Earlier on we showed the excerpts of former DFC Deputy Chair David Courtenay testifying before the DFC Commission of Inquiry. And while Courtenay did not accept that there had been any wrongdoing at the DFC, this afternoon, former Financial Secretary Hugh McSweaney said that something had gone very wrong with the corporation. He couldn't say who caused it, or what was his role, but in his words, "it was awful." But according to the Commissioners, what was awful to them was how as Financial Secretary he did not know that government was paying Abdul Hamze $9 million for a property - Mahogany Heights to be specific - for which it had no title. McSweaney was deputy Financial Secretary and Financial Secretary at key points in the transaction, but says he was not aware that this $9 million transaction was riddled with problems - he says maybe legal counsel Gian Ghandi knew, but he didn't.
Merlene Bailey-Martinez,
"What you are saying now is that information would have been emanating from out of your Ministry for which you had responsibility for, for a project of this magnitude and you are saying that you are unaware of the problem associated with it."
Hugh McSweaney, Former Financial Secretary
"No ma'am I am not saying that. My question to you as to whether or not I was informed is only in the context of this particular subject because I was sitting in the driver's seat of the Ministry of Finance. But I do not proclaim to know everything and I do not proclaim that legal counsel Mr. Ghandi in the Ministry of Finance might not do something authorized by the Minister and I would be informed afterwards, that's entirely possible."
Merlene Bailey-Martinez,
"That's flogging a dead horse if you say you did not know..."
Hugh McSweaney,
"Except that your statements insinuate that here I am, sitting as Financial Secretary and don't know these big things."
Merlene Bailey-Martinez,
"This is not a minor matter Mr. McSweaney, this is a $9.5 million transaction."
Herbert Lord,
"Let's assume you were out of the country."
Hugh McSweaney,
"And I saying it would be handled by the legal counsel in the Ministry of Finance. We did a good a job. We made some mistakes, we did a good job."
Merlene Bailey-Martinez,
"In what way did you do a good job sir?"
Hugh McSweaney,
"In what way? As far as I am concerned the only thing you can tell me
that I might have made an oversight in the five hundred or so millions, I would say is the $9 million to Hamze."
Merlene Bailey-Martinez,
"And you are talking that you did a pretty good job at the DFC? What is the position with the DFC now Mr. McSweaney?"
Hugh McSweaney,
"Madam Chairman, I was not in the management of DFC. I had a director there who you suggested knew about it and might have told me about it but I can assure he did not tell me about that."
Merlene Bailey-Martinez,
"With relation to DFC, what were the mistakes made?"
Hugh McSweaney,
"The result was awful."
Merlene Bailey-Martinez,
"What were the mistakes made?"
Hugh McSweaney,
"I was not that involved in DFC to be able to itemize them but this Commission knows about all, I know about the bad loans if that is what you want to talk about. But I wasn't involved in it so I can't relate to you."
Merlene Bailey-Martinez,
"But then you cannot also say that we did a pretty good job at the DFC. We can't let you get away with that or we wouldn't be here today."
Hugh McSweaney,
"The government of Belize's problem was a cash problem. As far as I am concerned we couldn't do anything to stop the DFC train."
Merlene Bailey-Martinez,
"You couldn't?"
Hugh McSweaney,
"Even though we tried."
Merlene Bailey-Martinez,
"In what way did you try?"
Herbert Lord,
"You're saying it was a runaway train?"
Merlene Bailey-Martinez,
"Could you let him answer."
Hugh McSweaney,
"Well I would not mention that and I don't want you to put words in my mouth."
McSweaney also discussed the time when government incurred a $9 million pre-payment penalty on one of its loans. It's one of the worse financial transactions government has ever gotten into, and it was so bad that when it was done, McSweaney said he needed a hug.
Merlene Bailey-Martinez,
"With prepayment penalty it is $9.7 million."
Hugh McSweaney,
"I know about that. It was in fact, he came to my desk to deal with that and I really had to get moral support when I had to deal with that because it was too high for me to deal with on my own."
[Everyone Laughing]
Herbert Lord,
"In the securitization programs, and it came to my notice, that we were buying at some expensive rates, because we are dealing with foreign currency, am I correct, we exchange rates."
Hugh McSweaney,
"Yeah."
Herbert Lord,
"And you have just answered the question in an indirect way. When we wanted to do this buyout there was a penalty involved."
Hugh McSweaney,
"That's basically what sends it up."
Herbert Lord,
"And that sent it up so you needed the moral support? And then plus you had to look at the exchange rate to pay it back at."
Hugh McSweaney,
"Of course there is also a multiplier effect out there."
Herbert Lord,
"I am aware of that."
Hugh McSweaney,
"Because the more your country is financial dilemma, the higher they are going to charge."
Herbert Lord,
"And the bond that was involved?"
Hugh McSweaney,
"In terms of...interest."
Herbert Lord,
"So we were paying exorbitantly for something we borrowed very cheaply."
Hugh McSweaney,
"Commissioners we had little choice. We resolve government's finances to do anything else."
Merlene Bailey-Martinez,
"Who gave you the moral support by the way?"
Hugh McSweaney,
"Is it in context" [Laughter] "Only if you tell me it is context I can answer."
Merlene Bailey-Martinez,
"And who made you this lame duck?"
Hugh McSweaney,
"I think you know the answer to that."
McSweaney served as Fin Sec until October of 2004. His departure from the Ministry of Finance came shortly after the man who had handpicked him for the job, Ralph Fonseca lost the Finance Ministry in the G-7 shake-up... David Novelo was supposed to have followed McSweaney on the stand this afternoon, but there was no time, so he has been rescheduled.
