In August of 1999, the PUP government entered into a program called “Privatization Program” for the modernization of the civil aviation sector of Belize. The program was to have been financed by the Inter-American Development Bank (IADB) and was to have included capital improvements to the international airport including the expansion of the runway and other upgrades. This project was started but it was moving too slow for the PUP government and it was withdrawn and NEWCO was engaged. NEWCO had in fact been the consultants who had been doing the feasibility studies under the IADB arrangement.
In June of 2000, the People’s United Party Government entered into an agreement with Lufthansa Consulting GmbH (LC). The agreement was to have Lufthansa do feasibility studies for the Government for the privatization of the International Airport. Under the agreement, the PUP Government was only willing to pay a fraction of the fees, so they offered Lufthansa the exclusive right to form a company to negotiate with the Government to become the airport concessionaire for 30 years. Thereafter, the studies were completed, and it showed that in fact the privatization would be feasible, and Lufthansa entered into formal agreements with the Government of Belize in November of 2002. At the time, the Government, the Belize Airports Authority and a newly formed consortium called NEWCO (which included Lufthansa) signed onto an agreement where “NEWCO will have an exclusive license to the Airport”.
Under the agreement, NEWCO was given a concession for the administration, operation, maintenance and modernization of the airport. The terms of the agreement included the exclusive right to operate and develop the airport, as well as, to finance and perform runway, terminal and other infrastructural improvements. After the PUP Government took office once again in March of 2003, the negotiations with NEWCO continued with the corporation seeking to close the deal. At the time, negotiations were conducted with the Minister of Investment and Foreign Trade to have the closing date finalized. But while that was the intention, “on July 25, 2003 a memorandum prepared by Mr. Courtenay was submitted to Cabinet requesting for” the termination of the Concession Agreement, negotiations for an exclusive contract with another investor called Washington Group, and if negotiations should fail, to look for local investors to take over the privatization project. The Washington Group had been brought in by NEWCO to finance the project and were instead coaxed into taking over the project. They would have but insisted that a settlement be reached with NEWCO. That never happened and thereafter, negotiations broke off with the Washington Group and the Concession Agreement with NEWCO was terminated.
In November of 2003, the Belize Airport Concession Company Ltd. (BACC) which is owned by Samira R. Musa, Pablo Espat, David Espat and Christopher Roe along with a director Edward Musa surfaced, and by December 2003 the BACC signed on to what is considered an agreement almost identical to that which was being pursued by NEWCO.
Because it was jilted out of its work and having reasonable expectations, NEWCO asked for arbitration in February of 2005 with the judgment coming in on June 23rd of 2008 in Miami. The ruling ordered that the Government of Belize pay 2.6 million dollars at an interest rate of eight percent per annum compounded quarterly for the period October 27, 2003 to June 23, 2008. The Government was also ordered to pay US$500,000 in legal expenses by NEWCO.
In response to this award the government took the matter to the Supreme Court here where it got an injunction and asked for a declaration that the award was deficient and sought a stay on the judgment. That request was denied in 2013 by the Supreme Court and the U.S. district court of Columbia confirmed the award. That ended with the government owing 4.259 million dollars to NEWCO as an award for the PUP government’s breach of the contract.
Editor’s note: next week we will explore the BACC’s contract and the exceptional terms under which it is operating
