$20 million dollars - that's how much government and Social Security are lending Michael Ashcroft through his company, Sunshine Holdings Ltd, and what's raising eyebrows is not just that $20 million of your money is going to a British billionaire, it's the highly concessionary terms under which Ashcroft's company will access the money.
Sunshine Holdings was created as what the corporate people call a special purpose vehicle, used only to hold the 20 million BTL shares in trust for BTL employees. But the fact is that it is an Ashcroft company, registered at his North Front Street headquarters and its memorandum is signed by his employees. But while it will hold the shares in trust, it's not for the BTL Communication Workers Union because that group has made it clear to government that it wants nothing to do with Ashcroft or his Sunshine Holdings.
But government isn't hearing that, because it does want to do businesses with Sunshine and on Friday the Prime Minister himself cleared the way. That's right, on Friday evening as the Social Security Office in Belize City the Prime Minister attended a meeting of the Social Security Board of directors to make it clear to them why it was imperative that they approve the loan on Friday. The Board took two votes on the loan, the first went 5 to 4 in favor of the loan, and then after the Prime Minister's intervention, it went 8 to 1, emphatically in favor.
The reason the first vote may have been so close was because of this letter from Social Security's Attorney Michel Chebat who listed serious concerns about the loan at terms that are highly disadvantageous to Social Security. In his letter, Chebat points out first that the loan is unsecured, meaning that there's no collateral to guarantee it, and not even the shares will be pledged as security. Second, he noted that interest on the loan is not going to be paid until October 31st, 2010. After that, the loan will pay only interest until the October of 2020 when the full principal will be paid in a Single bullet payment, a vastly concessionary arrangement. Chebat also points out that the term of the loan is 15 years at a rate of 8.5%, which he notes is far less then that current market rate for mortgages which is 12 to 14%.
So with all that against it, why did the Social Security Board vote in favor of the loan? Speaking with us today, Chairman Yasin Shoman told us that the board was convinced that it was the right thing to do after the Prime Minister explained that the shares are tied up and it cannot do anything with them until Social Security releases this money, money which government needs to meet its obligations. So now, with the board's approval it's just a matter of paperwork before Social Security hands over the money.
