Ralph Fonseca on Prosser, missing money and B.T.L.’s future

He is no longer the Minister of Finance, nor Minister of Budget Planning… and you won’t find him listed as member of the ministerial committee on money matters. But if you think that Ralph Fonseca has retreated–or has been relegated–to some quiet corner of Cabinet, you’d be very much mistaken. Because there’s no one in or out of government who knows the art of the deal like Fonseca. And for better or for worse, it is a succession of deals–good, bad, and yes, just plain ugly–that has government dancing like a one-legged man in a butt-kicking contest. This morning News Five’s Stewart Krohn sat down with the Minister of Home Affairs and Public Utilities for a wide ranging conversation on some current issues. The first involves Belize Telecommunications Limited and recent revelations concerning the draining of that company’s treasury.

Ralph Fonseca, Min. of Home Affairs/Public Utilities
“We are certainly very disappointed in general in what has occurred with the Prosser group. They had promised a lot and of course it has been a serious political problem for our government over the last few months. The information that we got suggested that B.T.L. funds were being used to finance Prosser operations, I.C.C. or Belize Telecom’s, whether to acquire financing so that they could pay the government for their shares or to buy INTELCO assets so that they could lease them back to B.T.L., or to deal with things in general that would not have to do with the normal operations of B.T.L. And of course this is why we got to the point of concern where we eventually passed the necessary legislation so that we could put an inspector in there expeditiously.”

“Once the investigation shows that some of the concerns that we and the other people have?and you’re obviously one of those?that in fact misappropriation took place, then the necessary authorities would have to come into play.”

Stewart Krohn
“Let’s look at the other side of the extraordinary item in the financials. That is around six point two million dollars of funds that have not been accounted for that was used to purchase hard currency on the parallel market in Belize. Number one, it has been alleged in certain segments of the press that you were aware of that practice. Let’s get that out of the way first, were you aware that B.T.L. routinely went to the parallel market for funds and did you okay this practice?”

Ralph Fonseca
“I certainly did not okay the practice. At one point during all this back and forth with the Prosser people and with the management of B.T.L., Mr. Aguilar and Mr. Vondross, or it may have been just Mr. Aguilar, were expressing all of their concerns as it related to some of these practices. That’s when we first began to learn about it; I think this was January of this year. And one of the things that were mentioned was that almost a million dollars was out there looking for U.S. dollars, Casa de Cambios in particular. And that was the only thing that was mentioned to me. And of course I immediately mentioned that they better bring that to a head a quickly as possible because if anything went wrong, they would be the ones that would be responsible. And I got the impression that you know, maybe we’re talking about almost a million dollars. I certainly had no idea that we were talking about over seven million dollars as it has now turned out to be. Because if that was the case I would have mentioned that in my deposition on June second. That would have been one more nail if you’d like in the coffin of Prosser as it related to the Miami case.”

Fonseca went on to confirm that a total of seven point six million dollars remains unaccounted for and offered some thoughts on the position of fired C.E.O. Gaspar Aguilar.

Ralph Fonseca
“Mr. Aguilar, as far as I was concerned, right up to the beginning of this year was a good employee and a good manager of B.T.L. We had no reason to question him. He had been there for a long time. Then we started to have problems as you know with this social unrest and twice we had to have the police pick him up early in the morning in order to make sure that things started to get back on track at B.T.L. And then the relationship I guess between Aguilar and ourselves soured a bit because we weren’t sure where the line was being drawn. Management wanted to take over B.T.L., the unions wanted to take it over. At one point we thought that they were together and then we found out that they were not and that sort of thing. So I am very, very disappointed that we’re hearing that the executive committee has said to Mr. Aguilar that there is some seven point six million dollars missing here and apparently his only response so far has been that he has been an exemplary employee over the last twenty-five years and I am hoping that there will be more coming from him to explain this whole thing away.”

Stewart Krohn
“Well he has said in his most recent letter to Keith Arnold, that I’m sure you have read as well, in addition to saying he has been an exemplary employee, he said that basically everything he did was with the approval of his superiors at B.T.L. and the people he was trading currency with were people who were well-known to his superiors and there was no reason for anyone to believe that they would go south with this money. Do you buy that line of reasoning?”

Ralph Fonseca
“Well first of all, if that’s the case then Mr. Aguilar will have nothing to worry about because he will have documentation etcetera that will show who took this money to go and get U.S. dollars. I just saw that letter that you’re referring to this morning because I heard about it on the news last night and I asked for it this morning. I had not seen that letter before, but yes, that is exactly what he is saying. He is not speaking to the actual issue as to who did the accounting to that seven point six million, and especially being a financial controller, one would expect that he would have talked to the system that was in place. You don’t take out seven point six million dollars out of a company, you don’t take out a hundred thousand dollars out of a company like that without having some kind of a paper trail. So I guess the executive committee was looking for that kind of paper trail so that they could hand it over to the police so that the police could do their work. I don’t think anybody expected or expects even today that anyone in B.T.L. would say, well we just handed over the seven point six million to a few people and expected them to come back and we didn’t even get a signature on it. I think this is where the real disappointment lies and that’s where the investigation will have to focus.”

Stewart Krohn
“Now, Mr. Aguilar does not say this, I want to point out in his letter, but certain of his defenders are putting out a line of reasoning that speaks to an unnamed government official or unnamed government officials who were alleged to be very close with the individuals that were given the money to change into U.S. and that somehow it was readily assumed that the fact that these officials were close with these money changers, that put a kind of official stamp on it and the first name that comes up as one of these officials is Ralph Fonseca. Where do we go with that?”

Ralph Fonseca
“Where do you think we should go. I mean Ralph Fonseca’s name comes up for everything. Like I said, I’ve known Mr. Aguilar, I’ve known him in various circles, so if Mr. Aguilar dealt with people only based on the fact that we socialise in certain circles, then he could be dealing with many, many hundreds of Belizeans, because I’ve got to be many places at many times and I have seen him around; that’s number one. But despite that, number two, there is a system in place and this individual has been working there for twenty-five years and knows that system extremely well. One would have thought that that system would have been used.”

Aguilar’s only public statement has come in the form of a letter to the B.T.L. board copied to the press. Today News Five unsuccessfully attempted to reach Dion Zabaneh, the man who allegedly was given six point two million Belize dollars by Aguilar to change into U.S. currency. Sources tell us that police visited his house in the Bella Vista area of Belize City this morning at four a.m., but it is not known what, if anything transpired. It is understood that investigators are pursuing a wide range of theories explaining what exactly happened to the missing money.

The missing money at B.T.L. is only one aspect of the problems swirling around the company; another is the disposition of its ownership. The latest wrinkle in the complicated controversy surrounds the creation of a company called Sunshine Holdings that will purchase twenty million U.S. dollars worth of B.T.L. shares from government, five million of that with money borrowed from the Social Security Board. The move has created a lot of public heat, but according to Fonseca, the opposition to the deal is based on the mistaken assumption that Sunshine is a creature controlled by Michael Ashcroft.

Ralph Fonseca
“Sunshine Holding Company is a trust company and the trust company is ran by trustees, like any other trust company. So you don’t have ownership in the way that you normally have ownership of a company. It’s if you like a special mechanism, a special purpose vehicle that has been developed to hold this interest in twenty percent of the shares of B.T.L. with the expectation that someone else, and hopefully that someone else will be the union and management of B.T.L., would take over that trust company and take over the responsibilities of the trust company. We were trying to assist first the management and then the union in getting financing to buy B.T.L. shares. It became an impossible venture because the union refuse to use their pension fund or even refuse to use their pension as a formula for the ownership of the shares in B.T.L. In the case of the management of B.T.L., they wanted a hundred percent of B.T.L., but they didn’t want to put a penny forward. That’s not a deal that financeable; no financial institution in the world will do that, as they have now found out. With our help and without our help and with the help of various other people who would have been very happy to embarrass us if they could have, so they were not successful. The best next thing that we could do is to form a trust company, which would be the vehicle that would be used for them to own those shares. In other words, you can’t get it done yourself, we’re going to try to get it done for you. And what did we do, we got one of the majority shareholders of B.T.L. to use another company that they are involved with, the Belize Bank, to fund fifty percent, fifty percent of the cost of those shares, the Government of Belize, twenty-five percent of the cost of those shares, and Social Security twenty-five percent of the cost of the shares. The company would have trustees that would be sitting on that board strictly as trustees to look at the action and operation of that twenty percent of the shares and to negotiate with whoever they have to negotiate with to eventually take over that trust company and then they could call it whatever they wanted to, as long as they met the terms of conditions of the financing. Now I don’t see what’s so mysterious about that. It’s a matter of putting a package together and then saying to the union, okay, we’ve been spending almost a year trying to do this thing, here it is, here is the package, that’s twenty percent of the shares B.T.L.’s, it is totally financed, the Belize Bank is the greatest at risk at this point, the Government of Belize has shown that it wants to help by getting involved itself and Social Security is involved itself also. In the case of Social Security, they’re at eight and a half percent. Social Security has right now, sterilised in the Central Bank, about ten million dollars that they are earning no interest on, absolutely none because of the monetary policy that must be carried out in Belize right now. Under these conditions, they will be making eight and a half percent for that money, which means that they will be making eight and a half percent more than they are making right now.”

But simply creating a trust corporation for B.T.L. workers doesn’t guarantee that they’re interested in buying. How does Fonseca see this deal eventually gaining traction?

Ralph Fonseca
“I think that there’s a distrust in general because of what has happened in the past. And I think it’s a personality thing that once they get their feet under the table and they start to work, and that distrust goes away and it will be in the interest of all parties involved to make sure that that goes away. Talking about more social unrest at B.T.L. is madness, talking about Mr. Ashcroft’s people going in there to retrench people is madness, talking about anything else that they can dream up that would hurt the company at this point, with all the problems that the company is going through, makes absolutely no sense for anyone that’s sitting around that board table or anyone that’s working or managing at B.T.L. They’ve had their problems in the past, they will have to find a way to put that behind them and work together and I think once they understand the real structure of the trust company and once their lawyers advise them what a trust company really is, that a new level of confidence will be achieved and they will start to work together.”

Stewart Krohn
“It looks like though, at least in the short run, the main beneficiary of this deal is the Government of Belize, which will come into about fifteen million dollars in cash.”

Ralph Fonseca
“Well I’m not sure it’s a beneficiary because we own the shares?”

Stewart Krohn
“But you’re converting the shares into?I am assuming that the government is fairly cash-strapped.”

Ralph Fonseca
“Well it’s not a matter of being cash-strapped, it’s a matter of the fact that we bought this fifty-two percent of shares originally from Carlisle with a loan and we have to pay that loan back, and that’s what we’re trying to get rid of before the twenty-second of November or whatever date the shareholders can call the put options that they have. So the government, yes has made a market, it had to make a market for its shares. The government said from the very beginning it would not own these shares, so in that sense you’re correct.”

And looking back at the entire B.T.L. mess, Fonseca still manages to see some room for optimism.

Ralph Fonseca
“I think we’ve been through a very rough period. There’re quite a few people out there that are confused. The B.T.L. issue has certainly been one that the Government of Belize has paid a heavy political price for. We genuinely wanted to create competition in telecommunications and that’s what started this whole thing. Today we have some competition in telecommunication, not as much as we want, but we have some. We have a much more modern telecommunication system than we had at that time, and I daresay, prices have come down in many, many areas as a consequence of this additional competition. Every country in the world today is going through a very, very rough time because of injecting competition into various industries, because of the international competition in general. So I think we have to work it out together, I think we have a chance now. I certainly see a light at the end of the tunnel, but we need people to be more involved, less sceptical, less cynical, listen more to the actual facts?the whole concept of the glass being half full instead of half empty. Belize is still a good country and we have, if you look at everything that’s happening around us, we’re extremely well off. We can?t afford to have this cynicism turn into some kind of centrifugal action that just destroys everything in our society. We have a good chance to move forward now and I think we should.”

Just to show that he is not yet ready to roll over and play dead, Jeffrey Prosser today wrote Solicitor General Elson Kaseke, saying that government’s revocation of I.C.C.’s “permitted person” status is both illegal and ineffectual and will be used as evidence of Belmopan’s bad faith in the upcoming arbitration in which Prosser’s I.C.C. is claiming two hundred million dollars in damages from the government of Belize.

In related news, the U.S. Department of Justice has filed a strongly worded “friend of the court” brief in favour of Belize’s position appealing the Miami federal judge’s decision to fine G.O.B. fifty thousand dollars a day for contempt. The one hundred and seventy-three page brief claims this was the first time any court has ever imposed sanctions against a foreign state for failing to comply with a judicial order and went on to maintain that upholding the ruling would adversely affect the U.S. government’s ability to conduct foreign relations.