Godfrey can’t escape responsibility, says McMillan
The blame game continued in Belmopan today, as the Special Senate Select Committee conducted its sixth public hearing in its investigation into the investment portfolio of the Belize Social Security Board. Appearing before the senators for their second time were securitization manager Ian McMillan and S.S.B.’s financial director Rolando Zetina; as well as first timers, Franklin Magloire of the D.F.C. and S.S.B. legal officer Leonora Flowers.
In more than three hours of testimony, McMillan highlighted that, contrary to the testimony of Glenn Godfrey on June ninth, everyone did not know that two of the mortgages bundled in the securitization process, namely those for Western Caribbean Properties and International Telecommunications Limited, had in fact changed the purpose of the millions of dollars borrowed from the St. James Building Society and later guaranteed by the Belize Social Security Board. Godfrey had previously maintained to the Senators that after becoming frustrated with the lengthy process, he and the original investors decided that instead of constructing apartments they would use the money to finance Intelco’s venture into Belize’s telecommunications market.
But as has become glaringly obvious during the senate proceedings, no proper due diligence was ever conducted by any of the financial institutions to verify the presence of any buildings on the two sites in San Pedro and San Ignacio as proposed in the project documents.
The result was that the collateral was inadequate to cover the size of the loans and when Intelco went bust, it was the taxpayers who were left holding the multi-million dollar bag.
This morning McMillan told the senate committee that there was no way that Glenn Godfrey, as chairman of the Development Finance Corporation, a founder of the St. James Building Society and a key investor in Western Caribbean and Intelco could not notice that there was no mention of a change in the purpose of the loans in the securitization documents for the two companies.
Godwin Hulse, Special Senate Committee Chairman
?In his testimony, he is suggesting that a year before all of this had changed, it?s just that you all didn?t bother to change the documentation.?
Ian McMillan, Domestic Mgr, Securitization Process
?No, respectfully, Mr. Godfrey cannot excuse himself of his responsibility. He was wearing many hats. As chairman of the D.F.C., irregardless of the fact that as we progressed in this transaction, as frustrating as it was even though we were able to complete this transaction–this transaction was the first of its type in the region, half a year prior to another competing one, he cannot excuse himself from the responsibility of knowledge because each time around transaction documents were presented, or drafts were presented. These two particular loans, which were over a million dollars, in disbursed balances, to use the term disbursed balances, had to and were illuminated within the private placement memorandum.?
Senator Godwin Hulse
?But he said he didn?t read that…he don?t remember those.?
Ian McMillan
?That?s his responsibility or irresponsibility.?
Senator Godwin Hulse
?My question to you Mr. McMillan is, in any of the discussions around this August/September period, did when we were talking about not having Social Security charge anything to facilitate and so, was it clear in your mind that all parties, including Mr. Godfrey in the various conversations when he was objecting that the money should come without any deductions, that it was still clear to him and all parties that you all were talking about the same thing? There are two issues, one you are talking about disbursement; we?ve cleared that to a certain extent. But the second that we were talking about the same thing-he was still clear that you are talking about Cahal Pech, and you were talking about San Pedro, about apartment buildings there, and the same project that had been described, or had those terms been specifically discussed, okay, now you have your buildings up… Any of that kind of conversation, because he is saying that a year before, which would have been from around April 2001, that had changed, and you were not talking about those things anymore, you are talking about different projects.?
Ian McMillan
?That?s the companies. I heard that. I had to laugh when I heard that, because that is or those are the companies changing what they want to do. That is fine, but there was a responsibility to advise at least your originator, which would have been then Saint James, that you have a change of desire to do whatever it is, that is your prerogative. But the originator should have known and the originator be a willing participant, no gun to their heads, to desire to offload their mortgages for the sake of liquidity purposes, all that this programme was designed to do, create liquidity in the market place to further on-lending, should have, as a willing participant, advised S.S.B. who would have in turn advised D.F.C.–the issuer–that there has been a change of intent. Obviously, unequivocally, that did not occur, so we have a problem there. Mr. Godfrey as chairman of D.F.C., right? Who knows when these transactions from D.F.C. when they are going to emanate, what?s the timeline? And these mortgages are not buried in hundreds of mortgages within the tape; they are illuminated by virtue of their principal balances being in excess of a million Belize dollars. So they are there, described, the intent of the projects are described; prefab buildings in two. Every month you were getting the same documents, maybe you were tired of getting the documents, but getting the documents nonetheless with it being there.?
Senator Godwin Hulse
?Every month??
Ian McMillan
?Every month or every two weeks, they came out very rapidly. But the fact of the matter is that there was no concealment, no rational or reasonable argument that anyone could put forward that you were not given the opportunity to be aware of what mortgages your–since you have a beneficial interest in St. James, and as we?re learning now a beneficial interest in the two mortgages themselves, I?m learning that from this hearing which is another issue which I?m very upset over. But going back to it, in terms of dealing with the issuer, should Mr. Godfrey have known? It was his responsibility to have known. If he did not know, then you have to ask him why he did not exercise his responsibility in knowing what was there, because he signed off on it. That?s not for debate.?
During today’s session, reference was made to evidence suggesting that just prior to the consummation of the securitization package, the Social Security Board raised questions about the status of the mortgages for the Glenn Godfrey companies. McMillan would maintain, however, that those concerns never went any further than that and at such a late stage, if those two mortgages had been pulled from the package, it would have thrown off the completion date of the deal by at least six months while new mortgages to fill the gap were sought out. Tonight News Five understands that there were fifty-six mortgages sold in the securitisation bundle, but those of Western Caribbean, Intelco and one for the Border Management Agency were three of the largest.
