Citrus industry hijack, claims CGA
Posted: 19/01/2010 - 10:20 AM
Author: Adele Ramos - adelescribe@gmail.com
The Chief Executive Officer of the Citrus Growers Association (CGA), Henry Anderson, today told Amandala that there is a move afoot, orchestrated by Dr. Henry Canton, the Chief Executive Officer/Managing Director of the Citrus Products of Belize Limited (CPBL), to undermine their 51% stake in CPBL and send CGA under.
Having a 51% stake in a company usually means having control of it. Even though CGA has 51% shares in CPBL and is its parent company, the CGA, representing 492 citrus growers, has lost control to Banks Holdings of Barbados (which owns 46.58% of CPBL) and three directors who have refused the association’s calls to step down, the CGA complains.
Amandala has learned that late last year, the CPBL made a peculiar move when it resigned from the CGA, following a group of seven that had done so in July, over unresolved differences. It still pays cess to the CGA, however.
It is the worst time for citrus growers to be quarrelling over control of the industry. Information reaching our news desk confirms reports that the industry lost $26 million in export earnings from citrus concentrate in 2009, as a recession struck the country. CPBL sales dropped from $97 million to $87 million. After turning a profit of $5 million in 2008, CPBL’s financial position plunged, registering an $11 million loss for 2009. (CPBL is the exporter of citrus in Belize, and the plant to which growers deliver the bulk of their fruit.)
Meanwhile, several growers in the industry are reportedly groaning under the pains of economic turmoil and are on edge over the ongoing war between rival factions of growers.
“We are trying to hold them back,” said Denzil Jenkins, chairman of CGA’s Investment Company Limited (ICL). “Some are waiting for the signal to start blocking the factory.”
At the last meeting with growers, held in December, growers were much more belligerent, he added.
“Right now, everything is in the hands of the court” said Jenkins. “We don’t want for the growers to take it into their own hands. That’s going to lead to the kind of fiasco we had with the cane farmers.”
There are two fights here, said Dr. Canton: One is a fight among growers, who are unhappy with CGA; the second is among the shareholders of CPBL.
They don’t interplay, Canton maintained.
Anderson retorted, however, that, “[Henry Canton] is the common factor of turbulence... When he said this is a problem between growers, he is orchestrating the problem and getting these people to follow him down a course.”
He told Amandala that Canton wrote his own company, Sitcan Farms, using his office as CEO of CPBL to put the CPBL in a position to be sued, which is “conflict of interest to the highest order... [and] monkey business.”
Jenkins had warned growers back in 2006 that the Barbados deal was not only a bad financial play, but would also cost growers control of the industry. Now, Jenkins said, they can’t even remove the directors they have placed there.
CGA wants to replace CPBL chairman, Mike Duncker; CEO/director Dr. Henry Canton; and director Frank Redmond, with Jenkins, Rosella Zabaneh and her brother-in-law, Antonio Zabaneh. However, the directors have not budged, and the matter is now before the court.
Jenkins and Anderson pointed to an agreement between the parties stipulating that each of the investors, Banks and CGA, would retain their absolute right to appoint and remove directors.
When they tried to invoke that right back in 2009, said Jenkins, it was Banks that blocked them, by voting down the resolution to have them removed.
“Banks is standing in our way,” said Jenkins. “When we called a meeting by requisition for the 11th of August to remove them, they stood in the way and voted to have them stay.”
He said, “...the only way they could have gotten what they wanted, was to hijack it and leave it up to us to challenge it in court.”
Canton defends Banks, and he told Amandala that the Barbados investors are a very credible, strategic partner.
Prime Minister Dean Barrow said to our newspaper today that he had appointed his advisor in the Ministry of Finance, Alan Slusher, to try to resolve the gridlock among growers.
There has been no resolve and instead, there have been correspondences with people attacking one another, he said.
“It has just been hopeless thereafter,” added Barrow, indicating that Canton’s role at CPBL is at the heart of the matter for the CGA.
He said that he now recognizes that it is more than the control of CGA that is the issue, but the control of CPBL—a matter that the Prime Minister told us “is so inextricably bound up with personalities.”
Barrow said that even though he prefers an amicable settlement, if those attempts fail, “I will legislate... I will not allow CGA to collapse.”
With regards to CGA giving the Barbados group veto power, how would the government sort that out? Barrow questioned.
“We won’t take ownership,” said Barrow. “We stop at Telemedia.”
The most recent controversy stems from news that six of seven growers who had resigned back in July 2009 had formed a new rival association.
The CGA takes issue specifically with item #5 in the list of “the objects” of the new association: “to acquire own and operate a citrus processing plant” and interprets that to mean that the Belize Citrus Mutual (BCM) wants a bite of CGA’s 51% in CPBL.
When we had first reported on the formation of Belize Citrus Mutual back in November 2009, two key players were signaled as the leaders of the movement: Ernest Raymond, Sr., former ICL chairman, and William Bowman, OBE, who Duncker had described as the largest single player in the industry.
There are 7 subscribers to BCM: Raymond, William Bowman, Dunker, Canton, Sue Hufford, Jorge Rosado, and San Miguel Farms Ltd. (Trevor Roe) of Gordon House, Coney Drive, Belize City.
Ernest Al Chanona (Green Acres/More Tomorrow) had also resigned, but has reportedly rejoined the CGA.
Anderson alleges that BCM wants to win over citrus growers, “seeking to strangle the present CGA to cause it to crumble so that they would be now the association or the group representing growers.”
The CGA contends that the investment agreement with Banks of Barbados, which was the bone of contention among citrus growers back in 2006, is the reason for the problems that persist in the industry today.
Jenkins said that clause 93 in the investment agreement puts the CGA immediately against a brick wall, because it requires two directors from Barbados to agree to any decision for it to be valid.
In a press release issued on Friday, January 8, the CGA accuses Canton, CPBL’s CEO, and Duncker, the chairman of the CPBL, of a conflict of interest. They say that one example of that is that Canton and Duncker are among seven subscribers who earlier this month registered a new association for citrus growers.
“I do not see the conflict of interest,” Dr. Canton said.
Specifically, the CGA took issue with Ernest Raymond, former CGA chairman, for appearing on a Channel 5 talk show last week. It was CPBL money that sponsored the show, the CGA contends.
Responding to CGA’s allegations, William Bowman told Amandala that he categorically denies CGA’s allegations.
According to Bowman, whose son Bryon Bowman chairs the rival CGA, “a group of concerned growers” do not like the direction that the current management of CGA has taken, and they have decided to form their own association.
They are merely expressing their right to freedom of association, Bowman added, indicating that they are interested in protecting their investment. He said that their association welcomes small and big growers.
“As we have done in the past, we will always protect small growers,” Bowman said.
Bowman, 71, said that he had been a member of the CGA since 1974, and the longest standing chairman for more than 15 years, negotiating the price for growers since 1976.
For his part, Canton broke the silence on Friday when he agreed to accept calls for the media to address the allegations against him.
Canton claims that there have been “lots of untruths.” He said it was Channel 5’s management that wanted to use some of the CPBL adverts they had agreed to sponsor for the Andy Palacio tribute show this week on last week’s show.
Raymond is not a director of CPBL but he was there as a proponent of the new association, explained Canton.
Canton said that even though his farm, Sitcan Farms, has left CGA, he is still a member of CGA through other companies. His wife and two children are co-owners, he told us.
Canton also said that they have no intention to take control of CGA’s 51%, but with Belize Citrus Mutual having been registered, there will be a big migration of the serious growers, Canton told us.
He told us that he stands as director/CEO on the basis of his contract. He said that he had made it known in the beginning, when he was asked to take on the position at CPBL, that he would not be employed unless he could sit at the table as director, which they later accommodated.
Banks had, back in July, 2009, taken issue with CGA’s push to have Canton removed, recalling an agreement that three senior staff, including Canton, would be required to stay on at least five years after the closure of the deal in 2006.
When CPBL delayed to open the factory at the start of last year’s season, because CGA is the agent for licenses and could not issue licenses to those big growers that had resigned, Government intervened. It ordered that the Citrus Control Board should issue licenses to those who had resigned to the CGA, so that they were able to resume fruit deliveries to CPBL. The growers of BCM are not paying cess to CGA, a total CGA estimates at $150,000 to $200,000.
Prime Minister Barrow told our newspaper that the government found a basis in law to issue licenses to those citrus growers who had resigned from the CGA, because without their throughput at the CPBL, the season could not proceed.
The citrus dispute is tied up in a web of litigation, and the CGA spokespersons say that an end to the turbulence is nowhere in sight.
While the negotiations with Alan Slusher, appointed by the Prime Minister to broker a truce between the rival factions of growers, were on pause, CPBL was sued on January 4th, over fees levied for the Mexican fruit fly program, said Anderson.
The breakaway growers are demanding that CPBL returns $16,000 to them. CPBL, in turn, demanded the funds from the CGA, to which the funds were paid. CGA says it now has to defend itself in that matter.
CGA believes that it also runs the risk of not being able to repay its debts if things continue on the current course—the Prime Minister said he is also concerned about this, because government has guaranteed some of CGA’s loans and the association owes the Belize Social Security Board.
The CGA points specifically to two pending loans, a $6.4 million debt with the European Investment Bank and a $1.6 million to the Social Security Board due in a few years.
An out that has been discussed in the corridors is the buyout of one of the big shareholders:
“If we get to the impasse of you buy me or I buy you, the Barbados investors will not support Banks injecting additional funds into the Belize venture with the turbulence that has been created.”
According to Jenkins, they have given consideration to Banks trying to buy them out.
He said that they have already had “a sneaky offer by an agent of that other side” suggesting that all CGA’s financial problems could become history if they were to accept BZ$20 million for their 51%.
Jenkins said, however, that CPBL is worth at least $150 million, and their shares worth around $75 million.
While it is mostly the larger growers and executives of CPBL, CGA and BCM who have been in the news, CGA says it represents 492 members—that’s less than half the amount of growers in the industry a decade ago.
(We intend to bring you more on this story in the weekend edition of Amandala.)
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