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Jun 9, 2005

Glenn Godfrey testifies at Senate hearing

Story PictureHe was the one man many doubted would ever appear before the Special Senate Select Committee charged with investigating the financial affairs of the Social Security Board…Glenn D. Godfrey. This morning, the driving force of the St. James Building Society, former Chairman of Intelco, and former Chairman of the Development Finance Corporation, showed up at the National Assembly in Belmopan to answer questions from the Senators regarding the involvement of his companies and the alleged reckless abuse of millions of dollars of public monies. But before the questions could start, Godfrey made his own statement on where he stood on the legitimacy of the proceedings.

Godwin Hulse, Chair, Special Senate Select Cmte.
?Pleasant good morning. Mr. Godfrey, I will ask you to kindly take the oath.?

Glenn Godfrey, Chair, Godfrey Group of Companies
?Before we do that Mr. Chairman, first of all let me say, thank you for inviting me. I am here voluntarily, but at the same time I would like to make it clear that my appearance here is not a waiver of whatever right I might have to challenge the validity of these proceedings. I have my own view, I have taken legal advice. It is not hostile, I want to assure you. I want to work with this committee. But it might come, there might come a point where I might have come and challenge the validity of the committee. So my appearance here is not a waiver of that right to challenge. I would like that in the record.?

In the end, Godfrey would swear to tell the truth, the whole truth, and nothing but the truth.

And for Godfrey, the truth of the matter is that he did nothing wrong. According to the former P.U.P. Minister, loans made by his St. James Building Society to two of his companies, Western Caribbean and I.T.L., were to have been used to build apartments in San Pedro and Cayo… But when the imported Venezuelan prefab buildings were slow to arrive, with the approval of the Panamanians who capitalized St. James, he changed the purpose of the loans in early 2002 to start financing Intelco, the Godfrey run telecommunications company that was supposed to bust up the B.T.L. monopoly. But officials from the Social Security Board now say that when they got into the picture in the process of selling the loans on the U.S. market, they were never informed that the money was going to Intelco…or that the land in question never did boast any new construction. Godfrey contends S.S.B. would have known if they had done their due diligence. And as to the failure of Intelco itself, Godfrey says that’s somebody else’s fault too…the Government’s…because they broke their promise to make interconnection between Intelco and B.T.L. a reality. In essence, Godfrey politely blamed the failed investment on everyone but himself.

Glenn Godfrey
?I approached, through St. James, I asked St. James to approach the investors and say, why don?t we use the money directly for Intelco? So the purpose of the loan would change. At that time, Intelco looked like a very, very exciting prospect. The business plan we had was incredible. In fact, it was so good that on the basis on the business plan alone I subsequently raised another thirty-five million U.S. dollars for Intelco. Why? Because everybody could see that if this thing got off the ground, it would put a serious hurting on the monopoly and would make a lot of money.?

?Intelco got permission from St. James, but mainly from the–who were speaking for the investors, and said, ?okay, fine, use it, give us the same security, we?ll go with you based on the business plan.? I cannot say that that was communicated to Social Security.?

Dickie Bradley, Senator
?Should it have been??

Glenn Godfrey
?I don?t think so. I think at that point, there were just discussions, there was no agreement to sell or anything, there were just discussions. I cannot believe that Social Security did not know of the change.?

Dickie Bradley
?Did not know what??

Glenn Godfrey
?Of the change, in the purpose, because all it would have taken was a trip to the site. What had happened though–?

Dickie Bradley
?And that trip to the site would have revealed what??

Glenn Godfrey,
?That in fact the purpose had changed because no building had been built. If after a year you have a loan disbursed and no building is built, your first question is, well what happened??

Dickie Bradley
?I need, before I get lost in this background briefing–the Western properties mortgage and the I.T.L. mortgage were being serviced up to this point??

Glenn Godfrey
?Oh yes. Those mortgages were serviced up to October 2004, because they were good mortgages, they were good loans. The only thing that made them bad loans is government?s failure to deliver interconnection. That turned them into bad loans.?

Dickie Bradley
?The only reason that turned them into bad loans is government?s failure to do what??

Glenn Godfrey
?To deliver interconnection. With interconnection, Intelco would have been successful. We would not be having this conversation. Everybody would be so happy with their internet in schools, computers for children, real competition.?

?Those mortgages, as I said, continued to perform into 2004 and would have continued to perform if Government had done what they said they were going to do.?

Dickie Bradley
?What was Government to do? ?

Glenn Godfrey
?Give Intelco interconnection.?

Dickie Bradley
?Who?d they said that to? ?

Glenn Godfrey
?They certainly said that to me.?

Dickie Bradley
?In writing??

Glenn Godfrey
?No, I don?t believe in writing, Senator.?

Dickie Bradley
?In your opinion, was there a conflict of interest by your being at the D.F.C. and there is some dealings with St. James financial matters??

Glenn Godfrey
?There can only be a conflict of interest if you are hiding something. If you come to me and you know I represent the Chairman, Mr. Hulse, and you also want me to represent you knowing that I represent Mr. Hulse, I can easily clear that by just telling Mr. Hulse, ?I will represent Mr. Bradley, do you have a problem with it?? Then there is no conflict of interest. Conflict of interest arises when it is underhanded, when it is not disclosed. That was never the case. Everybody knew of my involvement with St. James, everybody knew of my involvement in D.F.C. I don?t recall that there was any time when they had conflicting interest between D.F.C. and St. James.?

But the blame game doesn’t end there. Godfrey would spend most of his three-hour testimony categorizing the Social Security Board managers handling the securitization as inexperienced, incompetent, and unable to deal with “high tech finance.” According to Godfrey, it wasn’t until some time after S.S.B. had signed on as a guarantor to the securitization package, that is, buying out mortgages from the D.F.C. and St. James Building Society, did they figure out exactly what they had agreed to.

Glenn Godfrey
?We did not have the institutional strength, we did not have the staff, we did not have the understanding to do it properly, to make sure. You needed people who think like bankers. If you come in and you tell the banker, ?it?s a fine day today?, he is going to go outside to check to make sure the sun is out, that?s the way they behave. So for them to have relied on undertakings and representations that are a year or a year and a half old, shows that they are not part of that culture, and you really needed bankers to do something like this. D.F.C. could have helped, but again I think they were a little over, out of their depth. They just did not know how to handle this. And the people who were coming in were not looking after their interest, they were looking after the interest of people who were going to buy the bonds.?

?The board in fact had up until April the third 2002 to change their mind.?

Godwin Hulse
?Very good. Now??

Glenn Godfrey
?I?m afraid that you know, people start trying to blame everybody else by ?Oh, you tell me fu do it? and you know. You can?t get away like that you know. You have a right to do your due diligence and if as a result of your due diligence, you feel the loan is not good, to hell with what–sorry about the language–but to hell with what D.F.C. says. ?

Godwin Hulse
?Clearly. And you?ve said, and I know, that an astute business person as yourself would obviously be ensuring that there is proper due diligence.?

Glenn Godfrey
?Have to.?

Godwin Hulse
?So let me??

Glenn Godfrey
?Again to, by the chance of just repeating myself over and over, these were not financial people. They are people who gather contributions and discharge it. And what they were trying was real high-tech.?

?Senator let me tell you the truth. I really feel that in their mind, they did not realize that they had guaranteed that thing. It was like months afterwards that they came and said, ?We didn?t realise that we had guaranteed this thing.? It was so much paper to go through and certainly that was never the intention that Social Security would guarantee the whole thing.?

?But certainly Senator, I will say the intention was not for Social Security to guarantee everything. It was for Social Security to guarantee its portion, St. James would guarantee its portion, and D.F.C. Now that might have been changed because of the North American market. In other words, no way unless–because at the end of the day, the only way we were able to get that thing sold was by adding on layers and layers and layers of new assurances, like for instance an insurance against default. The whole thing changed.?

Godwin Hulse
?Social Security suggested, not suggested, but said to us that their understanding was that when these monies came this would have been a loan both to Western Caribbean and Intelco through St. James. And I asked the question, so why did you not ensure that.?

Glenn Godfrey
?They are making the big mistake that they made from the start, because they are saying that these loans were not disbursed. As I explained to you, the loans were disbursed long before. They think of disbursed as, well we noh see no buildings so that mean the loan wasn?t disbursed. But the fact is the loan was disbursed for the other purpose that was approved by the investors. I have tried to explain this to the people at Social Security. You really need somebody over there that understands that level of financing.?

Godwin Hulse
?Of course in your statements for the last two hours you?ve suggested that the serious weak link in all of this was the Social Security.?

Glenn Godfrey
?Well the fact that they put them to do something, or they asked them to do something that they were not equipped or trained or had the personnel to do. I mean, it, I don?t know anybody in Belize who could do a good securitization.?

?Part of it was, it was the first time it was being done in the North American market, we didn?t have the experience. I don?t want to say it was Narda?s fault or Ian?s fault, what we should have done was brought in a team from abroad. No disrespect to Belizeans, but you have to know your limitations in these things or you get eaten alive.?

?I think that what the people who were buying that look at are not really the projects, they look at who is going to pay at the end of the day. And the only reason that flew is because it had the sovereign guarantee behind it. The projects are neither here nor there; they are not material. You could put a panades shop there and you put a sovereign guarantee behind it and it will sell. ?

But perhaps the most surprising revelation in Godfrey’s testimony is his claim that as of today there is no risk to public monies as a result of the two loans to Western Caribbean and Intelco. As we understand it, Godfrey maintains that Belize Telecommunications Ltd., in its buyout of Intelco and its assets, also assumed all the debts now in contention. In fact, Godfrey says to date B.T.L. has already made as many as three payments towards those loans.

Dickie Bradley
?Large mortgages in the total of millions of dollars having been defaulted on, which already included in a package, already sold to foreign investors, who is to meet those monthly payments for those mortgages??

Glenn Godfrey
?B.T.L. The board of directors, the one appointed by Prosser and the subsequent one appointed by Government, both undertook to accept the liability on those mortgages and pay off the debt.?

Godwin Hulse
?Will there be any loss suffered by the people of Belize??

Glenn Godfrey
?If the undertakings that were given by B.T.L. are honoured, and there is no reason why they shouldn?t honour it, they are legally binding undertakings, there will be no loss.?

Godwin Hulse
?The people of Belize would have suffered no loss as a result of this??

Glenn Godfrey
Shakes head, no.

In the afternoon, the committee heard brief technical testimony from two Godfrey employees, William Roy Cadle and Selwyn Hernandez. It is not clear when, or if, the committee will hold future hearings.


Viewers please note: This Internet newscast is a verbatim transcript of our evening television newscast. Where speakers use Kriol, we attempt to faithfully reproduce the quotes using a standard spelling system.

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