REPORT #352 July 2000

Produced by the Belize Development Trust

The Reporter, June 11, 2000

The case against the Social Security Board, which has paid out $4.86 million in worker savings to buy $1.34 million worth of shares Belize Electric Company continues to rile Belizeans of all ages who are calling it the greatest scam of all time.

At all material times, the lawyers for the Social Security Board, V.H. Courtenay was also the Chairman of the Board. He also represented himself as the secretary of BECOL, the Belize Electric Company which owns the Hydro utility at Mollejon.. He was also secretary of IEEI, and a partner in the law firm of W.H. Courtenay & Co. with registered office at 23 Regent Street, Belize City.

At all material times, Ralph Fonseca was the Chairman of the Board of Directors of Belize Electricity Board. He also represented himself as Minister of Finance when in actual fact he was only the Minister of State in the Ministry of the Prime Minister.

Opening Moves

In January 1991, Fonseca invited bids from international companies to construct and operate a hydroelectric facility on the Macal River. At the same time he missioned Canadian consultants CI Power to perform a feasibility study for the said project.

On April 19,1991, four months before the Canadian study was completed, he signed a contract to involve the government of Belize and Belize Electricity Limited in a tri-partite arrangement with DEI IEEI and BEL.

In this arrangement, Fonseca unilaterally decided to improve the bid from DEI/IEEI to build Mollejon, committing BEL to pay more for electrical energy generated at the proposed plant. He raised the base energy price from 15 cents b KWh to 17.5 cents a KWh and the O & M charge was improved to 2 cents a KWh.

Rock solid guarantees such as 120 KVa take-or-pay were also part of the deal.

When he signed on behalf of both parties, Fonseca was in violation of the Laws of Belize. He was not the Minister of Finance and the BEB part of the contract was not signed and sealed by the Company Secretary as is required under BEB, bye-laws.

What in fact happened is that Fonseca delivered a sweetheart deal, reinforced with non-clad guarantees to the DEI/IEEI consortium.

Act two

After this, it was V. H. Courtenay's turn to do his thing. BECOL, the Belize Electric Company was incorporated a week later. Then on June 5, 1991 a shareholders' agreement was drawn up with the following features:

DEI 50%
Aquatine Co. Ltd. 6%
Pacific Power Co. 6%
Dolphian Investment Ltd. 12%
Joss Ltd. 9%
Robert E. Ratcliff 6%
The Cassian Co. 6%
Belize Social Security Board 5%
For total ownership of 100%

On this date, all of the above named companies became shareholders of BECOL. The IEEI stake-holders were comprised of seven entities - six of which were registered at # 23 Regent Street as IBC's. The seventh stake-holder was the Belize Social Security Board, of which Courtenay was Chairman.

The Plot Thickens

On July 28, 1991 the Social Security Board sent a cheque for $3.34 million accompanied by a letter and a payment voucher to the firm of W.H. Courtenay & Co. The voucher stated that payment was for the purchase of 5 percent shares in BECOL. The voucher was signed and returned by V.H. Courtenay.

Later in an unsworn statement at his criminal trial, (and since repeated and defended by the Minister of Budget Planning, Mr. Ralph Fonseca in the National Assembly), V. H. Courtenay makes the claim that the $3.43 million was paid to IEEI for rights to buy shares in BECOL.

This was an extraordinary claim for Courtenay to make because there is no record anywhere of such a payment being made - no receipt, no permit for foreign ex- change dollars, not a shred of evidence to support this claim.

But even if Courtenay had paid the $3.43 million to IEEI, the funds would necessarily have flowed to all seven principals - namely the six IBC's who had their registered offices at the Courtenay law firm and the Social Security Board.

Courtenay was acting on behalf of the Social Security Board; he was the Chairman of the Board, and he never told the Board that IEEI had received the $3.4 million.

The historical reality is that Social Security Board came together with six international business companies and formed a group known as IEEI. The primary purpose of this group was to agree to subscribe a stated percentage of shares in Belize Electric Company whenever such shares became available. Since they were the original principals, they already had the right and option to invest and had no need to pay anything extra for this right and option.

July 1991, two years before it was due, Courtenay makes a call on Social Security Board for $3.34 million and accepts a cheque for that amount.


On October 1, 1992 an Equity loan agreement was signed between BECOL and DEL converting a DEI loan into shares at $3.34 per share. Six months later DEI acquires the 45 percent block of shares owned by the six IBC's calling themselves IEEI for an undisclosed amount. The holdings of the six IBC's by this time has now been valued at $12.06 million.

Two years after Social Security Board paid its first sum of $3.34 million to Courtenay, in June 1993, BECOL makes its call on shareholders to subscribe to the capital amounts under the Shareholders' Agreement of June 5, 1991. In the case of the Social Security Board, this amounted to $1.34 million for its 5 percent stake.

In July 1993, Social Security Board dutifully sends another cheque to Courtenay - this one for $1.34 million and in return, receives a share certificate for cent of BECOL shares.

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