belize bank v attorney general of belize

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Belize Bank v Attorney General

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  • [2011] UKPC 36

    Privy Council Appeal No 0054 of 2010

    JUDGMENT

    The Belize Bank Limited (Appellant) v The Attorney General of Belize and others

    (Respondents)

    From the Court of Appeal of Belize

    before

    Lord Phillips Lord Brown Lord Kerr

    Lord Dyson Sir Patrick Coghlin

    JUDGMENT DELIVERED BY Lord Kerr

    ON

    20 October 2011

    Heard on 6 July 2011

  • Appellant Respondent Nigel Pleming QC Dr. Lloyd Barnett

    Jack Holborn Mrs Lois Young SC (Instructed by Allen &

    Overy LLP) (Instructed by Charles

    Russell LLP)

  • Page 1

    LORD KERR (WITH WHOM SIR PATRICK COGHLIN AGREES):

    INTRODUCTION

    1. On 7 February 2008, a general election took place in Belize. The outgoing government party was defeated and Mr Said Musa who, until the election, had been Prime Minister was replaced by Mr Dean Barrow who became not only Prime Minister but also Minister for Finance in the new administration.

    2. During the campaign which preceded the election one of the principal issues on which vigorous debate had been engaged was the relationship between the appellant, the Bank of Belize (the bank), and the government, particularly in relation to a debt owed by Universal Health Services Company Limited (UHS), a private company operating a hospital in Belize. The financial arrangements between the government and the bank concerning the repayment of a loan from the bank to UHS were the subject of intense media and political interest. During the election campaign, Mr Barrow, who was then the leader of the opposition, was strongly critical of Mr Musa about these financial arrangements. He also acted as co-counsel for a group known as the Association of Concerned Belizeans in a legal action that the group took, challenging the lawfulness of those arrangements.

    3. In the weeks following the election, a number of significant developments took place. First, on 28 February 2008, in a government press release it was stated that the Financial Secretary in the Ministry of Finance of the new government had written to the Venezuelan government about the transfer of US $10m from Venezuela to Belize. At about this time a letter had been received from officials in Caracas in which a query had been raised about how funds transferred from Venezuela to Belize had been dealt with. It is not clear whether this prompted the inquiry from the Financial Secretary. What is clear is that there was considerable suspicion and concern on the part of the new government that funds provided by Venezuela had not been devoted to the projects for which they were designed, namely housing and a sporting complex, but had instead been diverted to the bank in order to meet the former governments obligations under guarantee arrangements that it had entered into with the bank in relation to the banks loan to UHS.

    4. The press statement of 28 February concluded by quoting Prime Minister Barrow as having said that his government would continue to pursue justice on behalf of the Belizean people and will leave no stones unturned to bring to account those who have robbed the people of this country.

  • Page 2

    5. On 5 March 2008 Mr Musa made a public statement in which he said that funds had been transferred from Venezuela to Belize in two tranches. One of these involved the transfer of US $10m from the Venezuelan Development Bank, Bandes, to the Central Bank's account for the government of Belize. This was to be used to assist with housing, home improvement and a sports facility. Mr Musa also said that a further US $10m dollars had been transferred from Bandes to the Belize Bank in order to settle the governments debt obligations to the Belize Bank. These, he explained, had arisen because of a government guarantee of a loan obtained by UHS. He claimed that there was an understanding with the Venezuelan government that only the housing and sports facility grant of US $10m received by the Central Bank was to be announced until further notice. This claim must be viewed, even at this stage when the circumstances of the transfer remain to be fully examined, with some caution in light of what passed between the governor of the Central Bank and the President of the Bank of Belize which is discussed in the paragraphs which follow.

    6. On 6 March 2008 a meeting took place between the governor of the Central Bank, Sydney Campbell, and the President of the Bank of Belize, Philip Johnson. The governor has said that at that meeting Mr Johnson told him that the bank had received US $10m from Bandes Bank but that the written wiring instructions did not indicate for whom these funds were intended. This is to be contrasted with the public statement of Mr Musa, referred to in the preceding paragraph, that one of the two tranches of US $10m had been earmarked for settlement of the governments debt obligations to the Belize Bank. Notwithstanding the absence of wiring instructions, the $10m was credited to one of the bank's accounts in the Turks and Caicos Islands. According to the governor, Mr Johnson also told him that in addition to the money from Venezuela, another US $10m had been received from Taiwan, which the bank had used, together with the Venezuelan $10m dollars, to settle a debt owed to the bank by UHS. The governor claims that, on receiving this information, he told Mr. Johnson that a special examination of the Belize Bank by the Central Bank would be required. It is hardly surprising that Mr Campbell reached that view. To transfer to the banks account in another country such a substantial amount of money when the instructions as to how the funds were to be used seems, at first sight, to be a remarkable thing to do.

    7. Mr Johnson did not confirm the details that Mr Campbell had given about this meeting in any of the affidavits filed on behalf of the appellant in these proceedings but he did not challenge them either. He contented himself with a somewhat cryptic observation in his first affidavit to the effect that he had attended a meeting with Mr Campbell to explain what [the bank] knew about the transfer of funds not only from Venezuela but also from Taiwan.

    8. On the same day that Mr Campbell has said the meeting with Mr Johnson took place (6 March 2008), the Central Bank notified the Bank of Belize that, in accordance with section 36(5) of the Banks and Financial Institutions Act (the Act), it

  • Page 3

    intended to carry out a special examination of the bank on 7 March 2008. That examination duly took place. Mr Campbell, in the meantime, had informed the Prime Minister that a special investigation of the bank was necessary and Mr Barrow had agreed that this was indeed required. Again, this is no cause for surprise in light of what Mr Johnson had told Mr Campbell about the circumstances in which the transfer of the $10 million to the banks Turks and Caicos account had been made.

    9. At a press conference on 7 March 2008 Mr Barrow revealed that he had been approached the previous day by an intermediary with a message that Mr Musa and the former Minister of Budget Planning, Mr Ralph Johnson Fonseca, wished to meet him to discuss the missing Ten Million US Dollar tranche of the Venezuelan Housing money. He agreed to a meeting on condition that an official of the government should also be in attendance to record what transpired. In the event, the chief executive officer in the office of the Prime Minister, Miss Audrey Wallace, attended the meeting with Mr Barrow and she made notes of what took place.

    10. In his opening statement to the conference, the Prime Minister said this about what had happened at the meeting:

    Messrs Musa and Fonseca explained pretty much what was later said by Mr. Musa in a taped statement recorded for yesterday evening's newscast. In other words, he conceded at long last, he confirmed that it was Twenty Million US Dollars that had been given to Belize by Venezuela but that Ten Million US of the Twenty Million US had been diverted to the Belize Bank in connection, he said, with the UHS guarantee obligation that the Government of Belize had to the Belize Bank.

    It was my sense that these gentlemen knew and were, if only tacitly, admitting that it was an outrageous act on their part. Well if they didn't even know it, if they didn't even tacitly admit it, certainly these are my words, and this is how I characterize what has happened, and I believe that they are completely aware of this, that it was an outrageous act on their part to have lied all along so consistently to the. Belizean people in saying from the time of the initial announcement that it was Ten Million US Dollars that had been gifted to Belize by Venezuela for Housing. In fact the figure was from the start the Twenty Million US Dollars that's now been admitted.

  • Page 4

    Furthermore, it is my sense that these gentlemen had no intention of ever coming clean, even after the general elections of February 7th, 2008, and it was only that fortuitous, or perhaps not so fortuitous, letter from the officials in Caracas that forced public and official scrutiny, that raised for the first time the fact that it was Twenty Million US and not Ten Million US. It was that that sweated Misters Musa and Fonseca and obliged them to crack now.

    11. The Prime Minister then said that what the former Prime Minister and Minister of Finance, had done was absolutely reprehensible. It is highly immoral and the product of a conspiracy Later during the same press conference, when asked whether the bank was complicit in the conspiracy, he said:

    Well [the bank], it now turns out, was the recipient of these funds. The government paid the funds without first coming to the public. The government p

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