Over the past four months, the Senate Special Select Committee's Social Security probe has homed in on a company called MH financial Investments. It's yet another Godfrey company, this one with a bank account in New Orleans that directly received securitization proceeds in hard currency for a pair of projects that were to have been completed in Belize. As we now know, ground was never even broken for those projects and nothing was ever built but the money, $17.1 million was spent. The unfortunate part is that with so much publicly guaranteed money at stake, no one ever made sure that the money went into those projects. In fact, decision makers at the SSB and Central Bank folded their hands and just watched as the money was sucked away from Belize into foreign accounts. First Social Security and now the Government of Belize is using your money to pay for those what are now very costly bad debts. Tonight, 7NEWS has obtained Central Bank documents which show how the money went to MH Financial's foreign bank account. The question we're asking is: "who's responsible?"

Jules Vasquez Reporting, [jules.vasques@gmail.com]
This document shows how securitization proceeds went from the Central Bank, directly and almost immediately out of the country to a foreign account at the Hibernia Bank in New Orleans. First on 24th April 2002 - US$25 million was credited to DFC's securitization account at the Central Bank. The next day, 25th April, Social Security received a fifth of that - the Belize dollar equivalent of US$5.25 million. Social Security would never see the amount that it had guaranteed for the St. James mortgages because those were re-directed almost immediately.

6 days later, on April 30th, the sum of US$2.9 million was transferred to MH Financial, according to the document "by order of the Social Security Board." On the second of May, Social Security's account at the Central Bank received another major inflow of cash, the Belize dollar equivalent of US$2 million and the next day, May 3rd, MH Financial received US$1.5 million.

The pattern continued for 8 more weeks with Social Security receiving Belize dollars on one day, its share of the proceeds, and then on the following day, or in one case the very same day, U.S. would be sent to MH Financial's account at the Hibernia Bank in New Orleans. By July 3, MH Financial had received $8,457,276 of securitization proceeds. All that money, securitization proceeds, guaranteed by the Social Security Board, had been diverted to Hibernia Bank in hard currency for a project that was to have been developed here in Belize.

So who gave the order - who authorized this diversion? Narda Garcia told the Commission of Inquiry it's not her job to monitor foreign exchange leaving the country.

Senator Godwin Hulse,
"And you instruct that the funds that were transferred abroad, to the account of entities that have nothing to do with the two properties or even with St. James. Why would you make that instruction and not simply say to St. James you got to get these properties developed and get the collateral in place because we are guaranteeing these loans and therefore we don't want to have any default?"

Narda Garcia, SSB's Chief Executive Officer
"My understanding is that if the proceeds are being brought for or on behalf of St. James, then they can instruct to deposit here, there, or anywhere. We did not see it as our responsibility to ensure that they deposit in Belize and be used for whatever purposes."

Senator Godwin Hulse,
"But you knew, all the people knew, that these properties were not up and running, by your own admission. So why would the money not have gone to the properties and be sent elsewhere to an account that had nothing to do whatsoever."

Narda Garcia,
"But Senator I don't know that; I don't know that that account didn't have anything to do. What happened was the proceeds came to us, we were given instructions to deposit in Hibernia Bank, wherever that is, or Bank of Miami. There is a proposal that proceeds will be used to do buildings. What do I know if the money going out there is not to buy material to come back and do the buildings. That's not my purview, I think that's Central Bank's purview to say if there is US$10 million being sent to Hibernia Bank on behalf of X company being paid by Social Security, or any other entity, what are the proceeds used for and to who is this being paid. That is the responsibility and purview of Central Bank. When I as a citizen need a permit for a US$1,000 I have to tell them where I'm sending that to and what I will pay for, and when I come back I have to give them receipts unless I have a travel document and I'm going out of the country. So to me, in my mind, I am saying Central Bank needed to ask that question, who is this for, why you have hard currency going out when in fact we are securitizing to bring in hard currency."

Senator Godwin Hulse,
"Exactly and in those large sums."

But in his June testimony, Governor of the Central Bank Sydney Campbell deflected that allegation of blame or lack of due diligence.

Sydney Campbell, Central Bank Governor
"There is nothing in the exchange control regulations which tell you to stop somebody from genuinely doing a foreign exchange transaction."

Senator Godwin Hulse,
"Once that instruction came from the Social Security to pay St. James account at Hibernia and once St. James fulfills those requirements by reporting back to the Central Bank the use of funds, including bringing back funds to pay the mortgages, whatever portion if any went on to further accounts elsewhere as payment for other investment was really outside the purview of the Central Bank."

Sydney Campbell,
"Yes because as you rightly said, if the instruction came from SSB to put it in the account of St. James for further credit to somebody else then that instruction coming from SSB, one would say, it is clearly an instruction between both parties, SSB and St. James, as to what they will use the securitization proceeds for.

As to what transpired between the parties, I don't know how you could allege someone knew the detail of the securitization, and that would be somewhat burdensome for the Central Bank then to know the detail and intervene and say this doesn't comply with the detail of the securitization. But we are carrying out our role as a banker to ensure that funds going into the system can be properly accounted for."

But regardless or who did or did not correctly or incorrectly authorize the transfers of these major sums of U.S. dollars, in the end, the principal of record of MH Financial was Glen Godfrey.

Senator Godwin Hulse,
"Who were MH Financial?"

Glenn Godfrey,
"MH Financial is a whole new company for investors."

Senator Godwin Hulse,
"At the time of the placement document, the records at the registry showed that MH Financial was not yet involved in this company, it showed you as the majority shareholder. But the records do not show MH Financial at all, in any of the shareholding."

Glenn Godfrey,
"Well maybe its not up to date, I don't know."

Senator Godwin Hulse,
"No we've checked the filings right through to 2004."

Godfrey later explained that he was only a nominee shareholder for a group of investors that comprised MH. Regardless, the fact is that this single moment when the money went from the Central Bank to MH Financial in New Orleans is when this portion of the securitization proceeds, US$8.45 million, were irrevocably lost - the question the Senate Special Committee now has to answer is not only where did the money go but who's responsible for the misdirection.

The members of the Senate Special Select Committee are believed to now be working on their final report.

See the document
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