| | Mark Espat's Speech to the House: June 17, 2005
(see my new remarks below)
Madam Speaker,
This is the single largest privatization of a public asset in the history of this country. This is a
matter of historical importance.
I start with a quote from a US Justice, Mr. Brandeis, who wrote: “the government is the potent, the
omnipresent teacher. For good or ill it teaches the whole people by its example. Crime is contagious.
If the government becomes the law breaker or the law bender, it breeds contempt for laws, it invites
every man to become a law unto to himself…”
It is important, in commenting on this Resolution regarding government’s disposal of its 37.5%
holding in BTL, to look at the company’s history and to speak frankly about how we got to this point. This is a
time for plain speaking.
For 15 years now, the Carlisle Group of companies, led by Mr. Michael Ashcroft and sporting various
disguises such as the Belize Bank, the Belize Holdings and more recently, Mercury Investments, Pillow Talk and
E-Com, has pursued a scorched earth campaign to gain control of Belize’s most profitable public company – BTL.
Throughout this conspiracy to control and suck dry BTL and its Belizean consumers, it would appear that
this government has been an all too willing accomplice. As it has appeared to the Belizean people, the
relationship between the conspirator and his accomplice is a “Master-Puppet” relationship.
The events of the past two years, starting when the government signed a secret memorandum of
understanding to buyout the Carlisle 52% shareholding of BTL in October 2003, have proven beyond a reasonable
doubt, just how costly and how wrong this incestuous relationship has been. It has damaged beyond
belief our Party’s grassroots credentials, our government’s credibility and our country’s reputation. The
so-called investment climate at home and abroad has been sullied. This is a sad story, a tragedy of unbridled
greed, of reckless disregard for the Belizean consumers and voters, a tale of the free market system at its
worse.
The BTL story chronicles the quest on behalf of Mr. Ashcroft to become “a permitted person” –
permitted to illegally hold more than 25% of the company, permitted to extract tens of millions in management fees
and deposits, permitted to withhold dividends from the hundreds of small Belizean shareholders,
permitted to marginalize the Belizean management and staff, permitted to gouge the consumers, permitted to
enjoy a monopoly, then permitted to obstruct interconnectivity and competition, permitted to avoid taxes,
permitted to blur the line between onshore and offshore, permitted in short to act against the national
interest of Belize.
It is absolutely clear to me and it was made absolutely clear at the time BTL was first
incorporated in its 1988 Prospectus for the Sale of Shares that no person should hold more than 25%;
the public Prospectus declared:
“In order to prevent undue influence in the affairs of the Company as the telecommunications operator in
Belize, the Articles of Association contain provisions to limit shareholdings. With the exception of
Permitted Persons, namely, a Minister of the
Government, any person acting on the written authority of the Government of Belize, a trustee of any
employee share scheme and the holder of the “B” shares, no person shall be allowed to retain more than 25%
of the voting capital of the Company.”
Article 36 of BTL is actually entitled “Limitations on Shareholding” and this article deals extensively
with the procedures that the Board shall employ to ensure that no one owns more than 25%. The article has
some 16 sections outlining in detail the Board’s obligations to dispose of any shares held by a
person who exceeds the 25% limit. Articles 8 and 38(G) reinforce this limitation.
Why then, has this government conspired with Mr. Ashcroft to defy, circumvent and undermine this
in-built protection for the company, its shareholders, its customers and its management and staff? I
want to describe ten scenes in this tragedy where Mr. Ashcroft has been the beneficiary of this government’s
collusion:
Scene 1: In 1990, the Government sold to Belize Holdings a 10% stake in BTL, a stake then held by
the SSB. These shares were sold at cost, giving an immediate premium to Carlisle’s Belize Holdings,
given BTL’s profitability and its monopoly status. Why were these shares not sold to Belizeans?
Scene 2: In 1992, Belize Holdings was allowed to acquire another 14% of BTL from the Government of
Belize. Again, these shares were not made available to
Belizeans. Thus, Mr. Ashcroft's stake in BTL, with the help of the government, stood at 24.9% in 1992.
Scene 3: The day before the General Elections in June 1993, the Minister of Finance of the PUP
government wrote to the BTL Board declaring BHI/Carlisle to be a “permitted person,” attempting to allow them to
hold more than 25%. The day before the General Elections!
For the period between 1993 and 1998, Carlisle was not allowed to increase its holdings above the 25%
limit. So crystal clear are the BTL company rules that the famously litigious Mr.
Ashcroft dared not petition any Court to interpret this restriction or for refusing to
transfer the shares that they had purchased in excess of the 25%. Carlisle knew full well, then, as
they do now, that they were not to own any more than 25%.
Scene 4: Shortly after the PUP government returned to office, Carlisle resurrected the “permitted
person” letter and the new BTL Board accepted Carlisle’s right to hold more than 25%. Eventually, as was Mr.
Ashcroft's plan all along, Carlisle, along with MCI, controlled more than 50% of BTL’s shares,
controlled BTL’s Board and BTL’s bank accounts. Belize had essentially lost control of BTL. The company had
been hijacked with the consent and collaboration of the Government of Belize.
Scene 5: The collusion continued: in 2001, the Government endorsed and facilitated the sale of
MCI’s 25% shareholding to Carlisle. The Government had the chance to ensure that these valuable shares were
sold to Belizeans; instead it again colluded with Carlisle. In 2002, in fact, the Social Security
Board (SSB) actually teamed up with Carlisle to defeat the small Belizean shareholders and to give
Carlisle control of the Board. Imagine that.
Scene 6: In April 2004, Government bought Carlisle’s shares at a premium of $104 million plus another
$10 million for controlling interests. It did so in the interest of competition, it said, even though the
group buying, ICC/Jeffery Prosser clearly
expressed its public contempt for competition.
This purchase by the GOB was done with a secret loan that did not even have the approval of this
House. And secretly again, GOB colluded in a buy-back agreement that would force BTL back to the clutches of
Carlisle if the GOB did not sell the shares specifically to its new knight in shining armor,
ICC and Jeffery Prosser.
So, in essence, GOB agreed that Belizeans would not be eligible to purchase these shares in BTL, the
same shares that the GOB had used the good name and credit of the people of Belize to purchase.
Scene 7: The Government then gave on the merit of a mere promissory note, the 52% holding in BTL to
ICC/Prosser and sold them the SSB shares and all other government shares in BTL to ICC/Prosser, giving
that company 84% of BTL, again in defiance of the company’s rules. SSB’s most lucrative investment ever, its
BTL shares was sold because the “telecommunications sector was now not considered a viable long-term
investment.” This statement would be laughable if not so misleading, since SSB at the very same time was
secretly exposing itself to some $43 million in Intelco bad debt.
Scene 8: In its zeal to transfer every possible share to another foreign interest, this corporate
raider, ICC/Jeffery Prosser, GOB even transferred, unlawfully the “B” shares held in trusts by the teachers and
public service unions.
The Government’s April Fool’s Day, April 1, 2004 Press Release is a classic, in the Goebels sense,
that must be entered into the records of this House.
This is a press release dated April 1, 2004, from the Government Press Office on behalf of the Ministry
of Finance and Home Affairs entitled “Innovative Communications Corporation Buys 84% of BTL:
“Innovative Communications Corporation received the shareholding certificates amounting to 84% of the
total shares of the Belize Telecommunications Ltd. in a brief ceremony this afternoon at the Central
Bank…ICC paid US$89,729,838.00 for the Government shares in BTL and its Chairman Mr. Jeffery J.
Prosser said that by the time they would have bought the
holdings of other private shareholders, ICC would have spent approximately US$105,000,000, making this
the single largest purchase of an entity in Belize….Acting Minister of Finance Jose Coye handed over the
instrument of transfer and the share certificates of the original Carlisle Holdings, and the
instruments of transfer and share certificates of all the government entities to Mr. Jeffery Prosser. ‘With this
transfer of the shares, we are now about to restore stability to the industry and initiate the process for
meaningful competition that will ultimately benefit the Belizean consumers. Indeed, this has always
been the primary objective of the Government of Belize in the telecommunications industry,’ said Minister
Coye.”
And, in the mother of all blunders, GOB gave away to ICC/Prosser its Golden Share, a share that was
created to protect the national interests in Section 11(A) of BTL’s articles. Even His
Lordship, the Chief Justice of Belize, in interpreting the BTL company rules in April of this year, appears incredulous at this
GOB decision:
Paragraph 32: “It is manifest, however, from a close reading of the provisions of the Articles on the
Special Share or its holder, that it was the Government of Belize that was clearly
contemplated to be the holder of this Special Share or some other person, acting on the written authority of the
Government of Belize.”
Paragraph 34: “Quite how this inestimable piece of Special Share…came to be out of the possession of
the Government of Belize may be an unsolvable mystery, and it is not for this Court to speculate.”
Scene 9: But the master-puppet relationship between Mr. Ashcroft and the GOB did not end there.
On March 23, 2005, after innumerable defaults by ICC/Jeffery Prosser, and the shares having reverted
to GOB’s control, the Government chose, no, not to sell the shares to Belizeans, but to again return 15%
of the shares to Carlisle’s E-Com, at a loss of some $3.5 million to the Belizean taxpayer. In addition to
selling back the shares to Carlisle, the GOB abandoned its attempt to collect some $17 million
in business taxes owed by Carlisle’s Belize
Bank.
Scene 10: Now today, the Government is proposing to allow Mr. Ashcroft to grab another 12% of BTL, to
make available, without any details, 20% of BTL shares to the management and staff and to offer the
pittance of 5% to Belizeans. That would mean that the same Carlisle, the very same one that on December 11,
2003 said its business plan was to divest itself of all BTL shares, would own 37.5% of BTL and control the
company’s Board of Directors. And, since it is “financing” the 20% for the management and staff,
itwill be able to retake this 20% at any time it chooses by simply not declaring any BTL dividends,
these dividends being the source of repayment for the 20% shareholding.
It took Carlisle 15 years, from 1987 to 2001 to gain 52% interest in BTL.
On April 1, 2004, Carlisle cashed out its interest – it supposedly had zero BTL shares (at least that
is what the GOB said to ICC/Prosser). It has taken Mr. Ashcroft just 15 months to
retake 37% and I am certain it won’t be long before he grabs ICC’s 30% and the 20% now being made available to
the management and staff. Carlisle will end up with far more than the 52% of BTL it sold to the GOB
on April 1, 2004.
Such is the game of musical chairs being played. But make no mistake about it – only one person wins
every time BTL’s shares change hands. Mr. Ashcroft wins. Only one people lose – the Belizean people. That
is the purpose of this game.
GOB sells BTL shares at a discount – Mr. Ashcroft wins.
GOB buys BTL shares at a premium – Mr. Ashcroft wins again.
GOB sells BTL shares at a discount – Mr. Ashcroft wins yet again.
Ashcroft, the Master and GOB, the puppet…
Did you know Madam Speaker that this Carlisle is a company with revenues of US $1.38 billion, it has
full and part time employees numbering 37,000 in the US, UK and Ireland. Its operating income for the year
ending March 31, 2005 was US$33.6 million; but listen to this: US$30.9 million of that amount, 92% of it,
came from its Financial Services Division – that is the Belize Bank and its various affiliates. 92% of
the operating income of this touted multinational corporation comes from Belize. No wonder their
lawyers can boast of being “well paid.”
But the more salient point here is that Mr.Ashcroft needs Belize and not the other way around.
So then, is the absurdity of this Master-Puppet relationship not clear?
In the old days, our people didn’t have any money, so the pirates and the settlers would take our land,
our logwood, our mahogany, and our chicle. Now they allow us to work, so they can grab and export our money
and the profits of our best companies.
Madam Speaker, how could any Representative of the people of Belize support this resolution, one
that so nakedly betrays the national interest and the interests of the Belizean consumers, betrays the
Belizean management and staff of BTL and their families, betrays the remaining Belizean small
shareholders and betrays potential Belizean shareholders?
This government, we are to believe, having been able to raise an estimated $2 billion plus in debt in
the last six years is suddenly unable to raise US $40 million to facilitate ownership of Belizeans, of
the management and staff of BTL, so that this 37% could remain in the hands of Belizeans? The PM’s
address on March 23, 2005, when he announced the 15% sale to Carlisle gave Belizeans hope. This is what he
said:
“…Our strategic objective is to divest ourselves completely of those shares in order that
ownership and control of BTL can be placed in the hands of Belizeans….Very importantly, the Carlisle Group
has given a written undertaking that they will not seek any further shareholding in BTL….This now clears
the path for the managers and employees of BTL, and
other interested Belizeans to purchase the remaining 37% of the shares held by the government, as well as to
negotiate with the support of the government, for the purchase of the 30% held by the ICC/Belize
Telecom Group. These negotiations are in fact already underway. With this opportunity, it is therefore
now of critical importance that we as a people come together and work together to re-Belizeanize
BTL….The government, the workers of BTL, the shareholders of BTL and other Belizeans must now work together to
resolve the outstanding issues of BTL in order to ensure that at the end of the day, we have a
solution that will see BTL restored as a national Belizean asset, owned, operated and managed by Belizeans.
I have no doubt that we will achieve this…”
Are we to believe now that the government did not know that the chances of securing financing for 37%
would be substantially diminished as opposed to financing 52%? Why sell that 15% in the first place? Was
the 15% sold specifically to ensure that the 37% would end up in the covetous hands of Mr.
Ashcroft?
Why can’t the government keep the same loan at The International Bank of Miami/Capital Markets
Financial Services and allow the dividends of BTL to repay the loan, after which time the 500-plus Staff and
Management Trust would have unencumbered access to these valuable shares? Why not offer the shares
to Belizeans, who would prefer to invest their money at home rather than in the United States? Why not
keep the dividends in Belize?
Over the last six years, The International Bank of Miami/Capital Markets Financial Services has
loaned Belize hundreds of millions without, in many instances, the approval of the House of
Representatives. All of a sudden, this Bank is so discriminating in its lending that even with
BTL’s optimistic financial projections, even backed by a proper GOB guarantee, we are to believe that they
do not find this loan viable? I find these circumstances suspicious, to say the least.
The government can give 52% shares in BTL for free to ICC/Prosser, allow ICC/Prosser to collect
millions in management fees from a company it has not paid for, extend the deadlines for ICC/Prosser to pay for
almost a year but the government is helpless when, to no credit of its own, it stumbles upon an
opportunity to help Belizeans? This resolution is no resolution.
Belizeans are worse off today than in 1998, as it relates to BTL:
In 1998, Carlisle and MCI owned less than 50%. Today, Carlisle and Prosser will own more
than 67%. In 1998, the workers, through Social Security owned 29%. Today, the workers may eventually own 20%.
In 1998, small Belizean shareholders owned 21% Today, small Belizeans shareholders are being
reduced to 13%. This is not resolution. A resolution without
Belizean control of BTL is not a resolution. This is nothing short of a national travesty, a crying shame, a
downright disgrace and a betrayal of the national interest.
Every step of the way, every scene of this play, the relationship between
Carlisle and the GOB has been a master-puppet relationship. Ashcroft has proven to
be the De Bears of Belize, seeking to extract every caret of profit, every nugget of income,
it possibly can, willfully assisted by this government, who feign ignorance or helplessness but know well the toll
of their machinations. Carlisle is the 2005 face of colonialism.
When it comes to Ashcroft and Prosser, transactions with this government are so simple, shares can
change hands smoothly and taxes just vanish in thin air. But when it comes to helping Belizeans, whose
interests the government is elected to serve and protect, everything is a matter of high finance, legally
complicated and beyond their abilities.
This is why our country is so rich but our people so poor.
Madam Speaker, the political creed of the People’s United Party says “that the ownership and control
of our national resources and treasures must be so managed in order to secure the maximum benefit
for the Belizean people.” For the Belizean people!
The creed does not say that these national resources and treasures should be managed to secure the
maximum benefit for the party contributors.
It is my belief in this creed that drives my opposition to this resolution. It is faith in
this creed that should make every member of this side of the House oppose this resolution. One should not
be disloyal to Belize but loyal to a Party. Why have we lost touch with the interests of people we are
elected to serve?
The voice that the people of the Albert Constituency entrusted to me on March 5, 2003 cannot be used
to defend Carlisle; it must be used to defend Belize against these modern day pirates and profiteers
whose only loyalty is to their bottom line. Let others raise their voice to defend Carlisle and let them be
heard.
I stand with the brave and competent managers and staff of BTL and their families who recognize the
value of their labor and talent; I stand with the working Belizeans and the private sector that
deserve telecommunications service at the lowest possible rate. I stand with all those Belizeans who have
owned shares in BTL or who aspire to own shares in this truly Belizean enterprise. That is their right in
just and equitable Belizean economy, a right that this government has failed to protect.
I stand strongly opposed to this resolution.
Thank you
[Editor's note. This transcript contained a number
of inconsequential errors, such as saying "Mr. Carlisle" instead of
either "Carlisle" or "Mr. Ashcroft." I have taken
editorial licence to correct these errors. Please bear in mind that Lord
Ashcroft and Carlisle are essentially one and the same.
The document was also full of line return symbols which I
have removed, leaving a pair of these at the end of each paragraph.
-- Rick Zahniser]
Newer:
(Dec 05) Mark Espat was more or less expelled from the PUP for this
speech. Until then, he had been a prime contender for the Prime Minister's
job. Just recently, however, he and Cordell Hyde (another renegade)
returned to the fold, and were welcomed with open arms by the PM and the
party! Only in Belize!
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