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Government Passes Law to Takeover Telemedia
posted (August 24, 2009)

There was a Special Sitting of the House of Representatives today but the term “special” doesn’t do it justice – it was historic, epochal, seismic. The Prime Minister introduced and the House passed the Belize Telecommunications Act of 2009 which allows government to acquire Belize Telemedia Limited. It is the most dramatic, consequential and bold piece of legislations ever taken to the legislature – and it changes everything. Government did it to resolve what had become an intractable and costly series of legal battles with Ashcroft affiliated interests which own BTL. The central basis for those battles was the Accommodation Agreement secretly signed by the Musa Administration in 2006. The Prime Minister gave a detailed rationale.

Hon. Dean Barrow, Prime Minister
“Let me once say that the long title is quite clear and what the government is doing by way of introducing this measure is preparing to take control of the company formerly known as Belize Telecommunications Limited and currently going by the name of Telemedia. I must also say immediately Mr. Speaker that government intends to take the bill through all its stages today. The Senate will then meet tomorrow and we expect that the Bill will be signed into law by Tuesday or Wednesday morning at the latest. At that time, the new government appointed board of directors will assume operational control over Telemedia and the re-Belizeanation of the company will be complete.

The infamous secret Accommodation Agreement in which the PUP government guaranteed the Ashcroft group a minimum rate of return of 15%. According to that agreement and under that guarantee, Ashcroft could in any year declare that BTL had not made that 15%, entirely a matter for him, declare under a formula that did not give the government any opportunity to seriously dispute what he was saying, Ashcroft could declare that BTL had not made that minimum 15%, declare how much the supposed short fall was and simply not pay his taxes until the so-called shortfall had been recovered. That Mr. Speaker s exactly what happened in 2007 so that thereafter Ashcroft’s Telemedia ended up paying no business tax, no Customs duties, no impress of any kind. In addition the Accommodation Agreement stipulated that the Public Utilities Commission, which is there to regulate all utility services providers, that Accommodation Agreement stipulated that the PUC, could not regulate Telemedia’s rates, just leaving the consumers at the complete mercy of the company.

The UDP Cabinet voted in the name of the Belizean people to resist this treasonerous Accommodation Agreement. Belizean law and Belizean dignity would be upheld, Belizean pride and Belizean patriotism and Belizean patrimony vindicated. And of course resisted we have.

Now no one can doubt the justice of our stance but as we always knew it would, it has been costly. Michael Ashcroft had Telemedia invoke a arbitration in London, arbitration which the PUP administration and in particular the then Prime Minister and the then Attorney General had provided for in that Accommodation Agreement, Michael Ashcroft had Telemedia invoke arbitration in London to enforce the Accommodation Agreement and as we all know, he obtained a judgement of $38.5 million and an LCIA mandated requirement that this government now begin to honour this Accommodation Agreement. Well Mr. Speaker, I have said that as God is my witness I will never pay that award.

But it doesn’t stop there, in April of 2009 Telemedia informed the government of further claims they will make to the London Court of International Arbitration and that the size of the new award they hope to get, and I am quoting now, could pale the current award of $38 million into insignificance, end of quotation. Mr. Speaker, Members, fellow Belizeans, this is intolerable. I and the United Democratic Party government in the name of the people will put up with it no longer. That an agreement, so patently illegal, so patently immoral, so patently anti-Belize should continue to torture us, to bleed us, to subject us to this death by a thousand cuts cannot for one second more be countenance.

This is our House, this is our country. Here we are masters. Here we are sovereign. And with the full weight of that sovereignty, we must now put an end to this disrespect, to this chance taking, to this new age slavery. There will thus be no more Telemedia awards against us, no more Telemedia court battles, no more debilitating waste of government’s energy and resources, and there will be no more suffering of this one man’s campaign to subjugate an entire nation to his will. After long and sufficient consideration and in the exercise of that national power that is ours by constitution and inalienable right, this government will now acquire Telemedia.

This is no ideology, this is not triumphalism, this is a country in particular circumstances reaching the end of its patience and doing a singular necessary righteous thing to protect its national interest. It is not part of any pattern, part of no new philosophy, it is plain and simple, a special measure for a special case.

No one need feel any sympathy for Lord Ashcroft. This is not an ad hominem move. It is to deal with a structural problem. Indeed, apart from his compensation, Lord Ashcroft’s interests will remain profit making participants in Belize’s telecommunications sector because those interests own Speednet and Speednet will be left free to fly.

This I repeat then is only about Telemedia and no more and no less than a case of the Belizean national interests trumping any other consideration. Thank you Mr. Speaker, I look forward to the debate.”

As we said, it is historic. The Government of Belize has never - to our knowledge acquired a private company by an act of parliament – particularly one of the most profitable, essential and ubiquitous companies in the country. It is a bold manoeuvre, but beyond the broad stokes there are the details, the practical considerations that will operationalise such an acquisition. The Prime Minister also listed those today.

Hon. Dean Barrow,
“That the Bill makes every provision for fair and proper compensation to be paid to the owners of the shares that we will acquire. This is not, I repeat, some cowboy action but something done in the full plenitude of and compliance with our constitution. As well, we are only acquiring the 94 percent or so of Telemedia that is controlled by the Ashcroft interests. The shareholding owned by Belizeans will be left intact. The actual acquisition will be done by an order made by the Minister of Telecommunications who will in that same order appoint a new Board of Directors.

As soon as practicable after, an extraordinary general meeting will be held and new Articles of Association adopted. The new Articles will essentially be the articles of the successful BTL that was launched in 1988. In other words the safeguards to protect Belizean shareholders will be re-established including protection of the special share and the limitations on the amount of single ownership.

As well and perhaps most important, the Articles will guarantee that dividends will be paid annually to the shareholders at the rate of 40% of the company’s yearly profits. I also want to say that the new Board of Directors will be chaired in an executive capacity by Mr. Nestor Vasquez and it will have as one of its members the Rt. Hon. Manuel Esquivel.

Telemedia’s current employees will of course all keep their jobs. Indeed we expect a greatly improved industrial relations climate and the quick resolution of any current outstanding worker grievances. I think particularly of the arbitration case of the dismissed workers, a case that the current owners of Telemedia have utterly frustrated. I am positive therefore that Telemedia’s staff like all other right thinking Belizeans will completely support the government’s move and cooperate to make the transition as seamless as possible.

For consumers, we expect services to continue uninterrupted. We do not believe that the present operators of the company will try any kind of sabotage. If they do, we will have to use already existing provisions of the law to move and take control even before the passage of this bill.”

The timeline is as follows, the Senate meets in its own special sitting tomorrow to consider the act, approval is expected to be forthcoming and thereafter, either on Tuesday evening or Wednesday morning, the governor General is expected to sign it into law. The Minister of Public Utilities will then sign an order activating the new board of directors, which should go into BTL on Wednesday. And while that’s the plan – it is expected that BTL’s Ashcroft-controlled ownership may throw a series of legal obstacles to undermine that plan.

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