BELIZE & TURKS AND CAICOS - FINANCIAL SHENNANIGANS IN PARADISE.

SWASH BUCKLING WORLD FAMOUS BILLIONAIRE, WHO APPARENTLY MAKES HIS MONEY FROM SUCCESSFULLY AVOIDING TAXES? What a skill set, very admirable.


DISCUSSION FROM THE BELIZE CULTURE LISTSERVE.


Belize Bank puts depositors’ money at risk Print E-mail

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Written by Administrator
Thursday, 10 March 2011 00:00

FINANCIAL SHENNANIGANS THAT ANNOY PREDATORY TAX COLLECTING BUREAUCRATS!

Michael Ashcroft - If there is one mantra that the United Democratic Party has held ALMOST sacred is the right of the Belizean citizenry to know the workings of government, transparency being the order of the day for the UDP. ( That is a bit of self serving, tongue in cheek balderdash - no reporting of the National Debt to GDP ratio is permitted by this government ) So much this means to the UDP government that almost immediately upon taking office in May of 2008 the government introduced the Freedom of Information Act which prohibits almost all government documents from being secret. While that is for government documents, the same cannot be said for documents relating to private companies and court rulings.

The Guardian has been attempting for the past couple of weeks to secure affidavits that have been lodged at the Supreme Court registry by the Belize Bank against the Central Bank of Belize; however, a court injunction filed by the Belize Bank is preventing this newspaper or any other media entity access to the documents. From what we have been able to gather on the case, the Central Bank of Belize as the banking regulatory institution in the country had issued directives to the Belize Bank to discontinue a practice known as Parallel Banking. By our research on the issue, Parallel Banking is banks which are licensed in different jurisdictions and have the same owner(s) and or beneficiaries sharing management and business. Based on our research these parallel arrangements are established for various reasons including “to take advantage of different tax arrangements; to avoid legal restrictions in some countries on the ownership of foreign subsidiaries by domestic banks; or to diversify risk outside countries that are considered economically or politically unstable. In some cases, the motivation may be an attempt to evade regulatory constraints or consolidated supervision from the home country." –Working Group on Cross-border Banking.

Based on our information, under the People’s United Party it was a free for all for the Belize Bank conducting parallel banking transactions with a subsidiary in the Turks and Caicos; however, that came to an end when the bank in Turks and Caicos fell into trouble with the regulator in that jurisdiction. By our information, the Central Bank of Belize under the PUP gave the Belize Bank carte blanche to conduct any parallel transaction between Belize and Turks and Caicos.

Here is where the situation has reached the Supreme Court. The Belize Bank has taken the Central Bank to the court claiming that it does not have the authority to order the parallel banking to stop. More than that, the Belize Bank asked the case’s presiding judge, Justice Oswell Legall, for an injunction to prevent anyone from accessing affidavits that have been lodged in the case. Justice Legall issued the injunction and now no one outside those dealing with the case has access to the legal paperwork.

But the importance of the case is one that bears watching especially because of the financial implications that parallel banking has on the Belize Bank. Under its regulatory power the Central Bank of Belize instructed the Belize Bank to discontinue the practice and in particular to bring back what are called L.E.G. (Luke Espat Group) loans to Belize. However, the Belize Bank is refusing to comply with the instructions. The so called L.E.G. loans are quite an impressive amount. By our information the loans amount to as much as 190 million dollars and included in the portfolio are assets like the Port of Belize, Renaissance Tower, Croc Land, Indeco and other companies. The loans to L.EG. were split into two with the performing companies such as the Port and Renaissance being bought by a company called Private Investment Limited (PIL) (by our reckoning this is an Ashcroft affiliated company). These amounted to some 150 million dollars. The non-performing companies like Indeco and Croc Land and others amounting to some 40 million dollars were left with the Belize Bank. Now the Central Bank is saying the sale has to be reversed and the Belize Bank is resisting.

The instructions by the Central Bank would mean that the Belize Bank would have to re-purchase the 150 million dollar debt forcing the bank to come up with some serious amount of cash and dipping the bank’s reserves considerably.

But how it all came to this, where a single entity was allowed to rack up a debt of 150 million dollars is anyone’s guess. Those at the helm of the bank have some serious questions to answer and even more, as we’ve been reporting all along, this 150 million dollar debt is not the only one that the Belize Bank has to contend with. There are others of similar magnitude which we’ve exposed in previous articles, some of which have similarly been involved in parallel banking but which the Central Bank is yet to look into. For the time being however, the eye is on the L.E.G. loans and these will be crystallized when the substantive case begins on March 23.