Michael Ashcroft speaks on B.T.L., Belize Bank, U.H.S.
He has significant investments in Belize, but that doesn’t mean he has been without controversy, in fact he has been at the middle of it in most cases. And it appears that from time to time he has been in the warpath with both administrations and depending on whom you talk to, there is always a different view of Michael Ashcroft. Today we sat down with him for a one and one and he answered a wide range of issues.
Amalia Mai
“There is a general perception in Belize that the relationship between you and this country certainly is one sided, that perhaps you get more out of Belize than Belize gets out of you. How would you respond to this thinking?”
Michael Ashcroft, Has His Say
“That’s one of those really difficult questions to answer. It’s trying to prove the negative in saying that I believe that our companies that we’ve invested in, in the time that I’ve been involved with Belize, have been one of the most active donors in giving to the local communities. And even some of the projects like alcohol rehab center in Hattieville prison have proved to very successful. But more than that, it’s not just giving on a year in year our basis; I’m a great believer in creating a capital wealth for social cause. Perhaps I could explain that by referring to B.T.L. When originally, Belize sold its majority holding to the government, they brought in Mr. Prosser who, as we all know, turned out to be a real disaster for Belize and that was even after the previous disaster of Intelco, which we won’t go into again today. So when the last government ran into trouble with Mr. Prosser, they asked me whether I would help them get out of that mess. I didn’t particularly want to own B.T.L. again but I thought that this would be a great opportunity if handled correctly, to be able to re-Belizeanise B.T.L. and create enormous wealth for both social causes and the employees of B.T.L. And if fact, today well over ninety percent of B.T.L. is owned by either the employees trust or charitable trusts for the benefit of Belizean, social and charitable causes. And so my own interest in B.T.L., I think it is about two or three percent. The bottom result of all of that today is that if we were now able to sell B.T.L., it would probably release about a hundred and fifty million Belize dollars, yes a hundred and fifty million Belize dollars for long term causes within this country.”
Amalia Mai
“Today it was announced in the House by the prime minister that bank charges have been withdrawn against both the Belize Bank and the FirstCaribbean Bank. How, in your mind, did this happen and is it any indication that there is perhaps some mend in the relations between you and the government?”
Michael Ashcroft
“Well, I’m not so sure that there is a mending of any relations between ourselves and the government but even in all sorts of conflict and wars around the world, there invariably comes a point of time when it is in both parties’ interest to seek out whether there is a seize fire is in the best interest of both parties. It doesn’t mean relations are better but it’s in the mutual interest of both parties. As far as the charges being dropped are concerned, I think that is a very good and pragmatic move by the government because Belize has a terrible reputation in the international monetary markets following the restructuring and the bond issue during the last administration. The bond holders are very unhappy. The bond prices are low and reflects the sovereign risk of Belize and there was a hope of course, with the change of government, that the sovereign rating of the prospects for those bond holders might increase. And I don’t believe that the international markets particularly like to hear when there is a fragile reputation where we as the Belize Bank are accusing the Central Bankers of misusing and abusing their regulatory powers to become deck collectors for the government in which the prime minister personally directs the battle of the Central Bank against the Belize Bank and where bank managers are threatened with arrest and when there are charges of suspicious transactions, especially against a bank like FirstCaribbean, whose parent bank, Canadian Imperial Bank of Canada, is one of the world’s largest most respected banks. That doesn’t help the perception and I’m very pleased that at the end of the day, on that particular one, that we’ve been to mutually draw a line under that which has benefits for all concerned.”
Amalia Mai
“Let me just move on to an issue that is in people’s minds everyday; U.H.S. and the government guarantee. How did that come about?”
Michael Ashcroft
“U.H.S. originally was going to be financed by the D.F.C. and the D.F.C. then found out that it didn’t have the funds and Belize Bank was asked to bridge a short term loan to U.H.S. whilst the D.F.C. was obtaining further funds. That didn’t happen and Belize Bank was left with the debt and with interest it started to grow and then at a certain point in time Belize Bank took the view that it was not prepared to extend any further credit unless the government gave a guarantee, which the government in fact gave to the Belize Bank a guarantee which is still the subject of various litigation. However, the Belize Bank did take this case to arbitration in London and just before the final settlement was pronounced by the London court, the previous government came to us and asked us to organise a settlement around funds from Venezuela and Taiwan. But that settled the debt and also created a vibrant U.H.S. so it was not put into receivership and which we did and that was a settled deal. This government decided that it wished to reclaim the ten million of Venezuela money, in breach of that agreement made with that previous administration. Because of the process in Belize, in which the Central Bank directive has to be obeyed before the case is heard, the government has been able to take that money back from the Belize Bank. But what that means is that the government has now breached the settlement agreement, which means that the amounts, which we had previously written off in getting the settlement, are now back on the table, which is why London court now, the claim is now fifteen million U.S. dollars with interest accruing at seventeen percent and enormous legal fees being added to that day by day. We are, as a bank, extremely confident, that at the end of the day when the full legal process is finished, we will be given judgment for a sum far greater than the ten million which the government has just taken from the bank.”
Amalia Mai
“Let me just turn a little bit to investment climate in Belize. How would you characterize that right now?”
Michael Ashcroft
“From external perceptions, it’s terrible. Foreign currency investors don’t like to see what has happened to the oil company. They don’t like to see what has happened to B.E.L., in which a company, Fortis from Canada, which has a high reputation in the Canadian markets, let alone energy, which also has subsidiaries in other Caribbean countries, has now got to the stage where it is not connecting business and houses to the grid because they have run out of money, and who have invested over two hundred million in this country and are hardly seeing a return. And then seeing the problems that Belize Bank has had, that B.T.L. has had, you cannot expect foreign investors, which every country needs for its development—even developing countries need foreign investment. And these foreign currency investors had many choices as to where to invest the money and so at this point in time Belize is not favourably disposed on the international community. But Belize, if it’s to get its economy growing again, and there are already reports since I’ve been here on this trip, that for example, hardware stores here are forty percent down on business and the credit crunch is starting to come and Belize Bank, which has been traditionally the most responsible bank in terms of lending to the productive sector on a long term basis, is already reassessing its portfolio as whether it really wants to invest in the long term in the infrastructure of Belize. We have been, as a bank, very responsive to the needs of the citrus, bananas, and other industries that have needed considerate and long term financing and we have not gone after the short term consumer credit, which sucks in the imports, creates inflation and takes foreign in that sense out of the country. But we too, as the bank, must reassess our position within the market place and already we took the view a few years ago that we needed to diversify and now the profits of the Belize Bank over half of the profits of Belize Bank are no longer within Belize but are outside the country and we perhaps will have to accelerate that and further diversify our business out of Belize in order that we can remove ourselves from the political and economic risks that we perceive in Belize at the moment.”
