“If you fail to prepare, you can prepare to fail,” a Belizean sage and retired teacher likes to warn
A bloated contract is bad enough, but even worse is a contract that utterly fails with no possibility of getting your money back
Soybean is an increasingly popular source of protein and good nutrition not just in Belize, but across the world, and therefore, an expansion of the local production was not only supposed to reduce our dependency on imports for local consumption by people and farm animals, but it was also supposed to provide hundreds more jobs for Belizeans, and additionally, create a surplus for export to places like the United States and Japan. Well, even after the Government of Belize spent over $19 million on the project between January 2001 and July 2003, none of that happened, and several milestones for the project were never met.
A Special Report on the Soybean Project of Belize, completed in July by the Office of the Auditor General, Edmund Zuniga, and tabled on Friday, November 14, at the House of Representatives, discloses that the then Government utterly failed to meet its objectives under the highly publicized project – but more than that, there have been millions in losses as a result, and Government certainly did not get value for money.
“The country suffered huge losses due to lack of foresight and in some cases negligence,” concludes the report. “It is the firm belief of the Audit that a project of this magnitude required serious planning and a dedicated team to see it through.”
The Auditor General highlighted “financial delays suffered” and the fact that “GOB did not achieve its objectives.”
The audit spanned a period of almost 7 years, from December 2000 to March 2007, and a preliminary investigation was done in August 2006.
During the course of the investigation, the Auditor-General’s team interviewed the Financial Secretary, Joe Waight; as well as senior officials of the relevant Finance Ministry and Ministry of Agriculture, the general manager of the Belize Marketing Board, and private investors.
According to the report, the soybean project was an initiative that came out of Ralph Fonseca’s Ministry of Budget Management, which he headed when the project was initiated around the first quarter of 2000 (March/April). Also engaged in the project was the Development Finance Corporation – over which Fonseca also had control at the time.
The report makes it clear that GOB suffered substantial losses because the important studies and planning required before the project was brought on-stream were not done, and even when consultants were brought on-board, there were cases where Government could have actually gotten those services without all the expense that it ended up incurring.
The AG reports that the Government lost $3.4 million from cash and non-cash assets invested in the project, including losses for the cancellation of the corn mill and a special packaging machine:
In 2001, the minister ordered the cancellation of the corn mill – the wrong plant had been ordered, the report says. GOB lost its 15% deposit, but the company offered additional supplies and services in lieu of a refund of half a million US dollars. The Audit was unable to determine in this case if the Government had, in the end, gotten value for money. There was clearly a lack of due diligence to ensure that the Government got what it was supposed to get, the AG points out.
The Government leased for eight years an equipment for packaging products using a vacuuming technique – called the VACUTAINER – to take effect September 2001…the Ministry of Agriculture’s chief executive officer sent over a memo to his counterpart in Fonseca’s Ministry of Budget Management, after the first $642,016 lease payment had been made via the Central Bank, indicating that the lease arrangement was really not economically viable. So the lease was terminated. Despite trying, the Government was unable to recoup its first payment on the vacutainer.
(The technocrats at the Ministry of Agriculture were also brought on board, and there was an extended partnership to embrace the involvement of the Belize Marketing Board. On top of this, there was collaboration with CARDI – the Caribbean Research and Development Institute, which was contracted to provide technical assistance and support.)
Had the project materialized as planned, Belize would have been less reliant on imported animal feed, and the cost of the feed would have been cheaper. However, the project was never commissioned as planned, said the Auditor General, “equipments that were purchased to provide farmers involved in the project were removed from the project. Some of these equipments were eventually sold.”
In fact, in his very last budget speech in 2007 (March), the then Prime Minister and Minister of Finance, Said Musa, announced that the soybean plant would have been disposed of to Nutrisoya for about $9 million – a deal that had to be taken to the House of Representatives for approval under new provisions of the Finance and Audit (Reform) Act.
Originally, in February 2001, the Government approved $10.5 million for the soybean project. Seven contracts were given out: five to a Belgium company, N.V. De SMET, for a crushing plant, a refining plant, a corn processing plant, a vacutainer, and Comil Silo/Drying/Cleaning equipment, which would have been financed by Commerzbank of Belgium S.A./N.V. at US$4 million, says the Auditor-General’s report.
Additionally, New Holland Company got two contracts for machinery and equipment for a total of just under US$2.5 million.
Government was to supply US$863,183 in financing; ROC/Taiwan had earmarked and disbursed US$4.5 million. About US$2 million was for the rehabilitation of the Libertad Factory and the remainder as a grant in support for the project.
Of note is that the Government decided to move the project from the old sugar factory in Libertad to the Yo Creek Agriculture Station (Orange Walk), which added $4 million to the project cost.
The project should have been commissioned in January 2002, but by 31st March 2007, it had still not been commissioned. Instead, the Government abandoned the project, and proposed disposing of the facility through a lease/purchase agreement to NUTRISOYA BELIZE LTD for BZ$9,750,000.
When Musa presented his budget last year, he had asked, in addition to approval for selling the soybean facility to Nutrisoya, for approval to sell off the remaining assets of the former Libertad Sugar Factory and about 2,000 acres of surrounding lands to Mercosult S.A. for ethanol production for $4.5 million.
When the soybean project was being promoted back in 2001, the Government of the day had explained that, “Belize currently imports $20 million worth of soybean products and another $10 million worth of cooking oil, which can all be produced locally.”
In 2006, well after the project was to have come on-stream, Belize was importing – purchasing from abroad – $8 million more in soy products than it did in 2000, weighing in at more than 40 million pounds.
Under the soybean project, GOB repurchased the old sugar factory at Libertad with Taiwan grant funds of roughly $10 million, awarded in 1999. A political decision was taken to put the facility to other use for an ethanol project.
The Auditor-General noted that Belize’s soybean consumption was far greater than local production, highlighting the fact that the country’s potential to increase production was clearly not achieved, and the projected productions of corn and soy were also not attained.
The Government was to finance the project through 85% in loans from the Government of Brazil, to have been repaid over 5 years. Meanwhile, GOB was to provide roughly $2 million in cash during the first year.
When GOB spoke about the project in February 2001, it said that it would have been a vehicle for the creation of “at least 500 jobs in the Orange Walk and Corozal Districts…”
“It is failures of this type that erode the confidence of stakeholders in Government’s ability to provide sound economic growth. The lack of forward planning also causes government to incur huge losses,” Zuniga’s report declares.
Author: Adele Ramos