After months of litigation and waiting for an outcome, on Thursday April 30 Justice Minette Hafiz Bertram ordered that:
(1) A Declaration is granted that the Loan Note dated 23 March 2007 under the terms of which the second Defendant was to pay the Belize Bank Limited BZ $33,545,820.00 is unlawful as being contrary to section 7 (1) and (2) of the Finance and Audit (Reform) Act No. 12 of 2005.
(2) The Declaration that the Loan Facility of BZ $12 million procured by the first and second Defendants from the Belize Bank Limited on the 29 March 2007 is unlawful as being contrary to the Finance and Audit (Reform) Act No. 12 of 2005 is refused.
(3) The Claimants have locus standi to bring this application.
(4) The Defendants to pay the Claimants cost in this application to be agreed or taxed.
Based on the decision by the Supreme Court the Office of the Prime Minister has issued the following release:
“The Government of Belize is considering the full implications of the judgment delivered by the Supreme Court last Thursday, 30 April, in a case brought by the Association of Concerned Belizeans and other public-spirited persons and organizations regarding the validity of a Loan Note dated 23 March 2007 signed by the former Prime Minster and Minister of Finance, Hon. Said Musa, promising to pay the Belize Bank Ltd. the sum of BZ$33.5 million.
In a 70-page judgment, Madam Justice Minnet Hafiz declared that the Loan Note is unlawful as it contravened section 7(1) and (2) of the Finance and Audit (Reform) Act, 2005, which requires a resolution of the National Assembly before the Government could enter into any loan agreement of or above the equivalent of ten million Belize dollars. No such resolution had been obtained.
It also emerged during the trial that when this case commenced in May 2007, the then Solicitor General had given an undertaking to the Court that the Government would not satisfy the December 2004 Guarantee or any subsequent agreements emanating therefrom until after the determination of this action. Notwithstanding this undertaking, it is now common knowledge that the Government of the day proceeded to pay the Belize Bank Ltd. in satisfaction of the said Loan Note the sum of US$20.0 million — US$10.0 million which was wrongfully diverted from the money sent by BANDES of Venezuela for the construction and repair of houses, and the other US$10.0 million received from the Embassy of Taiwan.
It will be recalled that on March 14, 2008, the Central Bank of Belize, after conducting a Special Examination of the Belize Bank Ltd, had issued two directives to the Bank. The first directive required the Bank to forthwith credit the Government of Belize’s account with US$10.0 million which had been sent by BANDES of Venezuela. The second directive required the Belize Bank Ltd. to provide the Central Bank written documentation regarding the authority to deposit US$10.0 million to the account of Universal Investment Holdings LLC (UIH), received from the Embassy of Taiwan.
After a protracted Court battle, which is still ongoing, the Belize Bank complied with the first directive and, in August 2008, returned US$10.0 million to the Government of Belize, which had been sent by BANDES of Venezuela. However, the second directive regarding the US$10.0 million received from the Embassy of Taiwan is still outstanding and the Bank has so far provided no authority to the Central Bank for crediting this amount to the account of UIH. The Belize Bank was able to obtain a stay of this directive from the Supreme Court pending the outcome of their appeal.
While the Belize Bank has so far provided no documentation to the Central Bank regarding the Taiwanese money, the evidence shows that this money was also part of the package to satisfy the said Loan Note of 23 March 2007. As the Loan Note has now been declared unlawful and therefore void, it follows that the Belize Bank has no right to retain this money which should be returned to the Government of Belize.
The Government is advised that apart from any civil liability which may be incurred by the Bank in that behalf, the retention of money in such circumstances may also amount to a criminal offence.
The Government is carefully considering its options as to what further action should be taken in this respect. Meanwhile, the Government thanks and congratulates the Association of Concerned Belizeans, the Medical and Dental Officers Union of Belize, Senator Godwin Hulse, and the National Trade Union Congress of Belize who all joined in this action, for exposing the wrongdoings of the past administration.”
Problem’s Origin
But how have we come to this, well in her judgment, Justice Hafiz offers a Factual Background which begins with UHS aiming to build a 56 bed hospital at a cost of $28 million. “The project was initially financed by a $4 million loan from the Social Security Board, but the loan was later assigned to the Development Finance Corporation (DFC) and on 22 December, 2000 the DFC and UHS executed a loan agreement under which DFC agreed to provide a developmental loan of $28 million for establishing the hospital complex for which construction had already commenced. DFC was unable to make disbursements in accordance with the loan agreement and therefore alternative arrangements had to be made with the Belize Bank in consideration of the DFC’s guarantee of repayment, to make available overdraft facilities for short-term bridge financing by way of an overdraft facility until the DFC was in a financial position to commence payment of disbursements to UHS pursuant to the said loan agreement. The balance owed on this short-term bridge financing via the overdraft facility increased to $17 million which included interest. However, the DFC was still unable to make any disbursements to UHS as per the loan agreement. The Bank therefore offered additional financing to UHS via the overdraft facility on the condition that the DFC would provide a guarantee of payment on behalf of the UHS. The guarantee was so provided by DFC. On 9 December, 2004, the Prime Minister in his capacity of Minister of Finance executed a guarantee for the debts and liabilities of UHS owing to Belize Bank. In furtherance of this guarantee, the Prime Minister executed a Settlement Deed and a Loan Note on 23 March, 2007. On 29 March, 2007 the Belize Bank made a further loan facility of 12 million dollars to the UHS. The Minister of Finance was a party to this Additional Loan Facility.
It is well encapsulated; however, the story of how we’ve arrived at a judgment against the government can now be used as a case study of how politicians, for the sake of friends and cronies put an entire nation at risk without even the slightest consideration as to the effects of their actions.
