Loan scandal refuses to disappear
While the political bombshell of seven cabinet resignations has dominated today’s headlines, the issue that refuses to go away is the one that prompted the crisis in the first place: that is the Government and Social Security Board guarantees that were given to millions of dollars in questionable loans to former P.U.P. Minister Glenn Godfrey. Today S.S.B. General Manager Narda Garcia and Development Finance Corporation C.E.O. Troy Gabb met the press for the first time since the scandal broke…and while they continued to maintain that the entire bundle of transactions was totally legit, their valiant explanations seemed based more on wishful thinking than reality. Lack of time prevents us from running the discussion in its entirety, but the following exchange between News 5’s Stewart Krohn and the D.F.C.’s Gabb is typical of how things went.
Stewart Krohn
?What we are saying is that this transaction had every appearance of a series of loans granted extraordinarily to one person for one reason: of whom he was and the access he had to the highest levers of power. It would appear that you and Mrs. Garcia played right along with the programme and at no time, did you as good bankers and stewards of the peoples’ money get up to say, you know what, this loan is not worth the paper it’s written on. But instead you went right through with the thing…that is every fact that has come out today seems to indicate.?
Troy Gabb, C.E.O., Development Finance Corp.
?I need to refute that. Particularly because I mentioned to you the two transactions that are in the portfolio at the point in time when the transaction closed, these assets were to be developed. Your position was that well something happened after the transaction close in terms of the funding. But as far as what was suppose to happen at the point in time when the transaction was put together, there was nothing flawed in that; there was nothing flawed at all. The transaction itself in reference to the two facilities–those were to be developed, those assets were to be developed. And that was the whole process of what transpired. There was nothing at all wrong with the transaction.?
Stewart Krohn
?At what point did you realize that the borrower was not using the money for what you thought you were lending it for??
Troy Gabb
?But it didn’t matter at the point in time as long as the debt was being serviced. We were employing our level of due diligence. But the debt was being serviced.?
Stewart Krohn
?We borrow money everyday; we don’t depend on our parents’ allowance. We go to our bankers and we borrow everyday. We know our bankers won’t allow us to get away with that kind of thing.?
Troy Gabb
?As far as the transaction is concerned, there was nothing wrong at the inception and I think I made that point ultimately clear. In the event that the project did not go the way that it was planned to be done and I think the indications are that it was then diverted to INTELCO–then as far as–it’s that point in time, bare in mind that from 2002 the clients continued to service the debt.?
Jules Vasquez, Channel 7
?You put it in a start up project, you were supposed to put in a tourism project and you put in a telecom project to try and support a duopoly against the biggest company in Belize. The risk profile immediately changes. It becomes a sure thing to a downright blatant risk. And I’m saying that no point did you all intervene and say that, you have changed the profile of your loan we need to change the profile of the terms; we need to do something. I’m saying there was no follow up; no due diligence after that…I’m saying that it seems that you all did not have a material interest in where the money was coming from.?
Troy Gabb
?We were already locked into the transaction at that point in time. So, there is no way you could turn back the bond issue, but we had to then work with the borrower now to find a way to get the asset: one to service and to try and improve our asset. And that is where have been working diligently throughout the course of the last couple of years to–well not so long, it’s 2002 and that’s where we’ve been working to get this thing sorted out. But we were already in the transaction and there’s nothing that we could have then turned back at that point in time.?
According to S.S.B. General Manager Garcia, as of this morning all the arrears on Godfrey company loans that the Social Security Board had to pay have now been reimbursed to the S.S.B.
