Is there or is there not a government guarantee for the $33 million Universal debt? Well, two Ministers have gone on record to say there is, but two leading public officials have indicated that such a thing may not exist. One month ago, Senator Godwin Hulse told the Senate that there is only a DFC guarantee for that debt, not a government guarantee. And then, the Association of Concerned Belizeans asked Financial Secretary Dr. Carla Barnett to disclose the government guarantee under the Freedom of Information Act. Barnett said that she checked and couldn't find one.
But now the Ombudsman says that there is a GOB guarantee. Ombudsman Paul Rodriguez has written to the ACB confirming that he has seen the government guarantee. But while he has seen it, if government has its way, the ACB will not, and neither will you.
Rodriguez told 7NEWS that he is satisfied that it is legitimately classifiable as what's called "a privileged document," meaning that it cannot be made public. Rodriguez says those are the terms of the agreement which requires that it should not be released without the consent of the companies that are party to it.
Of course this raises two issues: first how is it that the Financial Secretary was not aware of such a guarantee? And second, how is it that a guarantee for $33 million to be paid with public funds or swapped for public assets - namely land on Northern Ambergris Caye - cannot be disclosed to the public?
Unofficial indications are that the ACB may choose to challenge that position in court. And while we wait and see how that goes, the issue of the Universal take-over has gone from wait and see to lingering uncertainty. The plans, so eagerly advanced in February are now on extended hold. Best indications are that government may not be ready to confront the political costs associated with an 8,000 acre land swap and a controversial guarantee.
And while government can hem and haw, the Belize Bank may not have that luxury. According to members of the Association of Concerned Belizeans, members who also happen to be bankers, there may be some urgency for the Belize Bank which is carrying around an expensive and non performing debt on its books.
Steve Duncan, ACB Trustee
"Generally how it works for banks is that you have to pass certain reserves, make certain provisions for any debt that is going bad and that is spelt out in the Banking and Financial Institutions Act."
Glen Ysaguierre, ACB Trustee
"The BFIA have certain levels of reserves that you have to pass on non-performing debt which it first starts with the reversal of interest accrued over the last ninety days because once a debt goes past ninety days non-performing, it becomes classified and it also requires you to pass non-loss reserves to the extent of the unsecured portion of that debt. And even a percentage of the secured on the basis that the value of your security may not be realized if you have to liquidate. Certainly to have a loan of that magnitude to fail on you and to be non-performing does affect your bottom line because you have to recognize that loss before you can recognize profits and pay dividends and that kind of stuff so yes it is an issue for any financial institution to be in that particular situation."
Both men stressed that they were speaking generally about the Banking and Financial Institutions Act and did not know the specifics of the commercial arrangement between Universal and the Belize Bank.
