Gov’t: deal is nothing unusual
But while Espat outlined the objectives of the investment, Public Relations Officer for the Ministry of Budget Management, Norris Hall, struggled to provide the elusive details of the deal.
Norris Hall, P.R. Officer, Min. of Budget Management
“What will happen let me explain, the Espat group will begin to be a part of the board of directors of Port of Belize Limited during the transition period. Of course the Government of Belize will retain two seats, the chairmanship and one additional seat. And during the transition period, the Espat group, Belize Ports Limited, will also have two shareholders on the board during the transition period. The transition period being that the Espat group will have to meet certain development plans that is required by the Government of Belize, and also it has to comply with certain covenants under its loan agreement with Belize Bank.”
Janelle Chanona
“So it will need, during that time period that you’re talking about, it will need to complete payments?”
Norris Hall
“Yes, of course.”
Janelle Chanona
“And you’re saying that’s approximately three months?”
Norris Hall
“Yes, during the three-month period, up until July.”
Janelle Chanona
“And if he defaults on that?”
Norris Hall
“Well the government retains the right to take back the port.”
Janelle Chanona
“And what happens to Mr. Espat’s money that he’s already put forward?”
Norris Hall
“Again, that’s a financial negotiation that I have not been involved with and I don’t really know what sort of arrangement will be made when that time comes.”
Janelle Chanona
“Doesn’t the government press release say that the Government of Belize will buy back the port at the same purchase price that Mr. Espat…”
Norris Hall
“That is what the government press release says and I assume that is what it means, but I…”
Janelle Chanona
“As the public relations officer you don’t understand that?”
Norris Hall
“I understand that, but I don’t know what would be the arrangement at that time.”
Janelle Chanona
“Okay. So if you could though, explain to me as if I’m a ten-year-old. If I am buying a car from you and you’re charging me two dollars and I give you a dollar, and you give me a week to come up with the other dollar, if I at the end of the week I can’t pay the dollar, you’re going to give me back my dollar that I first paid down and you take back your car?”
Norris Hall
“Let me explain to you in realistic terms, the Espat group has a loan agreement with the Belize Bank to buy the port over a specified period, during which the bank will be dispersing these funds. During the period of that loan, for whatever period it is, the Espat group will have to comply with certain covenants under the loan agreement with the bank. Under the investment agreement for the port, the Espat group will be required to make certain stipulated investments over a certain period of time and will have to show that it is moving towards that direction, at least by the end of July. If it does not fulfil the terms of the agreement with the bank and with the Government of Belize, then the Government of Belize retains the right to reacquire the port.”
Janelle Chanona
“So if he cannot come up with the rest of the money, government will give him back everything that he’s paid so far…”
Norris Hall
“Yes, and it reverts back to the Government of Belize.”
Janelle Chanona
“Does that make any sense? If I could play devil’s advocate here…”
Norris Hall
“It makes a lot of sense. If you buy a car, if I’m explaining it to a ten-year-old, if you buy a car and you do not pay for the car, the car company reacquires your car, takes back your car.”
Janelle Chanona
“But don’t you forfeit your down payment?”
Norris Hall
“Well I suppose it depends on the terms of the agreement.”
Since Hall couldn’t divulge the terms of the agreement, News 5 put the question to Luke Espat. When asked about a clause in the contract that seems to give the buyer a money back guarantee, Espat says such an understanding is common in many privatisations.
Luke Espat
“Like any agreement, B.T.L., WASA, B.E.L., any default, the government has the right to buy back the facility before… If you miss a payment to a bank for whatever reason and there will be a foreclosure, or if you go bankrupt, you can’t just move it, government has the right first to look at the facility and decide where they’re going. So you understand, there’s protective measures within it because of the importance there is…”
Janelle Chanona
“What I think is confusing me and maybe other people as well, you got a copy of that government press release issued today, and in part that press release says, if the strategic investors–known as yourself and your group–does not perform, government will buy back company–that is the port–at the purchase price. That to me appears to be, if you all default on any loan payments or a development aspect, government will say, okay here is the money that you gave us, give us back our port.”
Luke Espat
“It’s not as simple as that. Technically it’s like that, but it’s not as simple as that.”
Janelle Chanona
“That’s not true then?”
Luke Espat
“Yes, it is?”
Janelle Chanona
“It’s not like a lending, like here you can borrow the port, if you can’t maintain it we’ll take it back?”
Luke Espat
“No it’s not…but you’re not borrowing nothing, you’re buying it, that’s why shareholders invested money.”
Janelle Chanona
“But isn’t it like a failsafe investment, if at the end of the day you guys default on any point government is going to give you back your money and take back their port?”
Luke Espat
“Government, I don’t think that’s the way to look at it, I think that’s being totally…it’s giving misinformation.”
Janelle Chanona
“Well give me the correct information.”
Luke Espat
“There are agreements in place, that should there be default the government, a licence could be revoked. That’s the precedence that it takes, because you’re operating under a licence. And if you miss a payment or two or whichever way and you have problems… Say for example that you have a house and you screw up on your mortgage…”
Janelle Chanona
“The bank comes to take your house.”
Luke Espat
“Right, and they go to auction.”
Janelle Chanona
“But then they don’t give you back any money.”
Luke Espat
“No, but you go to auction.”
Janelle Chanona
“So how come your agreement you get back money.”
Luke Espat
“No, because if you have paid fifty percent of your house money and for whatever price the bank sell it at, you will get the difference of what is there.”
Janelle Chanona
“People out there might be perceiving this as some sort of sweetheart deal between this company: Belize Ports Limited and G.O.B. and I need to give you a chance to defend that. ”
Luke Espat
“It is so sad…People will invent any story that’s convenient for them if they don’t understand, and ignorance is a part of this. Some people might not want to understand it any at all. The issue is if it was a white company with a white man and a foreign company, nobody else would question, it’s all right. But because it’s Belizean and because some Belizean has been able to do the same thing a foreign company would come here and do, to access the same funds they are talking about on their international market place, the same way it was done, it becomes questionable. If I had taken and had a white man sitting down next to me with a suit and a tie, the questions would be different.”
Janelle Chanona
“You think it’s because you’re perceived as controversial…”
Luke Espat
“I think so, I think that’s one of the perceived thoughts and that’s real, and that’s one of the hurdles that I will have to face as we go on. But I think in the near future that will be looked at very differently.”
Espat declined to name the other shareholders of Belize Ports Limited, but says those people and their plans at the port will be available to the press in the very near future. Espat and his partners have purchased ninety-nine point five percent of shares for approximately forty million Belize dollars, with financing provided by the Belize Bank. Sixty-two minor investors have purchased the remaining shares worth a hundred and eighty-one thousand dollars. In addition to the land and assets of the Port in Belize City, Belize Ports Limited also assumes control of the facilities at Commerce Bight. Espat told News 5 that when his development plans are complete he will be re-offering shares in the port to the public as well as sell parcels of reclaimed land in the Port’s new free zone.
