Barrow and B.T.L. go to war over taxes, concessions
The gloves are off between government and Belize Telemedia Limited in their dispute over payment of business tax and the enforcement of an agreement to provide the company with a guaranteed rate of return. Today, following what he considers an unsatisfactory response from B.T.L., Prime Minister Dean Barrow issued a press release stating that after only one meeting the talks should now be considered at an end. According to the release, B.T.L. has chosen to respond through a letter from its U.K. lawyers, the firm of Allen and Overy, and in view of that response (quote) “discussions would be pointless”. Barrow says that government will now pursue “with all vigor”, every option to recover taxes owed by B.T.L. while maintaining that any agreements made by the previous government with respect to tax offsets and guaranteed returns are null and void.
At his May twenty-ninth press conference the P.M. still held out a glimmer of hope that some kind of compromise could be reached. Here’s how he described the situation last week.
Prime Minister Dean Barrow
“The first meeting between the government and B.T.L. took place yesterday afternoon but in the meantime, the injunction that B.T.L. had gotten in the U.K. to stop the government from proceeding with the income tax summonses here and to oblige the government to pay over the—how much did they claim we owe them?—eighteen million but they said four million had been set off already so fourteen or so million. That injunction, which I had been told by Michael Ashcroft, would lie dormant while the talks would get started, there was an effort made; there was an application made by B.T.L. here in Belize to get a form of that injunction from the courts in this country. Well I certainly consider a breach of the spirit of the agreement. I certainly consider that a move in bad faith. When I came back I was told about that. On the weekend the application was listed before the Chief Justice who put it off because Eamon Courtney, who was appearing for B.T.L. did say that perhaps it ought to be put off in view of that fact that talks were going to start between the government and B.T.L. But just the mere filing of the application, I considered an act of bad faith so I promptly instructed the Commissioner of Income Tax to file the two summonses for the February and March business tax and that has been done and the return date has been given for, I believe, the ninth of June. It didn’t stop the talks from proceeding yesterday. I believe the B.T.L. side cried foul and we said no, you are the ones that are guilty of the initial act of bad faith in filing the application for the injunction there and so we will, at all times, act to protect the interest and rights of the Belizean people. So the meeting proceeded and views were exchanged. I won’t, of course, go into the substance of those views. B.T.L. was represented by its C.E.O. and by Philip Osborne and government was represented by the Financial Secretary and a legal consultant the ubiquitous Mister Gian Ghandi. The B.T.L. side is to come back to us on what was discussed and I imagine they will do that before the return date for the summonses that we have filed. The application before the Chief Justice for the injunction, I think is put until around the fifteenth so it’s put off to a date beyond the return date for the summonses in the Magistrate’s Court.”
In the question and answer session Barrow described the deal given to B.T.L. by his predecessors.
Prime Minister Dean Barrow
“The past administration provided for these people to be guaranteed a rate of return and the agreement said if there was any difference between the guaranteed rate of return and the achieved rate of return, government would pay the difference. That agreement was made in 2005 and as soon as the first year of operations after the date of agreement was completed, B.T.L. wrote and said the achieved rate of return is less than the guaranteed rate of return by seven million dollars. And the fool, fool government at the time, instead of saying man look yah and there’s no effort made to check the figures to check the formula you know. It’s just our faith. They said well we can’t pay it now can you roll it over until next year? We’ll give you some additional agreement of comfort to enshrine the fact that we do owe you and B.T.L. said fine. And then the next year, which was 2007, they came back and said well not only do you owe us the seven million dollars, there is an additional eleven million dollar shortfall now for the 2007 year so you owe us eighteen million dollars and you either pay us or … And that is when government did a third supplemental agreement to say well if we can’t pay it—and obviously we can’t pay it—you can simply withhold any taxes, not just business tax, any tax at all that you pay. You can simply withhold that until you say the accounts are now squared and if we no longer owe you, government no longer owes the eighteen million dollars.”
It will be recalled that the Musa administration pressured Michael Ashcroft to sell his B.T.L. shares to government so G.O.B. could then resell them to Jeffrey Prosser. Government sold the shares to Prosser, presumably with a guaranteed fifteen percent rate of return and other concessions, but when Prosser proved unable to pay for all the shares, government went hat in hand back to Ashcroft, asking him to buy back the company they had previously urged him to sell. That repurchase agreement apparently came with all the perks that had been previously promised to Prosser.
