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Today Hernandez told us that how it all went down just isn't fair:..

Mike Hernandez Jr. Terminated from SIF
"This morning we were served with letters of dismissal the four of us from the Social Investment Fund. Namely myself, Mr. Pineda, Mr. Enrique Romero and Mr. Leonel Jimenez. The director was given the option to resign and I think he has resign effectively either yesterday or today. I am not too quite sure."

"I have to state that I am very disappointed in the manner in which it was done. It was done very unprofessionally and very disrespectful. The normal course of things should have been they should have called us in and say to us that this is what the board has decided and out of courtesy this is what is going to happen. This thing went public, they sent a press release and we found out through the press release. That is very unprofessional and very bad on the part of the chairlady of the board of directors of SIF."

"Be reminded that SIF is an institution that is one of the best institutions throughout the entire Caribbean region. In regards to the allegation made against myself, I can tell you that I have never request anything from Mr. Smart. This cheque in question was given to me explicitly as a gift in 2009 and I took it because it was Christmas time - a time when you share and give and it was a time when we exchange gifts. I never knew then that this gentleman had ulterior motives."

"Bear in mind that I was not a member of any committee that evaluated and recommended contracts or any committees that recommended tender of contracts. For someone to make serious allegation of me that I have been extorting is rather ridiculous. That's a service that I could not offer to anyone. I believe the real reason why Mr. Smart has made those allegations is to create distractions for his none performance work. He lost the contract in San Ignacio/Santa Elena and now he lost the contract in Dangriga."

Indeed, Kennard Smart's company "K and G Construction" lost two SIF contracts - but it had already executed five others: the Trial Farm Drainage Project phases one and two for a total of 920,000 dollars, the Gulisi Primary School for 370 thousand dollars, a project in san Felipe for 271 thousand dollars, a mental health facility project for half a million dollars, and Saint Viator for twenty thousand dollars.

How he qualified for those contracts is a question we put to Minister of State with responsibility for SIF Santino Castillo - and we'll have that for you shortly.

But first to a phone interview with Yvonne Hyde CEO in the Ministry of Economic Development and Chair of the SIF Board of Directors. She sent out a release today saying, quote, "After reviewing the Contractor General's report, the board determined that four members of staff were complicit in activities which merited termination." But that doesn't say they acted corruptly or accepted inducements. She left the country today, but before she did KREM Radio got a chance to interview her on the question of corruption. Here's what she said:..

Reporter
"People believe that since February to now it's a very long time and the report should have been concluded way before and they feel like he has been sitting on the report."

Yvonne Hyde, Chairman - SIF Board of Directors
"I don't think he was sitting on the report. He was doing series of interview and there were some odd circumstances I would imagine which prevented him from finishing off the report."

Reporter
"The extortion allegations: will a criminal case be launched?"

Yvonne Hyde, Chairman - SIF Board of Directors
"I am sorry. Looked, the board was dealing with a report which indicated that there were receipt of money on the part of certain staff from private parties. That was what the report was on. I am not aware of any monies being siphon off anywhere."

Reporter
"The Prime Minister had sent some information to Channel 7 indicating that the Contractor General was investigating reports of corruption act SIF."

Yvonne Hyde, Chairman - SIF Board of Directors
"That is correct, but the corruption was in connection like I just said with allegation made earlier this year which had to be proven in terms of evidence supplied, interviews heard and analysis of the documentation. The allegation were that certain staff members of SIF received monies from private parties. I don't know about anything else that they are taking about. I am sorry, I don't know about that."

Reporter
"Does that amount to extortion though?"

Yvonne Hyde, Chairman - SIF Board of Directors
"As far as I am concerned, that is what I am saying."

But the Contractor General Godwin Arzu said much more in his report. He turned us down when we asked for an interview today and said he couldn't share the report until it is tabled in the house. The only thing he did tell us was that what appears to be an inordinate lapse between February - when Smart first wrote to him - and September - when he finally submitted his report - was time spent thoroughly investigating the claims, searching exhaustively for proof and getting responses from the accused persons - because all those SIF Staffers who acknowledged that they received money from Kennard Smart say they had a legitimate, non-corrupt reason for it. As you heard, Mike Hernandez says his was a Christmas Gift, another said he got a loan from Smart, and one other SIF technical officer said he was simply conveying the money on Smart's behalf, to one of the contractor's lady friends - which would make that transaction the definition of a sweetheart deal!

Indeed, the entire web of apparent institutional corruption raises so many questions and we put those to Minister of State with responsibility for SIF Santino Castillo in an interview conducted three hours ago at his Belmopan Office. He says the allegations first came to Cabinet's attention in July, but he did not know the extent of it - until he watched the news!

Jules Vasquez
"Sir, at what point did you become aware of these allegations of extortion and corruption at SIF and what did you do when you became aware of it?"

Hon. Santino Castillo - Minister of State with Responsibility for Economic Development
"That is funny Jules because I was out the country and just came back in on Saturday the 14th and I read it online. I read Channel 5 and 7's report on it online and I immediately emailed the CEO Ms. Yvonne Hyde of the Ministry and she updated me immediately on what was happening. I arrived on Saturday and was kept fully abreast and then we move to immediate action to have the board have an emergency meeting yesterday with recommendations from the Contractor General who was at the meeting on how to move forward."

Jules Vasquez
"Sir, there had to be some type fundamental breakdown in communication because this was reported to the Contractor General in February. You have been at the highest level of a private business - you know that any allegation like this surfaces with the sort of evidence that Mr. Smart brought forward - it's actionable and you have to act immediately otherwise you will continue to hemorrhage public funds."

Hon. Santino Castillo
"Right. What I can tell you about that Jules, in fact one of the things that Mr. Cano did and one of the reasons he was asked for his resignation is because he did not choose to bring forth the information to either myself or the CEO."

Jules Vasquez
"Sir, I understand that all these persons had in fact excuses like Mr. Mike Hernandez when the Contractor General questioned them."

Hon. Santino Castillo
"That is so."

Jules Vasquez
"What did you think of their explanations?"

Hon. Santino Castillo
"The explanations as far as I am concern don't cut it at all. You are talking about one of them saying $5,000 was a loan. There was another $3,000 for insurance that his wife sold and he is no longer with his wife. Those were the sort of explanations which they had. If this was the private sector - it's no non-sense and heads would have had to roll from where I sit. However we put it in the board of directors - let them make the decisions."

Isani Cayetano, reporter
"What becomes of the monies that Gush and Emy as well as Lyndon Bailey had invested in this particular project in Dangriga?"

Hon. Santino Castillo
"Unfortunately for them our contract is with Mr. Smart, K and G Construction - we have no contract with Gush and Emy and with Lyndon Bailey. They were sub-contracted by Mr. Smart and up to date we have paid Mr. Smart a total of a little under $600,000 in payments for the Dangriga project of which he has not been forthcoming with his part of the deal which in effect - which is why eventually it came to this point. Why we got involved is because the contract automatically cancelled itself because the contract reads that after 100 days of delay - it's automatically cancelled."

Jules Vasquez
"Sir, Mr. Smart has received 5 contracts from SIF and anyone who knows how these things work or who's heard about how these things work knows that this particular contract and all the shaking down that he complained about - is probably not his first rodeo. It probably happened on the other contracts as well. That's not an unfair speculation if you see people receiving money in cheques."

Hon. Santino Castillo
"Not unfair at all."

Jules Vasquez
"Are you concern as any member of the public would be that there is a culture of corruption at SIF and there has been institutionalized in there for some time."

Hon. Santino Castillo
"Quite honestly Jules that is something that we are going to look at. We are going to implement new procedures. All that you say is very valid. I won't say that there isn't. I won't say that there is. I am hoping that we've weeded out those that are involved, but clearly we will have to focus on also taking into consideration that you have international funding agencies that are looking at us and how we will react such as the CDB, The World Bank, The European Union - these are all people that give us grants and loans at very low rates of interests. They will want to see how we will react and if we are "powder-puff" this thing which is why this didn't go to Cabinet at all. This was a decision that we accepted. We have a professional board of directors and their decision is what took place immediately and we acted on it at 8 o' clock this morning."

Jules Vasquez
"Sir, it seems that the action were taken largely base on the complaints that Mr. Smart made in his February email to the Contractor General where he named certain amounts. All those people have been terminated. But one this he said in there is that he gave Mr. Cano ten thousand dollars in a black plastic bag."

Hon. Santino Castillo
"He actually said that he gave him a thousand first in his office cash followed by ten thousand for a total of eleven thousand. Of course Mr., Cano disputes those allegations and there is no proof that he did so which is in fact why of all of them Mr. Cano was the only we asked of his resignation because we do not have proof. It is his word against Mr. Smart."

Jules Vasquez
"In the context on everything that was happening at SIF and the fact that these allegations had been brought to Mr. Cano's attention from 2010."

Hon. Santino Castillo
"That is way in fact Jules before I even got to SIF, so you are perfectly right, people can speculate."

Jules Vasquez
"Again, it appears that someone was sleeping at the wheel in so far as the culture of corruption appear to exist at SIF and nobody was in any urgency to shut it down. The Contractor General received it in February, the CEO received it sometime after that, I don't know the date. She is out of the country and you just heard about it on September 14th. I am saying as the media, the minute we saw this we were like the place has to close down. I am saying that wouldn't the funding agency reasonably say you guys aren't serious."

Hon. Santino Castillo
"Very true Jules. I guess based on our actions they will say that we were serious because as soon as we got involved we didn't "pussyfoot" around with it at all. We acted immediately. We could have procrastinated, but we didn't. The board meeting was held yesterday evening and we ask Mr. Cano for his resignation yesterday evening and everyone was dismissed at SIF this morning at 8 o' clock."

Jules Vasquez
"Sir, recently in a speech you call Mr. Mike Hernandez your good friend."

Hon. Santino Castillo
"He is my good friend. Unfortunately that's what hurts a lot about this. Since I've been at the Ministry Mike has been the public relations manager and truthfully Mike pleads his case to me and says it was simply a gift given to him by Smart saying for all the good work you've done, here is Christmas gift and I took Mike's word for what it was."

Jules Vasquez
"Under the Prevention for Corruption in Public Life law, these things are offences."

Hon. Santino Castillo
"They are."

Jules Vasquez
"Accepted that what would be called an advantage. Mr. Smart basically actions would what we called a bribe. These are actionable criminal offences. Will your office be taking that up or will you pursue that with the DPP?"

Hon. Santino Castillo
"The truth of the matter is that - that is the next point. We've reached the first point and Cabinet today was very involved with other discussions but that is a discussion that will still come up in Cabinet; how to move forward with this case."

Jules Vasquez
"Sir, Isn't this an inevitable consequence of rewarding UDP friends? Mr. Smart is a former convention candidate for the UDP. Obviously, once he's gotten 5 contracts and if you extrapolate not unreasonably that this sort of system existed in all those contracts - well then its clear that it was a friends and family system and this is what happens when a UDP Government hires its friends."

Hon. Santino Castillo
"Jules, it would be very hard for me to dispute that allegation."

Jules Vasquez
"The public confidence is clearly shaken because something like this was happening almost in a matter of fact way. Obviously it was happening and then when Mr., Smart ran into trouble is when he rang the alarm. I am saying that isn't a fair assumption that this what I've heard in the UDP circle called "biting." This "biting" on contracts is happening in every sphere of the Government's activity. Isn't that a fair assumption that anyone in the public might make?"

Hon. Santino Castillo
"I don't think so Jules. Honestly in this case I have to defend because this "biting" was happening by a few select people within the organization and truthfully Jules when you look at the figures, I mean, even those that sold their soul in the biggest scheme of things it wasn't a great loss to SIF financially what they took. Our loss basically was with Mr. Smart not producing and providing the work that he should have produce at the time he should have produce it."

"These guys were hustling; one got $500, one got a two thousand cheque - one thousand dollars twice, one got $5,000, one got $3,000 and these are cheques that Mr. Smart produced. Other than that he had no more allegations for giving these people any more cheques or any more cash other than the $11,000 he is alleged to have given Mr. Cano."

"The "biting" that occurred as I said, lets called them the "gang of five" and it is not something that I think is happening in all of the ministries with all contracts. I just couldn't believe that is possible."

Jules Vasquez
"Yes, but If I had told you this last year, you might have not believe it either even with your friend Mike Hernandez. I am saying that obviously in the state of things right now in our country, the unbelievable is believable."

Hon. Santino Castillo
"That is true Jules. It's also very believable that by the time you go home tonight and the clips comes out and we have light all the way to Belize." (Smiling)

But it's no laughing matter for the people of Dangriga Town. Lost in the all the wheeling and dealing, allegations and recriminations is the Dangriga Municipal Project - which was supposed to have seen a new market opened at the end of July. From March of 2013, the project has been delayed. Now it's been terminated, his underwriters Emy Ramirez and Lyndon Bailey say government owes them five hundred thousand dollars and the project is at a standstill. Castillo told us they will have to address it urgently:

Nellie Trench is acting Executive Director at SIF. The contractor general has urged the board to dig deeper. In his report, a part of which 7news has obtained, he says quote, "they must examine the evaluation process for the awarding of the Dangriga Market Rehabilitation & Extension Project with a view to establishing whether or not the contract was awarded impartially." End quote. Information to us suggests that Smart was awarded the contract based on insider information form SIF - on the understanding that once he got the contract, he would provide requisite kickbacks. Only, it appears, the insider miscalculated and he underbid, and thus was unable to keep paying the kickbacks while also keeping up to date on the project. His story is that when he stopped paying, the SIF payments started slowing down - and that's what ran the project into the ground.

It is a mess in every sense of the word, and we'll keep following every lead on this story - including this strange little document, an allegedly fake invoice from K and G construction which investor Emy Ramirez says Executive Director Cano tried to pass off on her. More on that tomorrow.