, 2004, Innovative
Communications Corporation (ICC) received shareholding certificates
amounting to 84% of the total shares of the Belize Telecommunications
Limited (BTL). This total was the combined shares of Carlisle Holdings
Ltd., as well as the shares of Belize Social Security.
ICC paid US$89,729,838 for the shares in BTL. ICC
Chairman and Chief Executive Officer Jeffrey J. Prosser, professed that
ICC is "committed to investing further in infrastructure with fiber,
broadcasting services and the latest in telecommunications technology for
residential and business customers. We will work closely with Prime
Minister Said Musa and the Belizean Government to assess new growth areas
and prioritize where infrastructure is needed."
Acting Minister of Finance Jose Coye stated, "With this
transfer of the shares, we are now about to restore stability to the
industry and initiate the process for meaningful competition that will
ultimately benefit the Belizean consumers. Indeed, this has always been
the primary objective of the Government of Belize in the
telecommunications industry."
Contrary to that, a Channel
7 News interview with Leader of the Opposition United
Democratic Party Dean Barrow, (armed with the details of the agreement)
disclosed the following about the secret contract for BTLís sale.
"This deal, in our view, stinks to high heaven from the
start. It was conceivedin error and it was compounded in terms of the
manner of its implementation."
In brief, the Prosser/ICC concessions are:
* A guaranteed 15% rate of return after
profits
* He will not pay the 15% tax on dividends
* He will not pay the stamp duty of 5.4 million dollars on the sale
* He will get an interconnection rate that takes into
account his 15% rateof return
* Government will cover, that means pay, any liability that
results from a ruling for a refund or other liabilities against GOB
* A tax-free management contract for ICC executives
* Any disputes against BTL will not go to the Supreme Court,
but UNCITRAL - theUnited Nations Commission on International Trade Law in
Canada.
By any assessment, itís a lavish
assortment of concessions - and the leader of the opposition weighed in
mightily against them. First, the guaranteed rate of return.
Hon. Dean Barrow: "In fixing the rates that we must
pay; the PUC will always have to ensure that the new BTL makes a return
on capital investment of 15% after taxes. Youknow we heard that Prosser
was insisting, and I watched what he said on the television that he would
re-negotiate the 19% business tax that BTL pays. But, does it matter?
Because he is guaranteed a rate of return and government is covenant in
here to arrange for the PUC, in setting rates, to set those rates on a
basis that will guarantee the new owners of BTL a 15% annum rate of
return on capital investments after tax. Altogether, what they are buying
from Carlisleand the various government and government-related entities
with what they want to buy from the individual shareholders, will amount
to a capital investment of around $200 million. Fifteen percent per annum
is something like $30 million - I gather than in the best or worst days
of Lord Ashcroft, BTL never made that kind of money."
"This agreement, and in particular, governmentís
commitment to give these people the 15% rate of return, is open ended or
if I can put it another way - it seems to last for eternity. There is no
cap on it. So this 15% will be with us always."
And while the profits should outdo Ashcroft, so will
the interconnection deal.
Hon. Dean Barrow: "And it gives to Prosser,
interconnectivity on a basis and in accordance with a formula which would
assuredly drive the cost of local telephone calls up. I canít stress too
much, that this is after government said that itís whole reason for
intervening was to take care of this interconnection problem in a manner
far more favorable than what Ashcroft was trying to get. But this turns
right around and it gives to Prosser interconnection on a basis that,
instead of being far more favorable, is far worse."
And as for the $60 million
refund which consumer advocates are trying to recover for over two years
of illegally charged rates well, an indemnity clause puts that
problem in governmentís lap.
Hon. Dean Barrow: "Well thatís gone to bed now.
Because if that were to be pursued and if it were to be found that
consumers are due any reimbursement - it is the government of Belize that
will have to pay. You want to bet me that that is the last you'll hear of
that case?"
And as for this case well, the agreement says
that if the opposition or anyone else wants to challenge it - they have
to get on a plane.
Hon. Dean Barrow: "All disputes arising under this agreement, whether
contractual or not, shall be finally settled under the United Nations
Commission on InternationalTrade Law in Ontario, Canada. So we canít even
appeal to our own courts."
But there should be nothing to go to court about - but
according to this agreement, which says, it should remain secret.
Hon. Dean Barrow: "The parties undertake that,
subject to the laws of Belize, the terms of this agreement and all
information gathered to comply with the terms and conditions,shall be and
shall remain confidential to the parties. Didnít the Prime Ministersay
that at some future time he would disclose the agreement?"
With all this and supposedly more in what Barrow calls
secret side agreement - in the view of the opposition this deal is the
worst ever.
Hon. Dean Barrow: "This, clearly, is perhaps the
worst agreement, the worst deal, that this government has ever entered
into and we know that there is a history of bad deals. So for me to say
that, gives you some indication of exactly how strongly the UDP feels
about this."
But if it is such a bad deal that sells out consumers
interests why did government sign it well, the opposition
blames it on a poor negotiating setup.
Hon. Dean Barrow: "Government then, at best, was in
a position of extreme weakness vis-a-visProsser/Ramphal/ICC. Government
had placed itself in that position. You donít buy shares with borrowed
money knowing that you then put yourself under pressure to resell as soon
as possible and resell, not knowing the concessions you will have to
make. So, it is a completely idiotic, and not necessarily of the village
type of idiocy, but it is idiotic for government to have done what it
did. But,that it was also corrupt, is a conviction that the UDP also
firmly holds."
Channel
7 concluded: A disturbing allegation
- and one the opposition will continue to make in every public forum it
can, unless government can put out its own spin on the sale and convince
a wary public the BTL buyout was not a sellout of consumer
interests.
The opposition maintains that, if elected, it will
investigate the sale and reverse it if the negotiations were not above
board. It says it will also apply a windfall tax on Prosser. Former Prime
Minister Manuel Esquivel also noted that the sale includes shares, which
were the pension schemes for the SocialSecurity Board and the Central
Bank. That means divesting holdings in a company whose returns are
certain to increase with the guaranteed rate of return, and opting
instead to bank these for less, about 7%, when in BTL they could fetch at
least 30%.
Chairman of Carlisle Holdings
Lord Michael Ashcroft and BTL Board of Directors Chairman Dean Boyce were
also on hand to witness the transaction.
Innovative Communications Corporation, a
privately held company, has telecommunications and media operations in
the US, and British Virgin Islands, St. Maarten, Guadeloupe, Martinique,
France and now, Belize.