BTL looted!
Posted: 27/08/2009 - 11:14 PM
Author: Adele Ramos - adelescribe@gmail.com
When the new state-appointed board of Belize Telemedia Limited (BTL) took over the company on Tuesday evening, the transition was described as seamless and smooth, but what the new board found in its preliminary assessment over the past two days confirmed reports flying around since the weekend that millions were leaving the company in anticipation of the unprecedented takeover.
An official release came from the Ashcroft group of companies on Monday, advising that they were detaching Great Belize Productions and Channel 5 from Telemedia, to maintain an “unbiased” voice in the media, and word came on Tuesday that the television company was moving into the former premises of the headquarters of the National Development Foundation of Belize (NDFB) – a building BTL officials say had been purchased by Telemedia and listed in its 2009 accounts as an asset of the company.
The former NDFB building, corner Coney Drive and Mercy Lane, was bought with Telemedia money, said chairman of Social Security Board and BTL secretary, Lois Young, adding that BTL had paid $3.6 million via cheque back in October 2008.
It is noteworthy because the order signed by Ministry of Public Utilities, Melvin Hulse, says that the takeover included all the company assets, as well as the 94% shareholding held by the Ashcroft group of companies.
This evening, Amandala had a one-on-one with BTL’s executive director and chairman, Nestor “Net” Vasquez, and he gave us the official run-down on the state of affairs.
Vasquez has been onsite since Tuesday, and when he took over the desk of former executive officer Dean Boyce, he found that key company documents were gone.
“Before you leave, I am going to show you the cabinets that are in that room - an office that was given to me that was formerly Dean Boyce’s office... completely empty,” he noted.
On Tuesday morning on Channel 5’s Open Your Eyes, Boyce had said that his boxes of biscuits and books had been packed and were ready to be moved out by lunchtime, but he promised a peaceful transition.
Vasquez told our newspaper that millions were also paid against BTL’s account, including monies to pay management fees to Boyce’s employer, ECOM Ltd., early in the week.
“In total, I can tell you I saw what was the balance of the bank account on Friday evening, and I looked at it when we got in here Tuesday evening, and there was a big drop in the balance available that was in credit in our favor. So it means that they spent millions of dollars on just Monday and Tuesday - in the region of $8 million on Monday and Tuesday. That’s when the action took place in-house. You may have heard rumors flying from Saturday,” Vasquez said.
Last year (2008) BTL paid ECOM $4.5 million management fees for having Dean Boyce run the company.
Chairman Vasquez also disclosed that the in-house financials indicate that BTL made substantially less profits in the last financial year, ended March 31, 2009, than it did for the previous year.
The audited 2008 financials indicate that BTL had earned $37 million and the in-house figures for 2009, yet to be audited, indicate that the profits were $22 million up to this March – a decline of about $15 million.
He said that a good guess is that the $8 million decline in revenues had to do with mobile customers migrating over to SMART, which Prime Minister Dean Barrow recently confirmed is majority-owned by the Ashcroft group of companies.
Higher expenses also contributed to the fall in profits. There is no indication to date that the acquisition of Channel 5 affected BTL’s profitability, and no indication that BTL was subsidizing the operations of the television company, he added.
As to the detachment of Great Belize Productions and Channel 5 through a mystery company, Katalyst, who Telemedia’s past directors claimed owned the TV company, Vasquez said that so far, he does not have the whole story.
“What I do know is that they [the Ashcroft group] tried to salvage Great Belize Productions for themselves, but I have seen evidence that the NDFB building on Coney Drive was paid for with a Telemedia cheque. And we were still looking into that,” he told Amandala.
Is BTL prepared to let them just have the building?
“No way! Telemedia will not allow that,” he responded. “They will have to pay back for the cost of the building that they paid with [BTL] money. At least for that building.”
The chairman said that it is possible that Telemedia’s money was used to buy Channel 5’s shares, but he hasn’t seen the details of the transaction (reportedly a $3 million transaction).
“If they used Telemedia money for that, that too will have to be paid back,” he added.
“To be honest, the first time I heard about Katalyst was when I saw it in the press release. That seems to be the case with everybody else I speak to, even around here [at BTL]. I don’t think I know enough about what happened with Katalyst,” he commented, adding that there are no documents on the premises to substantiate the transactions referred to in the press release.
The Katalyst release, which came on a Telemedia letterhead, had said that, for every BTL shareholder who has less than 1,000 shares in the company, they would be paid 17 cents per share. Those with 1,000 shares and above would receive 1 Katalyst share for every 1,000 shares in BTL.
(This suggests that the Public Service Union and the Belize National Teachers Union, which hold in excess of a million shares in BTL, should also receive their shares in Katalyst and Great Belize Productions.)
According to Vasquez, they will write the former corporate secretary of BTL, Rocky Reef Ventures, and ask for the documents.
“They must respond to whatever request we make. They should have handed over all the company documents,” said Vasquez.
Section 5 of the Minister Hulse’s Order says: “Upon the commencement of this Order, the existing company secretary of Telemedia shall forthwith deliver all books, records and other documents belonging to Telemedia and its subsidiaries to the Chairman of the interim board of directors appointed by the Minister...”
A violation of that clause is an offense, punishable with a $5,000 daily fine, a prison term not exceeding two years, or both a fine and imprisonment.
Apart from reviewing the financial transactions of BTL, and preparing a prospectus for the divestment of shares to the prospective investors (including Belizeans who want to purchase shares), the interim BTL board would also be reviewing agreements the company had with Great Belize Productions and SMART, a second phone company controlled by the Ashcroft group.
SMART has claimed to be the leader of value-added services in Belize. Responding to this claim, Vasquez said, “If that is so, it is simply because Belize Telemedia, to me, has been subsidizing them...,” using BTL’s backbone, such as the towers. “They use it and get it for a song, if anything at all.”
Vasquez said that the financials have indicated that SMART has been outdoing BTL, growing as much as 30%.
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That’s because we’re soft-peddling on them, but now we have found out the reason for that,” he stated, referring to recent confirmation that Ashcroft had been in control of both BTL and SMART.
“The board hasn’t seen or read any of those agreements [with SMART and Great Belize Productions],” said Vasquez. “I know they exist, because we have asked senior staff and they have told us ‘Yes, they exist.’ This is only our second day. We only had one meeting. We will have another one tomorrow – a board meeting and we will present to them everything that we have found.”
Of note is that BTL has two major outstanding debts: a $19.2 million loan with the Government of Belize for the acquisition of Intelco assets – a loan tied to the disputed accommodation agreement, which has led to a legal dispute between the Government of Belize and the Ashcroft group of companies, and a $45 million loan (US$22.5 million) with the Belize Bank branch of Turks and Caicos, which BTL claimed it got to purchase some shares formerly held by Prosser and also to make capital investments.
“Last word was that BTL had stopped paying the [Government] loan... If that is still the case, the payments will have to be resumed,” said Vasquez.
Of note is that several of BTL’s key assets, including the company’s headquarters on St. Thomas Street, are mortgaged to the bank under that loan.
“As far as I know, nothing has been paid on that [Belize Bank] loan... First payment was due June/July of 2009. I believe the company asked for an extension of time,” said Vasquez, adding that the entire amount, $45 million, as far as he knows, remains due to the Belize Bank.
“The board is very much aware of that and will be looking at that as well,” he added.
Barrow had said that whatever is taken from BTL by the former investors would have to be taken into account when the time comes to settle “compensation” for the seizure of the BTL assets and shares. The Government is already issuing a notice, asking shareholders to submit their claims for compensation for the sovereign takeover of the company, effected Tuesday.
Repeatedly, Hayward and Boyce have claimed that Michael Ashcroft has no economic interest in BTL.
Hayward pledges to challenge Government’s acquisition of BTL in court, to challenge the constitutionality of the takeover, and ensure they receive “full and lawful compensation...”
If there is a shortfall between what the new investors pay for their shares and what the court rules the company is worth, Government (and hence taxpayers) will end up footing the bill, Boyce indicated.
The Ashcroft companies claim the company was valued as high as US$300 million, whereas the Barrow administration says the value of the company is half of that.
The first time Ashcroft sold BTL to the Government, under the Musa administration in 2003, he sold for a US$5 million premium and the total value of BTL was fixed at US$105 million.
Hayward threatens more foreign litigation
The disputes between the Government and the Ashcroft group have so far left the Government of Belize with $82.6 million in judgments against Belizean taxpayers, and even though the Barrow administration has expressed the view that the takeover of BTL would help put an end to the tangled web of litigation, Ashcroft’s group is saying that the litigation would in fact get worse.
In an unsigned statement (with no letterhead) released Tuesday, Hayward threatens to invoke the Investment Agreement between Belize and the UK “to ensure that it is afforded protection.”
It added that, “there will probably be even more litigation in the future than there has been in the past.”
Hayward claims that it indirectly owns 70% of Telemedia, via the trust it claims was set up to acquire shares formerly held by American investor, Jeffrey Prosser.
Government’s legal advisor, Gian Ghandi told our newspaper today that firstly, they don’t know who Hayward is, because the company has been hiding its identity, such as it did when it sent a statement to the media without a letterhead or contact information.
According to Ghandi, the Agreement for the Promotion and Protection of Investment was signed between Belize and the UK in 1982. Under that treaty, a dispute is settled via an arbitration tribunal with three persons – one for the Government, one for the investor, and the chair agreed by both parties. In the event the parties cannot agree on a chair, the president of the International Court of Justice (ICJ) would be asked to assign a chair for the tribunal.
The treaty, said Ghandi, could only be invoked in the case where property is expropriated and there is no compensation. However, he notes that the amendments to the Belize Telecommunications Act that the Government passed into law on Tuesday provide for compensation to the former shareholders of Belize Telemedia Limited.
The legislation (as well as the ministerial order) sets out a procedure whereby the shareholders can submit their claims to the Financial Secretary.
According to Ghandi, notices would be published in the days ahead, inviting those shareholders (who we have identified in a separate article in this issue) to make their claims to the Government for compensation. With that, said Ghandi, he hopes the Hayward people will come out and say who they are.
For its part, the Ashcroft group, and particularly Hayward, has maintained that the takeover by the Government of Belize was both unnecessary and unconstitutional, because contrary to Government’s claim, the transaction was not being done for a public purpose. Former BTL executive chairman, Dean Boyce, indicated that the dispute may end up reaching the Caribbean Court of Justice (CCJ), which Government is inserting via constitutional amendment as Belize’s final appellate court.
Ghandi said that everything the government is doing, with respect to the takeover, is in line with the Belize Constitution, as well as the relevant telecommunications law, and a statutory instrument (#104 of 2009) signed on Tuesday by Public Utilities Minister Melvin Hulse and Prime Minister and Minister of Finance Dean Barrow.
BTL workers still interested in shares
Vice President of the Belize Communications Workers Union (BCWU), Senator Paul Perriott, told Amandala this afternoon that the transition in ownership has been “seamless,” and the takeover by the Government is one they welcome.
Perriott informed that the board is due to meet with them next week, and they would like to have assurances that there will be no political victimization – though he does not think that it will be an issue. If there are workers who still have strong allegiance to Ashcroft, that might be an issue, Perriott added.
He told us that one of their main priorities would be to appeal for the return of three workers who were fired from BTL back in 2006: Nelson Young, Enrique Monima and Andy Sutherland—that is, if they want their jobs back.
According to Perriott, the union is also interested in formally acquiring the 20% shareholding in BTL, which the Ashcroft group had claimed it was holding in trust for workers. The Barrow administration has already indicated that they are willing to let the workers purchase those shares, said Perriott.
Those shares, said Perriott, had earned as much as $11 million in dividends. “What happened to that money?” questioned Perriott. “Where did it go? Only Boyce and his people know.”
The shares that were purportedly being held for BTL workers in an employees trust (23% of BTL or 11 million shares), were actually held by a company named Sunshine Holdings Trust, which uses #212 North Front Street as its address, as do the other former BTL shareholders in the Ashcroft group.
Boyce, a director and shareholder of Sunshine Holdings up to the time of Government’s takeover, had said on Tuesday’s Open Your Eyes that the $40 million debt which the trust has – a syndicated loan of $20 million from the Belize Bank and $10 million each from Central Government and the Social Security Board – had grown to a whopping $53 million.
Because the Government takeover happened before the five-year grace period of the loan expires, Sunshine, in effect, gets a free loan. Amandala readers will recall that Central Government and the Social Security Board had loaned the company $20 million in late 2005, on vastly concessionary terms, at a rate of 8.5%, with a 5-year moratorium during which they pay nothing to GOB and SSB. The loan is payable over 15 years, starting in 2010.
The other half of the money to purchase the shares ($20 million) was reportedly loaned to Sunshine by its affiliate, the Belize Bank.
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