D.F.C. general manager says he just followed orders

This morning, following a two month suspension of public hearings, the Development Finance Corporation Commission of Inquiry was back in front of the cameras. The only difference this time around was a slightly higher level of drama as the witness list moved up the food chain at D.F.C. News Five’s Janelle Chanona reports.

Janelle Chanona, Reporting
Without fanfare, this morning the Commission of Inquiry investigating the financial affairs of the Development Finance Corporation continued its public hearings at the Belize Institute of Management in Belize City. However, it is clear the commission is frustrated that a forensic auditor has yet to be appointed by the government and the Trade Union Congress.

David Price, Chairman, Commission of Inquiry
?As far as the Commission is aware, the forensic auditor has not yet been appointed and therefore no forensic accounting investigation of the D.F.C. has taken place. The commission further notes that so long as the forensic accounting investigation is not carried out, then the commission?s investigation will be incomplete.?

The first and only witness of the day was Roberto Bautista, one of the longest serving employees of the D.F.C. During his thirty-three year career, Bautista rose from an Agricultural Credit Officer to General Manager. He testified that in April 1999, then Minister responsible for the corporation, Ralph Fonseca addressed a meeting of key financial sector personnel and outlined the role of the D.F.C. This morning Bautista was asked to read from the minutes of that meeting.

Roberto Bautista, General Manager, Development Finance Corporation
?The Minister went on to outline the following:
1) Within the next six weeks, G.O.B. would be receiving approximately eighty-six million dollars, this included funds from the R.M.B., Taiwan and the C.D.C. who would be paying off Social Security for debentures. The Minister stressed that it was of vital importance that this money be programmed for lending as quick as possible, particularly in the housing sector. These funds would be deposited at the Central Bank earning an interest rate of eight and a half percent. However, it was emphasized that these funds were not intended to be sitting at the Central Bank for too long but should be mobilized as soon as possible.?

According to Bautista, those statements would soon cut the loan processing paperwork in half and generally set the tone for operations at the D.F.C., especially when it came to housing loans.

Roberto Bautista
?We had to sort of modify these lending criteria to make it more accessible and affordable and that is where equity was relaxed. Most clients could not find, were incapable of finding five or ten percent cash equity plus also finding all the legal fees required to perfect all the legal documents. So what we did, we went along modifying these lending guidelines, particularly for housing. That?s what I meant by equity, in some instances, no equity was required. In some instances, even legal fees were assisted.?

David Price
?Would I be correct in saying that disbursement and pre-disbursement conditions were also relaxed??

Roberto Bautista
?I won?t want to put it as a general policy. There were yes I agree, several loans that were disbursed in one tranche. But as a policy that should not have happened. The majority of the loans is supervised credit and we do it by tranches. Those that you see like that, might have been ?authorized?.?

But Bautista would go on to claim that management had little say when it came to saying ?No? to housing projects initiated by the government.

Roberto Bautista
?We had no option, it was just passed to us and you make the best of it to get it working. In other words…?

Merlene Bailey Martinez, Commissioner
?Why you think you had no option Mr. Bautista??

Roberto Bautista
?Because it was accepted by the board. It said, okay D.F.C. you go ahead and implement this contract.?

Merlene Bailey Martinez
?You are taking about the management had no option, but at the board level was there also the feeling that there was no option??

Roberto Bautista
?They could have said no, they could have said yes. It was left to them, they decided.?

However, it was Bautista who signed off on a fourteen million bulk payment to the Novelo family.

Roberto Bautista
?The disbursements were authorized by me, but I was instructed to authorize, to pay.?

David Price
?Where did that instruction come from??

Roberto Bautista
?That instruction came from my chairman.?

Reading a letter from Antonio Novelo to the D.F.C., Bautista says the board agreed to issue a fourteen million dollar check to Eugene Zabaneh for the Z-Line Bus Company. But then on the same day, he got a phone call.

Roberto Bautista
?Approved on the sixteenth of March by Mr. Godfrey, his name is not there but the signature is there.?

David Price
?So it?s on the strength of that, you authorized??

Roberto Bautista
?Yes, I was instructed to do that. What actually happened–the day when these documents were signed and we were given okay to start to implement the project ? I told them at the meeting that we were going to disburse Eugene and the balance I would have met with Novelo?s at a subsequent date. And we even arranged a date, I think about a week after that we were going to discuss the implementation plan which is the ??

Merlene Bailey Martinez
?Disbursement schedule??

Roberto Bautista
?Yes. But then I got a phone call from my chairman to tell me that why I?m not disbursing this thing. I told him that we have already agreed with the Novelo?s that we would have discussed an implementation plan. And he said no, no, you have to disburse it because we can?t have the money just idling there. You know?because at that time there was arrangement with Central Bank to hold the money and hold it for us and pay us some interest. But because of the substantial amount of money they said they won?t hold it for us so may as well we disburse it with the Novelo?s and let them manage the funds to implement their project and then they would pay us interest which would be earning thirteen percent. That is what I was told, and then it was followed in writing. I received a fax of this.?

Herbert Lord, Commissioner
?Mr. Bautista, to date, how much is still outstanding on that loan.?

Roberto Bautista
?How much is still outstanding? Thirty two million.?

Janelle Chanona
?On Thursday, Roberto Bautista will reappear before the D.F.C. Commission of Inquiry where he will be asked to explain other transactions, including a loan for over a hundred thousand dollars to Arnaldo Pena for buildings that were never constructed. Reporting from the Belize Institute of Management for News Five, I am Janelle Chanona.?

According to the commissioners, during their nine week hiatus, over five hundred pages of transcripts were reviewed and a number of official private interviews held.