Seven GOB ministers resign!

The Island Newspaper, Ambergris Caye, Belize            Vol. 14, No. 29            August 19, 2004

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The recent disclosure that $6 million in Belize Social Security monies were used to pay for defaulted loans secured for a private company and the same type of backing promised by the Government of Belize (GOB) to guarantee over a $100 million in Intelco loans, has led to the resignation of seven ministers and put the country in a state of turmoil over what will happen next.

   Last Tuesday, August 10th, after Minister of Works Jose Coye admitted that the GOB had put Social Security funds at "undue risk," it seemed every organization in the country jumped on the bandwagon and had something to say about the biggest financial scandal to ever hit Belize.

   First, the Belize Chamber of Commerce and Industry (BCCI) condemned the use of Social Security funds to guarantee private company loans. They stated that if reports are accurate, the action was "impudent, ill-advised and reckless," adding that it appeared to bring "no apparent tangible financial benefit to the fund." BCCI made it perfectly clear that this investment decision was made prior to their involvement on the Social Security Board. They further called for a special financial audit of the Social Security loan and investment portfolio.

   Following suit, the Society for the Promotion of Education and Reform (SPEAR) called for the resignation of the Social Security Board of Directors and their investment committee, and suggested an independent audit of their finances.

   The Opposition, United Democratic Party, called for a full-scale commission of inquiry into the spending of Social Security funds.

   To show solidarity, the Belize Tourism Industry Association (BTIA) expressed their "extreme consternation" over the matter and requested a public review of all investments and guarantees, and further called for a financial audit with full disclosure.

   For his part, Minister of Finance and Home Affairs, Ralph Fonseca, who figured prominently in this misuse of Social Security funds used to guarantee millions of dollars for Intelco, said that he had the full support of the Social Security Board at the time (prior to the March 2003 elections) but not the Musa Cabinet. He was the Minister responsible for Social Security when the transactions took place. In an interview with the Reporter newspaper, he said the decision to have the Social Security Board back Godfrey’s mortgagee plan on the international market was justifiable, especially since it opened up an opportunity to bring fresh money into the country to create jobs.

   All of this information led to a meeting last Thursday morning, August 12th, between a coalition of six ministers who felt "that the time had come" to confront Prime Minister Musa, and ask that immediate steps be taken to change the Ministry of Finance. The G7, as they are now known, are: Minister Mark Espat, Minister Jose Coye, Minister Godfrey Smith, Minister Servulo Baeza, Minister Cordel Hyde and Minister (Senator) Eamon Courtney. Their mission was endorsed by a letter of support sent by Deputy Prime Minister Johnny Briceño who was out of the country. They were adamant when informing the PM that Cabinet must have control over foreign debt, investments and be given real figures. The seven ministers’ most important request was the resignation of Ralph Fonseca as the Minister of Finance. Reportedly, an ultimatum was given: If the PM did not concede to all of these measures, the seven ministers would leave their positions on Monday.

   The following day, in his speech to the nation, it was felt that the Prime Minister had agreed to commit to these requests as he stated the following:

   My fellow Belizeans,

   Over the past two weeks, there has been much public discussion regarding the finances of the public sector. Much of this discussion has focused on the investments in the telecommunications sector and the risk exposure of funds of the Belize Social Security Board.

   Our government has also heard the clear calls for increased transparency and management reforms from the social partners and the wider Belizean community.

   Today, I met with members of my Cabinet and we have agreed to pursue the following plan of action: The Board of Directors of the Belize Social Security Board will, with immediate effect, refrain from making any new loans to the private sector.

   A Cabinet team, along with appropriate public officers will formulate and implement a short and medium term plan for the public sector addressing the financial management process, debt management, cost savings and revenue generation.

   As soon as possible, there will be full disclosure to Cabinet, and to the public, of all public sector loans, loan guarantees and other financial arrangement and obligations, for government and statutory boards. There will be full and immediate disclosure of the actual budget outturn for the last fiscal year, in order to make the appropriate adjustments to Government finances. A review of all Capital II and Capital III expenditures will be undertaken by Cabinet and senior public officers, not for a freeze, but to prioritize projects for improved fiscal management.

   Ultimate management of the financial public sector, including the Social Security Board, DFC and all statutory bodies, will be the responsibility of the Cabinet.

   We will afford the Central Bank full autonomy within government.

   Additionally, we will refocus and prioritize those Manifesto promises rooted in social justice of the PUP government, including job creation, access to education, housing and land.

   We further recognize that the success of this plan is dependent on certain fundamental changes to the current approach and management of public sector finances. These changes will require restructuring at the highest levels of government. We will be disclosing the details of our plan of action and embarking on its implementation by month’s end.

   The days ahead will be challenging. My Government will discharge its obligation to lead Belize forward. Together, with the continued support of the Belizean people, we will successfully make the adjustments in the public sector finances and enable the private sector to continue to perform its rightful role as the economic engine and creator of jobs.

   Let us move forward with the work of development in a climate of good governance, accountability and social justice for all.

   I thank you.

   Sounds good on paper, but over the weekend there was a whirlwind of activity prompted by the PM and Minister Fonseca to gather the needed backing to keep the six disgruntled voting members of Cabinet from becoming seven, who, if joined by the eight UDP members would accumulate the majority amount of representatives needed to force a "no confidence vote" in the Cabinet. A majority would have given them the power to ask the Governor General to dissolve The House of Representatives and call for new elections.

   That was not to be though, as the remaining Cabinet members proclaimed their loyalty to the Prime Minister (possibly hoping for their own ministerial appointment) in a statement signed by the following Association of Parliamentarians: Michael Espat, Maxwell Samuels, Ainslie Leslie, Florencio Marin, Valdemar Castillo, Rodwell Ferguson, Mario Castellanos, Ismael Cal, and Dave Burgos.

   This resulted in a letter of resignation from the G7, which was sent to the Prime Minister on Monday afternoon (August 16th), which read:

   Dear Prime Minister,

   In the best interest of the nation and Party, we now feel obliged to submit our resignation, effective immediately, to allow you the latitude to exercise your best judgement in the appointment of a new Cabinet.


   Honourable Servulo Baeza, Honourable John Briceño, Honourable Eamon Courtenay, Honourable Jose Coye, Honourable Mark Espat, Honourable Cordel Hyde, Honourable Godfrey Smith.

   This led to an announcement by Cabinet Secretary Robert Leslie, which stated: "Today, August sixteenth 2004, the Prime Minister received the resignations of seven members of the Cabinet. These resignations will not affect the proper functioning of the Government as the Prime Minister retains oversight responsibility of the ministries involved. I have already informed the chief executive officers in my capacity as Cabinet Secretary, that they are directly responsible to the Prime Minister and to no one else for management of their ministries. The Ministers, who submitted their resignations, broke with Cabinet protocols by making their disagreements public and by making public demands on the Prime Minister. The proper procedure would have been to resign first. By submitting their resignations in writing, they have now acted appropriately and in the best interest of the nation. This will allow the Prime Minister, the opportunity to advise His Excellency, the Governor General, to appoint a new Cabinet. I expect that the Prime Minister will announce the names of the new Cabinet at an appropriate time."

   Going back to the impetus behind all of this upheaval, the loans to Glenn Godfrey for DFC and Intelco, Chief Executive Officer Troy Gabb of the Development Finance Corp stated that "As far as the transaction is concerned, there was nothing wrong at the inception…" When challenged that they had "changed horses in the middle of the stream" so to speak, by asking for a loan for a tourism project and putting it into a telecom project, which changed the entire profile of the loan, Gabb replied, "We were locked into the transaction at that point in time…there is no way you can turn back at that time."

   According to reports early this week from Belize Social Security Board General Manager Narda Garcia, all the arrears on Godfrey company loans that the Social Security had to pay have now been reimbursed.

   Until, the next time.
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