agreement, the real share price would be paid to the Alliance and the other enhanced value would go into a fund for projects benefiting the Belizean people.

Seems simple enough, but the problem is that nobody anticipated that the Accommodation Agreement portion of the settlement would take up the bulk of the BTL bill. The arbitrators assessed it at 60% of the final 500 million-dollar price tag. The problem was compounded because the drafting of the Settlement Agreement, as laid out in the 2015 Acquisition (Settlement) Act, was not written to account for that. On the Ashcroft side, the document is being interpreted with the commitment that the Government gave. Seen here in Subclause 4.1 (b.1) of the Act's Schedule, the Government agreed that the first partial payment that Dunkeld International, an Ashcroft-Allied company, would receive is 50% of the entire settlement in US dollars, 10 days after it is finalized. That amount goes directly to the Alliance.

The other part of the settlement, spelt out in Subclause 4.2, is the Government's pitch as to why the huge settlement isn't all that bad. It says that the Accommodation Agreement portion of the settlement should be designated as a "Dunkeld Restricted Amount". That amount, from the Barrow Government's perspective, should directly into the Hayward Charitable Trust, to be used for the benefit of the Belizean people.

So, why is all this important? Well, the Ashcroft Alliance says that they should have been paid 50%, or 75 Million dollars in US Currency. But, the arbitrators assessed that 60% of the award is due to the Accommodation Agreement. So, in principle, the Ashcroft Alliance should only get 40%, as the real share value. So, that's the big dispute?

Well, the Alliance wants their 50% upfront, while the Government says that they are only entitled to 40%. No one is sure who's right, since the Settlement Agreement allows for both interpretations. But with the wording as it is, each side is saying that they should get their share first.

Yesterday, we challenged the Prime Minister on the convoluted wording of the agreement, which now causes this problem, and on the fact that his brother was unable to successfully convince the CCJ judges of the Government's position. He told us that his reports say otherwise, and so, we've put together excerpts of the hearing for you to decide how it went. The CCJ's video recording had some audio issues, and so we've assisted you with subtitles; here's that exchange between the attorneys and the CCJ judges:

Eamon Courtenay, SC - Attorney for Ashcroft Alliance
"The parties agreed that the Arbitrators would determine the compensation amount, but also will attribute a value to the shares, and a value to the Accommodation Agreement. There is no dispute about that. What the applicants did was to make very clear, and to make an express term of the agreement that whatever amount the arbitrators reach as to the value, and whatever amount they attribute to the Accommodation Agreement, and to the shares, 50% of the total award is to be paid to them in US dollars. Both parties took a risk as to the attribution of the amount to the Accommodation Agreement. There is no provision in this agreement that says all of enhanced value is to go to the trust."

Denys Barrow, SC - Attorney for GOB
"The parties agreed that out of that 175 million US, that portion representing the value attributed to the Accommodation Agreement is to be held by the owners for the benefit of the people of Belize."

Justice Rolston Nelson - CCJ Judge
"But, the drafting is bad, and that doesn't mean that we should be misled."

Denys Barrow
"It is 40-60."

Justice Rolston Nelson - CCJ Judge
"It doesn't say that in the agreement."

Denys Barrow
"No, well exactly, and it doesn't either that you are entitled to any of the 60% for your benefit. Payment in installments does not alter - notwithstanding that it is a bit convoluted - does not alter that proposition, which I think remains as the meat - as the central thrust of this clause 4."

Justice Rolston Nelson - CCJ Judge
"Mr. Barrow... I would take a lot of persuasion..."

Daniel Ortiz, 7News
"The Government is on very thin footing when it comes to demanding that."

Rt. Hon. Dean Barrow - Prime Minister
"Listen, I wasn't there, so I didn't hear what the court said, but that's not the way I got the report. So, I am afraid I am not in a position to comment on your understanding, since it doesn't accord with I was told. I would only say this, that we clearly take the position that there is no doubt at all about the agreement making clear that the Accommodation Agreement portion of the award is to come back to Belize for the benefit of the Belizean people."

As we told you, the CCJ judges have suggested that they make their best attempts to settle this outside of court. They have until next week Thursday, and if they cannot agree on a resolution, the Court will decide on which interpretation is the correct one based on the wording of the settlement agreement.

Channel 7


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#517909 - 09/29/16 06:31 PM Re: Half-a-billion bucks for BTL! [Re: Marty]
Marty Online   happy

CCJ rules against GOB

Government of Belize Expresses Disappointment over CCJ Decision

The Government of Belize (GOB) expresses its disappointment at the decision of the Caribbean Court of Justice (CCJ) this morning on the interpretation of the BTL Settlement Agreement.

GOB does not agree with the ruling of the Court but must accept it. It is important to point out that the overall quantum of the Arbitral Award has not been increased or in any wise altered; however GOB now has to pay 10% more of that award in US currency - that is 50% rather than 40% of the total award.

The CCJ has said that it is prepared to give GOB time to pay on an installment basis. GOB is now determining, together with the Central Bank, the best case scenario to avoid any withdrawal of too large an amount at any one time from the Central Bank Foreign Reserves. Thereafter GOB will put that scenario to the CCJ for approval. On that basis, GOB is comfortable that the ruling will cause no shock to Belize's foreign exchange position.


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