So far, we've shown you lengthy - often compelling - extracts of testimony given before the Senate Special Select Committee on Social Security. Tonight, for slightly broader context and more detailed analysis, we take a look at testimony given about a critical, but much-mystified piece of evidence. It's that letter which Glenn Godfrey and Troy Gabb can't remember, and Senate Chair Godwin Hulse just can't forget. It's piece of paper that presumes to take responsibility for over $17 million dollars and tonight we look back at the many vacillations over this single letter.
Jules Vasquez Reporting,
This letter is worth over $17 million. It's the difference between Social Security having to pay Glenn Godfrey's bad debts and DFC having to pay. But what does this famous letter say? Well Chairman of the Senate Select Subcommittee read it.
Senator Godwin Hulse,
"It said the Development Finance Corporation of Belize hereby undertakes to fully release and discharge Social Security Board from all liabilities arising directly or indirectly and including but not limited to payment obligation arising from the purchase of loans by the Social Security Board from St. James Building Society and in particular the loans in relation to Western Caribbean Properties and International Telecommunications Limited. Yours Truly Development Finance Corporation signed by the Chairman Mr. Godfrey."
And that's the original letter, clearly with the DFC letterhead and with Godfrey's signature at the bottom. But in a strange bout of amnesia both the CEO and the former Chairman say they did not know about it.
Senator Godwin Hulse,
"But on June 3rd of 2002 you did write a letter to Mrs. Garcia…"
Glenn Godfrey,
"I've heard of that letter, let me see it. The letter has been shown to me. I'll be honest with you I have no recollection of it."
Senator Godwin Hulse,
"Is it your signature?"
Glenn Godfrey,
"It appears to be my signature but you don't have an original?"
Senator Godwin Hulse,
"No that was supplied to me by Social Security."
Glenn Godfrey,
"There are many things that can be done with photocopies. I am not charging anybody but I'm saying I don't recall this letter and I've asked them to check with the DFC, and there's no record of this letter in the DFC. I really can't recall that letter."
Senator Godwin Hulse,
"Have you ever seen the original correspondence from the DFC?"
Troy Gabb,
"For what?"
Senator Godwin Hulse,
"For the same letter in question. The original of the letter you said you don't have a copy of."
Troy Gabb,
"No sir. No."
Senator Godwin Hulse,
"Would you like to see a copy of the original letter?"
Troy Gabb,
"Sure. This is the same copy we have. We had obtained a copy from SSB when learnt of it."
Senator Godwin Hulse,
"Looks like the type of letterhead from DFC and DFC's letter."
And while both the CEO and the Chairman, who signature appears at the bottom of the original cannot recall it, Social Security's lawyer says its real and binding and means DFC, not Social Security, has to use public funds to pay its former Chairman's private bad debts. And it has to pay because the projects that should gotten the money were never developed. That misrepresentation could have been caused because there was what one expert called a conflict of interest between Godfrey the Chairman of DFC - who signed off on the securitization and his private company, which received the $17 million.
Ian Macmillan, Fmr. Managing Dir. BIMCO
"You are looking at a very peculiar situation here where you have Mr. Godfrey as the Chairman of DFC and you have him also as the principal of St. James. There would have been a conflict of interest issue."
Senator Richard "Dickie" Bradley,
"Was there a conflict of interest by your being at the DFC and there is some dealings with St. James' financial matters?
Glenn Godfrey,
"There could only be a conflict of interest if you're hiding something. If you come to me and you know I represent the Chairman Mr. Hulse and you also want me to represent you knowing that I represent Mr. Hulse, I can easily clear that by telling Mr. Hulse I'll represent Mr. Bradley and will you have a problem with it. Conflict of interest arises when it is underhanded, when it is not disclosed. But that was never the case. Everybody knew of my involvement with St. James. Everybody knew of my involvement with DFC. I don't recall that there was anytime when they had a conflicting interest between DFC and St. James."
But not only did Godfrey not declare a conflict of interest, he signed unto a document which said that there was not. Hulse read warranty 43 of the document, which stressed that point.
Senator Godwin Hulse,
"No mortgager is an employee, officer, director, or shareholder, or is related to an employee, officer, or director of the seller."
Godfrey - who again signed this document as DFC Chairman was a shareholder, director and a principal of the companies that rceived the money. As the expert testified it had all the bearings of a conflict but again Gabb and Godfrey - who both signed the document - say they never saw clause #43.
Glenn Godfrey,
"There was no way I could have read that entire thing front to back. I was relying on their due diligence to tell me that I could sign that. Everybody does that. Nobody plows through that."
Hopefully he was not relying on the due diligence of his CEO and General Manager.
Senator Godwin Hulse,
"Did you read any of these documents before you signed? Any of the three I mentioned?
Troy Gabb,
"To the best of my knowledge I can't recall if I went throughout them in details. To the best of my knowledge no."
Senator Godwin Hulse,
"I find it difficult that at the most senior level of the DFC, as well as the most senior level of the Social Security, that persons sit before me and say I penned agreement which I did not read. And to my mind that is one of the most fundamental weaknesses. Would you agree?"
Troy Gabb,
"What I would say Mr. Chairman is that, as I mentioned to you earlier, I have looked at those documents. I can't recall in any great detail, at this point in time, how detailed I read it but I am sure that I looked it over and I was basically comfortable and advised accordingly to go ahead and endorse them."
It's a dilemma that maybe Godfrey answered best.
Glenn Godfrey,
"Everybody is human and everybody makes mistakes."
A mistake will cost Social Security contributors or taxpayers $17 plus million - apparently acceptable losses for those who sailed the seas of high finance, but it is an unbearable burden for an overtaxed population.
Apart from signing on the warranties, evidence presented by the committee also shows that Godfrey, Gabb and board member Bob Bouhnara also signed off on a closing certificate which says "the undersigned certify that to the best of our knowledge that the representations and warranties...are true and correct in all material respects....the placement memorandum does not contain any untrue statement of material fact or omit to mention any material fact." Pretty comprehensive and next week we'll revisit more testimony to tell you where those sworn against misrepresentations occurred.
