Last week outgoing BTL owner Michael Ashcroft called the concessions to the company's new owner Jeffrey Prosser "exceptional" and "not in the public interest."
Well he wasn't kidding, today, the opposition released a document called the "BTL acquisition agreement" which outlines what the UDP leader Dean Barrow calls an obscene package of concessions and sweeteners given to Prosser and ICC. Here's an outline of what's in the contract.
Flanked by area representatives, the opposition leader outlined a contract which makes lavish concessions and all of them will hurt either consumers or government funds.
Hon. Dean Barrow, UDP Leader
"This deal in our view stand to high heaven from the start. It was conceived in error and it was compounded in terms of the manner of its implementation."
In brief the concessions are:
- A guaranteed 15% rate of return after profits
- He will pay not the 15% tax on dividends
- He will not pay the stamp duty of 5.4 million dollars on the sale
- He will get an interconnection rate that takes into account his 15% rate of return
- Government will cover, that means pay, any liability that results from A ruling for a refund or other liabilities against GOB
- A tax-free management contract for ICC's executives
- Any disputes against BTL will go not the Supreme Court, but uncitral - the United Nations commission on international trade law in Canada.
By any assessment it's a lavish assortment of concessions - and the leader of the opposition weighed in mightily against them. First the guaranteed rate of return.
Hon. Dean Barrow,
"In fixing the rates that we must pay, the PUC will always have to ensure that the new BTL makes a return on capital investment of 15% after taxes. You know we heard that Prosser was insisting, and I watched what he said on the television that he would re-negotiate the 19% business tax that BTL pays. But does it matter? Because he is guaranteed a rate of return and government is covenant in here to arrange for the PUC in setting rates to set those rates on a basis that will guarantee the new owners of BTL a 15% annum rate of return on capital investments after tax. Altogether what they are buying from Carlisle and the various government and government related entities with what they want to buy from the individual shareholders will amount to a capital investment of around $200 million. 15% per annum is something like $30 million - I gather than in the best or worst days of Lord Ashcroft, BTL never made that kind of money."
"This agreement and in particular government's commitment to give these people the 15% rate of return is open ended or if I can put it another way - it seems to last for eternity. There is no cap on it. So this 15% will be with us always."
And while the profits should outdo Ashcroft, so will the interconnection deal.
Hon. Dean Barrow,
"And it gives to Prosser, interconnectivity on a basis and in accordance with a formula which would assuredly drive the cost of local telephone calls up. I can't stress too much that this is after government said that it's whole reason for intervening was to take care of this interconnection problem in a manner far more favorable than what Ashcroft was trying to get. But this turns right around and it gives to Prosser interconnection on a basis that instead of being far more favorable is far worst."
And as for the $60 million refund which consumer advocates are trying to recover for over two years of illegally charged rates - well an indemnity clause puts that problem in government's lap.
Hon. Dean Barrow,
"Well that's gone to bed now. Because if that were to be pursued and if it were to be found that consumers are due any reimbursement - it is the government of Belize that will have to pay. You want to bet me that that is the last you'll hear of that case?"
And as for this case - well the agreement says that if the opposition or anyone else wants to challenge it - they have to get on a plane.
Hon. Dean Barrow,
"All disputes arising under this agreement, whether contractual or not, shall be finally settled under the United Nations Commission on International Trade Law in Ontario, Canada. So we can't even appeal to our own courts."
But there should be nothing to go to court about - but according to this agreement, which says, it should remain secret.
Hon. Dean Barrow,
"The parties undertake that subject to the laws of Belize, the terms of this agreement and all information gathered to comply with the terms and conditions shall be and shall remain confidential to the parties. Didn't the Prime Minister say that at some future time he would disclose the agreement?"
With all this and supposedly more in what Barrow calls secret side agreement - in the view of the opposition this deal is the worst ever.
Hon. Dean Barrow,
"This clearly is perhaps the worst agreement, the worst deal that this government has ever entered into and we know that there is a history of bad deals. So for me to say that gives you some indication of exactly how strongly the UDP feels about this."
But if its is such a bad deal that sells out consumers interests -why did government sign it - well the opposition blames in on a poor negotiating setup.
Hon. Dean Barrow,
"Government then at best was in a position of extreme weakness vis-à-vis Prosser/Ramphal/ICC. Government had placed itself in that position. You don't buy shares with our money knowing that you then put yourself under pressure to resell as soon as possible and resell not knowing the concessions you will have to make. So it is a completely idiotic, and not necessarily of the village type of idiocy, but it is idiotic for government to have done what it did. But that it was also corrupt is a conviction that the UDP also firmly holds."
A disturbing allegation - and one the opposition will continue to make in every public forum it can, unless government can put out its own spin on the sale and convince a wary public the BTL buyout was not a sellout of consumer interests.
The opposition maintains that if elected it will investigate the sale and reverse it if the negotiations were not above board. It says it will also apply a windfall tax on Prosser. Former Prime Minister Manuel Esquivel also noted that the sale includes shares, which were the pensions schemes for the social security board and the central bank. That means divesting holdings in a company whose returns are certain to increase with the guaranteed rate of return, and opting instead to bank these for less about 7% when in BTL they could fetch at least 30%.