Fonseca accepts responsibility but denies knowledge
In the week since Prime Minister Said Musa and seven dissident cabinet ministers managed to kiss and make up, not a single member of that body has spoken to the press…until today that is. This morning Minister Ralph Fonseca, a key player in the political drama, as well as the ongoing controversy over the nation’s finances, told News 5 that while some mistakes may have been made and some risks taken, the goal of accelerated economic growth was always driving the government’s actions.
Janelle Chanona
“In hindsight looking back at the Social Security Board issue with former PUP minister Glen Godfrey, the Belize Governance Improvement Commission has recommended a firewall be put in between the S.S.B. and G.O.B. policies. Do you agree with that?”
Ralph Fonseca, Former Minister of Finance
“Well, I think it sounds good. The problem is you are saying to Government that you have to put a firewall between yourself and the macro-economy of the country, in effect, because Social Security is one of the largest investors in Belize. And I think they’ll have to be very careful how they build that firewall. The concept obviously I understand, that Social Security funds cannot be driven purely by political will. I understand that. But certainly you can’t have a situation where the firewall is such that it is impervious to what is happening in the rest of the macro-economy.”
Janelle Chanona
“Was the initial decision to include those loans in the securitization bundle from the S.S.B. investment committee or was that a directive from G.O.B.?”
Ralph Fonseca
“Oh, that was done by BIMCO. BIMCO at that time was in charge; if you’ll recall, BIMCO was converted from building houses, writing up mortgages, to being a transfer agent to, if you like, sweep up mortgages from all over Belize and put together into securities. So BIMCO put that together and took that to the Investment Board and took that to the Royal Bank of Trinidad and Tobago and took that to the North American Securities companies etc. and they modified the packages as the market demanded.”
Janelle Chanona
“But what was in it for the S.S.B.? Was there any return on their “investment”? What was in it for them, why do that?”
Ralph Fonseca
“I have always said that I don’t believe that those particular mortgages should have been under the S.S.B. The S.S.B. should have been securitizing their own mortgages. They had mortgages that they had bought from government, mortgages that they had bought from RECONDEV. And certainly, that concept had been approved by government. How it ended up under S.S.B. and not DFC, we are still not sure. But the important thing is that it occurred. But what S.S.B. was trying to do at that time was to assist in creating liquidity in Belize in order to move the economy forward, because we were stagnant in 1998. So everyone was doing whatever they could to change illiquid instruments into liquidity.”
Janelle Chanona
“From somebody who was on the inside I mean, you’re talking about still not knowing how certain things happened and the overall perception has been very negative. What would you recommend to make sure that those things never happen again?”
Ralph Fonseca
“Well, again, when you are in involved with a very large operation, you are in charge of it. Please, so don’t misunderstand me. I take full responsibility for what occurred. I am just trying to explain operationally how these things happen. I could not tell, for instance, that in the list of mortgages that Wilfred Elrington had seven hundred and sixty three thousand dollars, a mortgage for seven hundred and sixty three thousand dollars from St. James Building Society. I found that out yesterday. I didn’t know that. I didn’t know that Ms. Whatever had a mortgage; I don’t want to call names. But, I mean, how, there is no way that I as Minister could micro-manage the situation to the point of knowing the actual people that are involved. And remember, there was no INTELCO involved, in those days, it was LG. And you had different companies that were being used. The closest thing to it, which even I did not know, was this Information Technology Company or Information Telecoms Company, whatever. But there was nothing that said INTELCO at any time, so there was no red light that went up for me. And like I said, I didn’t see the actual list of mortgages that were being securitized. I just knew about the total amount that were being securitized, that was being handled by other people. But yes, I was responsible for it.”
Janelle Chanona
“But those people that were supposed to be responsible to you, will there be repercussions for them, consequences for their actions. They are supposed to be the ones on the ground, covering your back.”
Ralph Fonseca
“Well if there are going to be consequences, there will have to be consequences for everyone. I am ultimately responsible…and I am not dodging that. But you know, are there going to be consequences for Royal Bank of Trinidad and Tobago, because they also looked at the mortgages. Are there going to be consequences for Steadfast Insurance…because they also looked at the mortgages, in the case of the North American securitization. So there are a lot of people involved with this thing. Today, because there has been a perceived failure–and I still believe that those loans will be paid off–because there has been a perceived failure and because a microscope is on it, and because this thing of transparency and accountability is a good political subject. Obviously, the Opposition is trying to create hysteria with this thing and use it as a catalyst to create doubt in people’s minds and confusion. Truth of the matter is that when you are driving an economy that was not moving, to what we did, to accomplish seven point nine percent growth over the first five years that we took over government after four hurricanes and 9/11, a lot of risk had to be taken. I have said many times, we had to walk a very tight rope. Ah, certain things got through the cracks, we’ve admitted that but whenever we found out that something had gone wrong, we found a way of recovering from it. In the case of these mortgages that were securitized for the Godfrey Group, when we found out that a part of the monies were not being used for those assets but in fact, to build up INTELCO, right away we clamped down on INTELCO and said, you know, whenever you sell that part of INTELCO, that will have to go toward the Social Security loans and that was done a long time ago. As a matter of fact, I only knew those loans, based, seeing them come from Social Security, recently, as ITL/Western Caribbean or ITL/Cahal Pech. There was no INTELCO there, but we had linked it to INTELCO because we wanted to be vigilant that when INTELCO did a sale, or they brought in new partners or when they brought in new equity as they hoped to initially, that in fact that was the first thing to be taken care of. And I still believe that it will be taken care of. As you know, six million dollars has already been paid as good faith money. As far as I was told before I left my office yesterday evening, most of the documentation has been signed for INTELCO to sell over to, I don’t know if it’s B.T.L. or whatever instrument they are using. And the next payment that comes due will be taken care of by whoever is paying INTELCO and they will, whoever is buying INTELCO, and they will take over the loan from Social Security or totally pay it off.”
Janelle Chanona
“Switching gears slightly to the context of all of this, the compromise cabinet, as it has been labelled, will this become the team spirit you spoke of earlier?”
Ralph Fonseca
“Well I think as I have always said, I am a team player. If you are a centre in a basketball team and people are used to you performing a certain way and then things seem not to be going as they used to you and they tell you that you have to change from centre to be defence or to be forward, you don’t quarrel about that. When they tell you (that) you have to sit on the bench, you don’t quarrel about that. You continue to work together as a team. And that’s Ralph Fonseca, I?m a team player.”
To steal a phrase from Fox news…”We report, you decide.” In related news, on Thursday Social Security Board general manager Narda Garcia continues her public relations counter-attack. She will be meeting with the Belize Governance Improvement Commission in the morning and in the afternoon will face the press and collection of NGOs.
