After a three month break, the public hearings of the DFC Commission of Inquiry resumed today. Since the last public hearing on October 31st, Chairman David Price passed away, and accountant Mark Hulse started his forensic audit. Commissioners Lord and Bailey-Martinez were also promoted to co-chairs and today the tension of that arrangement and the weight of Price's departure set a somber and emotional tone at the opening of the morning session.
Herbert Lord, Co-Chair
"The faiths were not kind to the commission and its chairman, Mr. David Price, was taken by the supreme being as he sees fit. Therefore we are left to continue the work that was begun by three, now being two."
After a moment of silence, co-chair Merlene Bailey-Martinez gave her own emotional.
Merlene Bailey-Martinez, Co-Chair
"He desired leadership and accountability of the government of Belize. He was prepared to give his life for this nation. Don't dishonor his memory by making the fruits of his labor come to no account."
And with tears rolling down her face, Bailey-Martinez spoke of other tensions that are pulling and pushing the commission.
Merlene Bailey-Martinez,
"If there is a concern that delaying the inquiry is politically motivated, maybe there is a concern that unduly hastening the inquiry is politically motivated. We are not here to play politics with the people of Belize. We are here to conduct this inquiry and it needs to be done properly and in good time. And these are not the comments of the commission, these are my comments, unless he is berated for my comments."
And with that being said, they moved on again to St. James and again with Jane Longsworth speaking specifically about legal fees and reserve fees that were waived for St. James and paid by DFC. How much? $4.56 million.
Jane Longsworth,
"I must instructed that St. James would not be paying, will not be taking up their portion of the expenses nor would they participate in the reserves. So I had to take them out of that arrangement. The other part of the instruction was that DFC in fact would be taking up that slack, not the Social Security."
Merlene Bailey-Martinez,
"You were told that by whom?"
Jane Longsworth,
"By. Mr. Gabb."
Merlene Bailey-Martinez,
"Mr. Gabb instructed you to recalculate."
Jane Longsworth,
"To do the recalculations."
Merlene Bailey-Martinez,
"Did Mr. Gabb do so verbally or in writing?"
Jane Longsworth,
"Verbally."
Merlene Bailey-Martinez,
"Were you told why?"
Jane Longsworth,
"No, not really. I was just told that he didn't agree to that or that kind of vague discussion, nothing definite. It was just he is not going to participate, St. James is not..."
Merlene Bailey-Martinez,
"He who?"
Jane Longsworth,
"Mr. Godfrey."
Herbert Lord,
"The Chairman of the DFC at the time was who?"
Jane Longsworth,
"Mr. Glen Godfrey."
Herbert Lord,
"And the person who was responsible or had shares in St. James National Building Society?"
Jane Longsworth,
"As far as I know it was Mr. Glen Godfrey. The Board did not inform us of any expenses or deferral of proceeds nor did we accept such particulars. 'We have communicated this matter to the CEO of DFC who indicated that he would discuss the matter with you. Thanks for your assistance in clearing up this matter promptly, Hector B. Knight."
Longsworth also discussed the loans that the DFC had to scramble to put together when Novelo's fell through.
Jane Longsworth,
"Having to take out Novelo's meant we had to put back in mortgages that would meet the criteria to bring back up the collateral, Novelo's $30 million. I don't remember what it is was at the time and we replaced that with about five hundred loans so that the collateral would be at the required level."
Merlene Bailey-Martinez,
"555 loans actually. It begs the question, how you were able to find that value of loans and you said that there were loans that the restrictions had been removed because the government had paid back on the first securitization to RBTT. Of course there is a follow up question to that, do you have any idea how this was paid?
Jane Longsworth,
"Yes. The government of Belize entered into a different arrangement with the RMB. I think it was a new bond issue for a certain value. Out of that proceed, from that new issue, these transactions would be paid off."
Merlene Bailey-Martinez,
"The government of Belize paid off the RMBTT, which is the Royal Merchant Bank of Trinidad and Tobago, for the first, the outstanding amounts of the first four tranches, A,B, C, D with a loan from the same institution.? It sounds very much like DFC. With a loan from the same institution, that is what you are saying?"
Jane Longsworth,
"Yes."
And from irregular transactions to irregular controls, Longsworth disclosed that many many times the Board of Directors without the benefit of full financials.
Jane Longsworth,
"I was told when Mr. Morris handed over that the financials were not to be submitted to the board with the notes."
Merlene Bailey-Martinez,
"That is the distinction."
Jane Longsworth,
"Definitely. I was told then that I was not to submit the notes."
Herbert Lord,
"So if I may summarize, the possibility existed that the board was operating without the hindsight of the notes being before them to tell them x, y, and z is out?"
Jane Longsworth,
"For a while."
Herbert Lord,
"Ad they made no requests as far as you are concerned?"
Jane Longsworth,
"As far as I know. For a while they didn't have the notes and for a while they did not have the financials."
Herbert Lord,
"But they still operated and continued to...isn't this almost what you would call the lifeline to know exactly what funds you have to deal with, how much you can give, how much you approve and if you are not doing this you are operating, to my mind, in the dark?"
Jane Longsworth,
"Well it tells you if you are working at a profit or a loss, if nothing else."
Merlene Bailey-Martinez,
"This is a financial institution, let's not forget that, and you are saying for an entire year the board did not receive financials."
Jane Longsworth,
"Right."
Secretary to the executive manager of operations Roselia Moore testified about other irregularities with corporate governance. She signed a back dated resolution validating a meeting where a $50 million loan from the Belize Bank had supposedly been approved. Thing is, she never attended that meeting.
Merlene Bailey-Martinez,
"Why did you sign for the 18th of March? On whose instructions?
Roselia Moore,
"The instructions of the CEO through the legal officer."
Merlene Bailey-Martinez,
"What did Mrs. Wiltshire say to you?"
Roselia Moore,
"She said Carmen, in the absence of the corporate secretary who at the time was on sick leave, Mr., Gabb says that you have to sign this document as acting corporate secretary. She said these documents are urgent and they need to go to the Belize Bank."
Herbert Lord,
"We are dealing with $50 million, that is a huge sum. Many people will never see that in their lifetime on one spot. But what I am saying, I am aware she was very careful but on this particular occasion, you were not present at whichever board meeting, purportedly or supposedly stated this resolution. Did she present to you anything or did you take it from a verbal instruction?"
Roselia Moore,
"She told me."
Herbert Lord,
"So if I am put it this way, you penned your signature to something, one you were not aware of, two which you have no knowledge and three for which there was no follow-up process to prove what they were asking you to sign for? But you took it because of the knowledge you have of the person who asked for it, that they were doing in all cases the correct thing."
Merlene Bailey-Martinez,
"Did you have any concerns about backdating the resolution?"
Rosalie Moore,
"Well since at the board meeting they had indicated that the loan had been approved previously but that it was never documented."
But the resolution refers to a special meeting which by all indications never happened and maybe that is why none of the senior managers wanted to confirm the minutes.
Rosalie Moore,
"I would take it to the Chairman personally and he would say, 'I will look at it later.' His office was open and I realized that nothing is coming back, I took it back and I went to my supervisor who was the CEO. Being part of management and attending board of directors' meetings you look at these people for guidance and his answer would be that he knew nothing about that. He didn't know then, he was learning now when I told him about it."
Merlene Bailey-Martinez,
"About what?"
Rosalie Moore,
"About the unconfirmed minutes."
Merlene Bailey-Martinez,
"And from your recollections of the minutes, did the Chairman ever sign those minutes?"
Rosalie Moore,
"No because he would always say that he would look at it."
Merlene Bailey-Martinez,
"This is Mr. Espejo at the time?"
Rosalie Moore,
Mr. Espejo."
She resigned in 2005 and those minutes were still not confirmed and why? Co-chair Lord had a reason.
Herbert Lord,
"That date 17th of March seems to be a fantasy or a phantom because there are no minutes purportedly that any of us can come across for that particular day."
Governor of the Central Bank Sydney Campbell testified in the afternoon session. The public hearings continue next week Wednesday, Thursday and Friday and they will be aired live on Channel 7.
