P.M. says Senate will investigate SSB
For weeks now, the silence out of Belmopan has been deafening, despite mounting political pressure, national financial crisis and determined public outcry. Until today that is. Immediately following a meeting with business and labour representatives this morning, Prime Minister Said Musa met with members of the press. The meeting opened with a statement by the P.M. on measures agreed to by the government and civil society.
Prime Minister Said Musa
?Our government continues to address the issue of the status of investments made by Social Security Board as a matter of priority and urgency and that we will continue to do so until it is satisfied; that there has been satisfactory disclosure and explanation given to stakeholders. I indicated that the primary objectives of this are to ensure the safety of funds of SSB; to ensure maximum recoverability of the investments already made; and further to review the processes and procedures used in making investments and to make clear recommendations for the improvements.?
And in the spirit of transparency and full disclosure, Government has supported the call for a hearing by the Senate. This recommendation includes a promise by the Government to pass any laws or make any necessary amendments to existing regulations which would strengthen the power of the Senate committee.
?There will be a full scale Senate hearing on the SSB investment portfolio. The terms for such a hearing as presented and agreed to by government as presented by social partners will be for the extent or carrying out a full investigation and review of the Social Security funds including it?s investments and loans and most specifically those falling under the Social Security Board securitization, investments and guarantee programmes. Such investigation in review will encompass:
a) The gathering of all documentation pertaining to the above investments, loans, securitization and guarantees.
b) Interviews of any and or all persons connected with the said BSSB programmes and any other persons within the public service or other statutory bodies whose information may be material.
c) Determine where if any proper procedures and or regulations were not followed or any process as determined by law were circumvented.
d) Determine person or persons responsible for such breach.
e) Recommend any corrective action necessary to the legislation, regulations or procedures to prevent recurrence.
f) Recommend any action to be brought against person or persons, if applicable for any misconduct or violation of the law.?
Who will serve as chair of that Senate inquiry is still uncertain since the current President of the Senate, attorney Phillip Zuniga, served as a member of the SSB’s investment committee from 1999 to 2003, the same time period under scrutiny. According to Musa, in addition to a full review of the Social Security Act and a continued freeze of all commercial loans by the SSB, at the next regular meeting of the House of Representatives, the 2003 audited financial statements of the SSB as well as a quarterly review for the financial year 2004/2005 will be tabled. Furthermore, a draft set of investment guidelines would be completed by the end of October.
But even without the benefit of a full investigation, it is clear that under the present investment guidelines, on numerous occasions the investment committee broke its own rules in order to guarantee loans by other entities to the companies owned by former People’s United Party Minister Glenn Godfrey, as well as to make direct loans to several borrowers who appeared unqualified. Despite the evidence already in the public domain, P.M. Musa says this was not cronyism at work.
?My immediate priority at this time is to ensure that whatever funds were loaned or securitized, or approved to any of the Godfrey companies, that those loans will be recovered. That Social Security will not lose any money in the process. This is what we are engaging at this time. As far as the INTELCO side of things may concern, you may well know that negotiations are ongoing to deal with that and we will do everything possible to ensure coming out of that; assuming it?s successful–the buyout by ICC group or BTL, whatever–that Social Security?s exposure will be fully covered and recovered.?
?It?s easy enough to comment or make editorial comment about what appears to be the case that this is some kind of favourite deal done for a former minister of the government. The truth of the matter is as far as I am concerned is that the Social Security Board was–if you like–impelled in this process because of trying to carry out Government?s macroeconomic policy. What do I mean by that? We were committed from day one–and I think the people of Belize voted for this?to a process of doing everything possible to bring down rates in telecommunications. We saw rightly or wrongly that the way to go about that was to try and create competition in the industry. With hindsight now, you might say we went about it the wrong way; fair enough. But that was sincere commitment to do whatever was possible to create this climate of competition to drive down rates in telecommunications. In the process yes, I am prepared to accept that due diligence may not have been practised in every distance. But I don?t think you should draw from that a conclusion that it was done simply because it was a former minister of government or that whatever we?ve done through Social Security or any other institution or government agency was simply to help PUP friends. The truth of the matter is thousands of Belizeans have benefited from loans whether through from SSB or DFC. One can think of the one thousand eight hundred new homeowners out there who have received loans backed by Social Security, for the first chance to get the opportunity of own a home of their own. I can think of the hundreds; if not thousands of students who have benefited from student loans again under the Social Security programme. So we need to look at the whole picture and not just isolate one thing.?
But with government left holding the bag for hundreds of millions of dollars in loans and guarantees, the Musa administration is paddling against the current to bring the crippling public debt under control. According to the PM, by mid-October the process of refinancing some short term debt through a hundred million US dollar package from the Royal Merchant Bank of Trinidad and Tobago should be completed.
Said Musa
?The RBTT term sheet if you like, speaks of a bond but that?s a bond between the investment bank and its shareholders if you?d like or people who buy bonds from them. It?s not a bond strictly speaking that Belize is entering a bond arrangement. We are strictly entering into a refinancing arrangement with the RBTT bank.?
However, Belmopan’s latest effort at belt-tightening to meet its financial obligations has yet to change our falling status on the international credit market.
Said Musa
?It?s a matter of great concern to me and to my government. We are working very hard to restore confidence because that is the key issue here. We have to restore that level of trust and confidence at home and abroad in the capital markets, with the institutional investors. I have been in closed touch with the World Bank, with the IMF, with the Inter-American Development Bank, with all the IFIs because we do need to work to restore that level of confidence which will then result with the ratings being improved and upgraded once again. That is my objective and we are working very hard on that almost 24/7.?
The perception of financial scandal involving Social Security monies proved to be a catalyst for embarrassing dissent within the People’s United Party, a situation that climaxed when seven members of the Musa’s cabinet, including the Deputy Prime Minister, resigned in early August. Those men have yet to address the public on the specific reasons for their actions. But today two of the seven Samurai joined in at the Prime Minister’s press conference and finally spoke on record about Belize’s financial crunch.
Jose Coye, Minister of Works
?We had expressed our concerns about the financial management. Those concerns have been listened to and they have been addressed and therefore we are carrying out what we had asked to do.?
Eamon Courtenay, Minister of Foreign Trade
?I believe that the Prime Minister has brought us back into his cabinet and has set up the committee in order to approach the issues in a collective way. I think have started on that process. There is a tremendous amount of work that needs to be done and I hope that we get to it as quickly as possible. But we are beginning the process and I think we are working it through.?
As a result of the mass resignation, Musa removed the Finance portfolio from Belize Rural Central representative Ralph Fonseca and assumed command of the ministry himself. However, it is worth noting that during the period under investigation, it was Prime Minister Musa who was minister of Finance, not Ralph Fonseca.
Reacting to today’s announcement of a Senate hearing, Opposition Leader Dean Barrow issued a press release in which he expressed understanding of the business and labour groups’ decision to endorse the Musa plan, even though one day earlier those same organisations agreed that an independent inquiry would be the best route. He said the UDP stands by its call for an independent Commission of Inquiry, preferably headed by the Chief Justice. It is unclear at this time whether the UDP Senators will participate in any Senate investigation.
