Of all the wrongs that the People’s United Party did to the country of Belize, one of the most hurtful and enduring ones is the giveaway of the Phillip Goldson International Airport. Two weeks ago we catalogued how it was that the Government of Belize ended up owing 9 million dollars to NEWCO. It was basically as a result of the then PUP government taking away a contract which it signed with that company and giving it to its cronies.
This week we have a closer look at the contract between the Government of Belize (GOB), the Belize Airports Authority (BAA) and the Belize Airport Concession Company Limited (BACC). From beginning to end, in almost every single page of the contract there is some egregious injury caused to the people of Belize.
The agreement was made on the 29th of December, 2003 and it is almost an evil Christmas gift to the people of Belize who have very little or no knowledge of the contents of the agreement. The first injury is the handing over of “all the land… together with all buildings and erections thereon and all infrastructure, installations and facilities comprising the Airport to hold the same unto the Company for the term of 30 years…” there is no financial consideration for doing this. What is worse is that the term of 30 years “may be extended for a further period not exceeding fifteen years on such terms and conditions as the parties shall agree…” In this event the BACC would notify the government one year before the expiration of the first 30 year contract.
The agreement goes on to read, “The Government and the Authority hereby grants to the Company a right of first refusal to operate any additional airports in Belize which have international arrivals and departures in accordance with terms to be mutually agreed between the parties… The Government and the Authority further undertake not to divert or to facilitate the diversion of any traffic at the Airport to any other international airport which may be built in Belize.” The contract goes on to specify that if there is ever “a diversion of existing commercial international flights from the Airport to another airport in Belize it shall be compensated by the BAA and or the GOB for such loss.”
If this was not enough of a giveaway, the contract also gives wide and sweeping tax and duty exemptions to the BACC through a twenty year tax holiday. It states, The Company and BAMS (Belize Airport Management Services Limited- basically a milking tool created to squeeze as much out of the airport as possible) shall each be exempt from all taxes payable to the Government of Belize its agencies and departments as well as all local regional or municipal governments which are measured by or imposed on receipts, revenues, income or profits. This exemption shall apply to all officers, consultants and employees of the Company and of BAMS who are not citizens or permanent residents of Belize. In addition, the Company shall each be exempt from all income withholding and other taxes payable to the Government of Belize… for (i) all dividends, distributions, interest, and other payments paid by the Company to its owners and (ii) all interest and other payments paid by the Company to any lender or foreign creditor with respect to any loan(s) or other indebtedness incurred in connection with the acquisition, construction and mobilization of the Project or any portion thereof…” But the tax holiday seems endless however as the contract continues that “the Company and BAMS shall each be exempt from Excise Taxes, Ad Valorem Taxes, other taxes or fees imposed or payable on the conversion of currency, Stamp Duty and Sales Tax, payable to the Government of Belize.”
And with all this giving away, what is the benefit that the Government of Belize Receives? As far as the contract goes the BACC will only make payments to the Authority if it earns income of US $15 million and less than US $ 16.5 million, the excess above the US $15 million and less than the US $16.5 shall be due to the BAA as concession fees. If BACC earns more $16.5 million, the BAA will be entitled to 9% across the board. BACC shall pay to BAA Bze $50,000 on April 1st of each year beginning April 1, 2005. This payment shall be deducted from the concession fee which is calculated at the end of each year. Or, it shall accrue until such time as fees are due to BAA, and then be applied against such fees due. Under the contract the payment of fees to BAA is subject to BACC having a profit margin of 25%. If BACC attains the required income described before payment of fees will be subordinate to whether BACC has attained its 25% guaranteed profit. So really the Government is collecting almost nothing from the BACC.
When the PUP government handed over the airport it had a book value of 70.6 million dollars. Its loans and liabilities stood at 45.3 million dollars and it had significant income. Now the government receives virtually nothing. And more than the above mentioned breaks to the BACC got it also given the right to open casinos or gambling houses at the airport. In the agreement “the Government and the Authority hereby expressly assign to the Company all rights which they may have to designate a national flag carrier to the intent that the power right and authority to make such designation shall vest exclusively in the Company” for the term of the agreement. Furthermore there is nothing in the agreement that compels the Company to furnish financial records to the Authority, there are only a couple of clauses that request that it maintain appropriate records.
What the agreement is very explicit on is the giving to the Company the authority to collect monies which were due to the Authority. It states that, “The Authority and the Company shall enter into a “collection management agreement”, on terms to be agreed by them by virtue of which the Company will invoice and collect in the name of and for account of the Authority all or part of the amounts owed for fees or charges for Air Navigation Services. To add a slap to this, “the Government shall continue to be responsible to provide Essential Services … and all Air Navigation Services necessary for the proper and efficient functioning of the Airport…” That appears like a free ride!
And continuing on the free ride, there are clauses which pertain to the expansion of the Airport which is really the reason why the airport was privatized in the first place the giveaway continued. There are two expansions that are to be conducted and in one labeled Ib there is mention that land should be acquired by the government. It states however that the land, “immediately upon acquisition, shall be transferred to the Authority and then demised to the Company so that it will become part of the Concession Property. As soon as practicable thereafter the Goverment shall at its own expense make all arrangements for the relocation of the BDF in accordance with the schedule required for Airport improvements in accordance to the Business Plan.” (We are not certain what land which the BDF occupies this is referring to.) The agreement then turns and expresses that if there is a delay in the acquisition it would not be reason for terminating the contract, it goes even further to if that delay goes for more than 6 months, that delay will be added on to the agreement as an extension of it.
As far as the expansion and work to be done on it, the contract does not only offer sweets into the BACC, the construction company hired will also “be exempt from paying all import duties, revenue replacement duties and sales tax related to the Company’s construction obligations under the terms of this agreement.”Â
While we have pointed out many of the sweets in the deal there are still others contained within the document as well as other documents which also have it that the government after handing over the airport gave the BACC the nod to mortgage its assets in order to raise capital. Even worse is the fact that if the Company defaults on payment the Government would be liable.
Sweetheart deals of this proportion was the order of the day for the PUP and now even 8 years after they have been out of office their actions continue to linger and cost the Belizeans people millions of dollars.
