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Belize ~ Analysis of settlement between G.O.B. and Ashcroft alliance over B.T.L.

Posted: Thursday, September 17, 2015. 3:49 pm CST.

Thursday, September 17th, 2015. By Richard Harrison: In 2009, with follow up in 2011, the Government of Belize took by force, without compensation, the shares of the Ashcroft Alliance in Belize Telemedia Ltd (B.T.L.), which at the time totaled 94.2% of the 50,000,000 shares. This was part of its thrust to nationalize utility companies using a patriotism justification.

The forced nationalization of B.T.L., B.E.L. and other entities such as the ship registry, sent a bad signal to genuine domestic and foreign investors, giving Belize a black eye and causing a decline in inflows of foreign direct investments, as well as slow down in domestic investments and liquidity piling up in the commercial banks.

“We’re paying the $97,400,000.00 which is where the award of the tribunal with respect to the original 22.5Million dollar US loan to BTL stands. And we’re paying with respect to the compensation to the acquisition of shares, 65,000,300 Belize Dollars. All together, a total of 162,700,000 Belize Dollars” ~ Hon. Dean Barrow, Prime Minister

As part of the settlement, Government will make a partial compensation payment to Dunkeld at the rate of US$0.72 per share for 34,107,117 shares totaling US$24,557.12; and another partial payment to the Trustees of the BTL Employees Trust also at US$0.72 per share for 11,092,844 shares totaling US$7,986,848.

When the Arbitration Tribunal determines the final award amount, the Government will then make a final payment of compensation over a period of time, based on that arbitration award less any amounts already paid by the Government. Government says that financing for initial partial payments to Dunkeld and to the BTL Employees Trust will come from monies held on deposit arising from the sale of BTL shares in 2010.

“I was greatly helped in terms of formulating my own position, my thoughts, my stances by the Financial Secretary, by Ambassador Mark Espat of Hallmark. And of course by Net, who has tremendous institutional memory and knows this issues back and forth. But the actual negotiations, face to face negotiations, email negotiations were done just between Ashcroft and me.” ~ Hon. Dean Barrow, Minister of Finance

Financing for the settlement with the British Caribbean Bank will come from dividends and contribution due from BTL; from the sale of additional Treasury Notes; and from PetroCaribe funds.

Belize Telemedia Ltd annual reports show the following:

2015 Total Equity $265.9m Net Profit $17.5m Tax $15.4m

2014 Total Equity $260.4m Net Profit $19.6m Tax $16.2m

2013 Total Equity $253.2m Net Profit $21.1m Tax $16.6m

2012 Total Equity $244.0m Net Profit $26.5m Tax $17.4m

2011 Total Equity $257.9m Net Profit $31.3m Tax $21.3m

2010 Total Equity $238.1m/$165.9m Net Profit $22.7m Tax $28.4m

2009 Total Equity $143.9m/$176.8m Net Profit $19.7m Tax N/A

2008 Total Equity $239.3m Net Profits $35.2m Tax N/A


a. The total equity reported for 2009 and 2010 are different depending on whether the 2009, 2010 or 2011 annual report is referenced. The variation between the 2009 total equity is $176.8m minus $143.9m or $32.9m. The variation between the 2010 total equity is $238.1m minus $165.9m or $72.2m. Both numbers offered for 2009 are far below the 2008 figure of $239.3m. This is probably reflecting the British Caribbean Bank loan of US$22.5m….or when the nationalized BTL was trying to justify a lower figure of what compensation should have been. Looks like creative accounting without cleaning up what is published in its website under annual reports.

b. Net profits have been declining consistently since nationalization, from $35.2m in 2008 before nationalization to $15.4m in this year’s annual report….a decline of almost $20m….or average drop of $4m per year. At this rate the company can be expected to turn ZERO net profit within the next 4-5 years. This is probably why the settlement did not include any shares accepted back by the original owners….because they do not want any shares….the Government of Belize is now holding a “white elephant” in its hands.

c. The amount of taxes paid to government by B.T.L. has declined from $28.4m in 2010 to only $15.4m this past year…..a decline of $13m, and falling. At this rate of decline of average $1.63m per year, this company will likely pay ZERO taxes to government by the year 2023.

d. During the years 2009 to 2015, net profits and taxes amounted to $273.7m. Total equity increased from $239.3m to $265.9m, for capital gains of $26.6m. Thus the government total take over the period since 2009 has been $300.3m. We do not yet know what is the total that will be paid out after the arbitration tribunal, but today they are paying out $162.7m towards an asset with book value of $265.9m

e. With total equity of $265.9m and 50,000,000 shares issued, each share has current book value of $5.32 per share or US$2.66. The partial compensation of US$0.72 per share as per the settlement agreement would mean that US$1.94 per share will remain outstanding (if the settlement is based on current book value) and that the balance owed after the arbitration tribunal ruling should be around US$87.69m or BZ$175.4m on the 45,199,961 shares owned by the Ashcroft Alliance. In this scenario, all the capital gains of $26.6m would accrue to Ashcroft.

f. If the current book value is used, and all capital gains go to Ashcroft, then the total take by government since the nationalization, inclusive of taxes, would only be $273.7m. This would be the marker of whether government gains or loses in this nationalization charade. Hence, after this first BZ$162.7m is paid, the arbitration tribunal balance should not exceed BZ$111m or US$55.5m, provided that the loan of US$22.5m was included in the balance sheet. If the tribunal balance exceeds US$55.5m, there will be a net gain for Ashcroft…..a balance below this level would be a loss for his alliance.


a. This settlement needed to be reached. Belize has already lost too much in the way of foreign investments and relationships, appearing more like trending towards a market-unfriendly authoritarian style ala Hugo Chavez than a free-enterprise-friendly democratic state.

b. The settlement should be fair, and meet with the conditions of the judgments reached by the courts or dispute settlement forums to which we have subjected ourselves in accordance with our treaties. Any settlement should be aimed at termination of differences and with an objective of reaching a working position with any and all existing and prospective investors in Belize, as long as they are operating within our laws. If our laws need to be amended, especially with regards to fair and balanced taxation and competition, and transparent accounting standards, then Belize should move expeditiously to make appropriate amendments.

c. There should be no thumbing of noses at judgments made by foreign courts, all of them will have to be complied with at some point, and it only gets more expensive to seek to delay settlement. The kind of statement by the Prime Minister, “They have gone to the US District Court in Washington, and in fact I think now to the Court of Appeal and gotten the US Courts to say NO, we don’t care what the CCJ says, the award is enforceable. My strength, the advantage that this country has is that we do not have any assets abroad, so you can get all the enforcement orders you wish from courts abroad. What are you going to attach? We have nothing” looks more like a statement by a spoiled child than of a responsible leader attempting to build back the integrity of Belize and bring genuine investors back to our table. The fact that you do not have assets abroad is no reason to not pay your bills abroad. Belize must be a country where the rule of law prevails, and the Government should set the example of upholding the law, including those to which we MUST abide according to our treaties. Belize does not only have to get investments flowing again….it must build back relationships….and lasting bonafide relationships among free people are based largely on respect and trust…and abiding by the laws.

d. The decision by the Government of Belize to nationalize private companies without compensation and by force was ill-advised and wrong, especially given Belize’s history and outlook among free democratic states. We have paid a very high price for this arrogant extravagance and it is about time we acknowledge the error of our ways and move to make corrections….better late than never. There are many injured parties in Belize who do not have deep pockets to take and endure the defense of their rights to the highest courts, but a government appears to foreigners only as good as it honors its own citizens rights….so honoring the deep-pocket foreign investors rights does not fix the problem for Belize….Belize Government has to make good with its own domestic investors that have been injured by their ill-advised and wrong decisions. They can start with the case of injury to Verena Foods.

e. The Ashcroft Alliance will have been afforded a most desirable exit route and being unsaddled from the “white elephant” being created at B.T.L. They perhaps always only wanted the very profitable new-technology-based wireless phone business (and not the old-technology-based, high-operating-cost, land-line business), and the Government of Belize may have knowingly given them the golden handshake….best-friends in private, worse-enemy in public.

The views expressed in this article are those of the writer and not necessarily those of the Belize Media Group.

This article was written by Richard Harrison, Belizean investor in production and services businesses in Belize. He holds a Masters in Business Administration degree from Lancaster University.


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