Finance Minister defends B.T.L. deal
Since April fifth, when U.D.P. Leader Dean Barrow released the text of the agreement between Government and Innovative Communications Corporation for the sale of majority ownership in B.T.L., both the Opposition and a wide range of independent critics have been vocal in their denunciation of the deal. For its part, save for a few innocuous press releases, government has taken the lashing with uncharacteristic silence…at least until today. On Tuesday afternoon Minister of Finance Ralph Fonseca sat down with News 5’s Stewart Krohn to defend what Fonseca admitted was a transaction that proved far more complex than anyone had anticipated. The interview focussed on charges that government had given away too much in the way of special concessions to I.C.C… beginning with a pledge to indemnify the company from a number of potentially costly legal actions.
Ralph Fonseca, Minister of Finance
?There were many lawsuits and many of them brought on because in effect there was a war going on in the courts. That?s what brought on this whole thing. So you had Carlisle taking certain actions, B.T.L. taking certain actions, Social Security taking certain actions. And the agreement was that once we went through with this agreement that everything would fall away. All of these actions that these various parties were taking against each other would just fall away. The one that I think has caused the most problems in the Belizean society is the one that has to do with the P.U.C. taking action on behalf of consumers. And that was taken to court, and in fact the case was over with before this document was signed off on. So we did not see that as an issue.?
?I have tried to tackle this several times. I was the minister at that time. I issued the actual stop order, or signed whatever had to be signed to start the process. And my intention was never to fool people into believing that they were going to be getting monies back. It was just stopping B.T.L. and having them respect the P.U.C. because I realized from the very beginning that this whole tariff rebalancing thing went both ways. There were certain people that were paying less and certain people that were paying more. And of course when the boys brought the numbers to me, I realized that B.T.L. would be making even more money if in fact we were to go to court and try to make a claim against them. B.T.L. would just make a counterclaim against those that were saving themselves money, if you like, with that tariff rebalancing that they did. So we never promoted it as that, we promoted it as a mechanism to try and get people around the table to find a rational solution to this whole tariff rebalancing thing.?
Stewart Krohn
?Speaking of the P.U.C., several of the clauses in the document are a little bit peculiar in that Government pledges to use its best efforts or its best endeavours to what appears to be influence P.U.C. in a way that?s favourable to Innovative Communications and B.T.L.. What is the relationship between Government and P.U.C.??
Ralph Fonseca
?I can see that to be fair, I think maybe we weren?t sensitive enough as it relates to that issue because the P.U.C. was educating us, if you like, as it relates to how they were negotiating. And because we know that there has to be a margin of profits in any formula, and fifteen percent is not an unreasonable margin of profit. People will not invest in Belize unless they can make a minimum of fifteen percent, you know that, otherwise they might as well go in less riskier areas. We thought that it was fairly innocuous to say that we would do our best to make sure that that?s the road that the P.U.C. goes down because we thought that?s the road that they were going down. We have found out since then that there is a slight difference and there may be a need for some amendments, maybe by S.I., in order for them to deal with it that kind of way. But I think that at the end of the day we will strike up a compromise. But all that we were saying there is that if you want people to interconnect with a company that has two hundred million dollars out there, then it?s only fair that they make a profit from the connection and that they don?t lose money. That?s basically all that we are saying.?
Stewart Krohn
?Minister, the question of interest that the Government of Belize paid on the money it borrowed to make this deal happen, we?re talking about a significant sum of money. You have said in pervious interviews that government will be getting this money back, presumably through profits made by B.T.L. during the time that government held the shares. Where do we stand on that??
Ralph Fonseca
?Well two places really, the profits made from government divesting itself of its shares at a much higher value, and also, Social Security, The Central bank, DFC, etcetera, everybody who had shares. And there is also the fact that B.T.L. must have been making some money during that period of time. So we are hoping that we will be able to work out something with the new shareholders. We?re not hoping, we have discussed this, in order that that cost is covered. But I said to you in the last interview, I believe it is covered in any case, only with the sale of the shares…
Stewart Krohn
?In the large capital gain that government and the related bodies made in that, so even if you don?t get a special allotment you think you made enough money and are covered in that.?
Ralph Fonseca
?We?re covered.?
Stewart Krohn
?When you computed, what was the interest bill on that? I see various figures floating around, what was the actual figure?
Ralph Fonseca
?Well if you use a rough rate of ten percent, and it was less than ten percent, and you?re talking about around fifty million dollars, then you?re talking about five million per year. You?re talking about one third of a year, so you?re talking about less than two million dollars.?
Stewart Krohn
?It has been alleged by the Leader of the Opposition that this agreement that he has released is only one of several agreements with I.C.C., the others are still secret. Are there secret documents and when or is government going to release all the documents having to do with the sale of B.T.L.??
Ralph Fonseca
?There are no secret agreements.?
Stewart Krohn
?In the agreement that I have and that the Leader of the Opposition made public is an agreement that Government has never made public. Is it government?s intention to make all the details of the agreement or agreements with Innovative for the sale of B.T.L. public at some point?
Ralph Fonseca
?If it was totally up to ourselves, we would have made it public the next day, but lot of these things have got confidentiality clauses in them for specific reasons, when people are raising money, when people are buying insurance, etcetera, etcetera. And after that period of time there is no problem with making it public. If you make it public before then, it becomes a part of the market force.?
Stewart Krohn
?Presumably that is all behind us now.?
Ralph Fonseca
?Not quite, but soon, soon.?
Stewart Krohn
?So you anticipate that all the agreements relating to this sale will in the near future be made public.?
Ralph Fonseca
?Yes. Now I?m not saying that there are not other issues that we have discussed with this company that are not in that document?if that?s the right document?or in the purchase agreement. Because there are many, many issues that were discussed, many of them, I wasn?t even around when they were being discussed. I?m just saying that the agreement that was made for the share purchase agreement relates to that one document.?
Stewart Krohn
?Minster one gets the impression that Michael Ashcroft never wanted to sell his shares in B.T.L., he was put in a position that despite the large profit he made he really didn?t want to do it. He has made numerous remarks to the press that he is an unhappy participant in this deal. Where does government stand with Michael Ashcroft regarding future investment or involvement in Belize??
Ralph Fonseca
?I spoke to him around this time yesterday and he was talking some very nice things about Belize. And I am hoping that once we get past the B.T.L. issue we can get him back on track with his other investments. I think we had a problem with the B.T.L. issue and we would still like the see Michael Ashcroft and his people continue to invest in Belize.?
In related news, I.C.C. owner Jeffrey Prosser met today in Belize City with Opposition Leader Dean Barrow for what was described as a courtesy call. On numerous occasions, both before and after the sale, Barrow has threatened to levy retroactive windfall profit taxes on Prosser’s company when and if the U.D.P. returned to power. When contacted by News 5 this evening, Barrow declined to comment on the substance of the talks other than to say, “He put forward his position and I restated my position.”
