Belize Bank v Attorney General of Belize

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Belize Bank v Attorney General

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<ul><li><p> [2011] UKPC 36 </p><p>Privy Council Appeal No 0054 of 2010 </p><p>JUDGMENT </p><p>The Belize Bank Limited (Appellant) v The Attorney General of Belize and others </p><p>(Respondents) </p><p> From the Court of Appeal of Belize </p><p> before </p><p> Lord Phillips Lord Brown Lord Kerr </p><p>Lord Dyson Sir Patrick Coghlin </p><p>JUDGMENT DELIVERED BY Lord Kerr </p><p>ON </p><p>20 October 2011 </p><p>Heard on 6 July 2011 </p></li><li><p>Appellant Respondent Nigel Pleming QC Dr. Lloyd Barnett </p><p>Jack Holborn Mrs Lois Young SC (Instructed by Allen &amp; </p><p>Overy LLP) (Instructed by Charles </p><p>Russell LLP) </p></li><li><p> Page 1 </p><p>LORD KERR (WITH WHOM SIR PATRICK COGHLIN AGREES): </p><p>INTRODUCTION </p><p>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. </p><p>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. </p><p>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. </p><p>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. </p></li><li><p> Page 2 </p><p>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. </p><p>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. </p><p>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. </p><p>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 </p></li><li><p> Page 3 </p><p>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. </p><p>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. </p><p>10. In his opening statement to the conference, the Prime Minister said this about what had happened at the meeting: </p><p>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. </p><p>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. </p></li><li><p> Page 4 </p><p>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. </p><p>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: </p><p>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 paid the funds by way of, in my view, an improper diversion when you look at what the contract reputedly contained. I would say that [the bank] might perhaps want to explain their position. </p><p>12. On 12 March 2008 Mr Barrow and the governor of the Central Bank held a further press conference. In the course of this Mr Barrow made a number of statements to the effect that he was convinced that the former Prime Minister and the former Minister of Budget Planning were guilty of improperly diverting funds that should have been used for the benefit of the Belizean people and were also guilty of procuring those funds without properly disclosing them. The Prime Minister then said this: </p><p>I've indicated to the Belize Bank that I wish to put them on notice, that the Government will also be taking legal advice as to whether they are not obliged to credit that money (return that money if you will), to the Government for the people of this country. I must say that, as far as I can understand, the Bank has been cooperating up to this point in time, and, ah-I don 't know if he is the Director of the Bank, but certainly, Mr Philip Johnson, with whom I met this morning, has indicated that he will take that position to his principals, that I am putting them on notice that (and I put it no higher than this), that we will be seeking legal advice as to whether they are not liable for the return of the US $10m. </p><p>13. Given the banks position that it had transferred $10m to an account outside Belize without express instructions from the source of the funds as to how they should be dealt with the ministers statement about the bank might be regarded as, if anything, restrained. </p></li><li><p> Page 5 </p><p>The directives and the Appeal Board </p><p>14. On 14 March 2008, as a result of their investigation, the Central Bank issued two directives under section 36(5) of the Banks and Financial Institutions Act. Only the first of these is relevant in the present appeal. It was in the following terms: </p><p>[The Bank] should forthwith credit [the governments] account with [the Central Bank] with US $10m as per Payment Details stated on wire transfer instructions sent by Bandes-Fideicomisos De Venezuela on the Cash Payment Confirmation dated 28 December 2007 </p><p>15. On 18 March 2008 the bank responded to the Central Bank's directive. It challenged the Central Bank's powers to issue the directives under section 36(5) of the Act. It also complained that it had not been given sufficient time to make a proper response. By virtue of section 36(6) the bank had ten days in which to appeal. The Central Bank extended this to 3 April 2008. </p><p>16. In the meantime, on 25 March, the bank wrote to the Chief Justice of Belize, Conteh CJ, indicating its intention to appeal. The Chief Justice was presumably chosen by the bank because, under section 70(2) of the Act, the Appeal Board which hears any appeal against the issuance of a directive shall have as its chairman the Chief Justice or another judge of the Supreme Court nominated by him. </p><p>17. No Appeal Board had been constituted before the bank intimated that it intended to appeal against the directive. Under section 70(1) of the Act it was the responsibility of the Minister for Finance (in this instance the Prime Minister, Mr Barrow) to cause to be appointed a Banks and Financial Institutions Appeal Board to hear and determine all appeals in respect of matters which may be referred to it under the Act. These include an appeal against a directive made pursuant to section 36. </p><p>18. Mr Joseph Waight was then the Financial Secretary in the Ministry of Finance. He is a career civil servant who had served in that department for more than twenty years. In an affidavit filed on behalf of the respondent, Mr Waight deposed that on 26 March 2008 or thereabouts, the governor of the Central Bank, Mr Campbell, raised with him the matter of the appointment of the Appeal Board. It was Mr Waights experience that whenever the Minister of Finance was required to appoint members to an administrative appeal board, such as the Income Tax Appeal Board, or the General Sales Tax Appeal Board, the Minister receives names from the Financial Secretary and makes his appointment from those thus nominated unless he has some fundamental objection. </p></li><li><p> Page 6 </p><p>19. On learning of the need to appoint an Appeal Board, therefore, Mr Waight turned his mind to the question of who would be suitable for this task. He reviewed what he described as the cadre of persons who had expertise in the areas required. He came up with the names of Mr Jaime Alpuche and Mr Jeffrey Locke. Mr. Alpuche is a former Financial Secretary and Mr Waight had served under him as Deputy Financial Secretary. Mr Locke had previously worked for the Central Bank. Both appeared to Mr Waight to be entirely suitable and he recommended them for appointment to Mr Barrow who accepted the recommendations and appointed both on 26 March 2008. </p><p>20. The appointment of both these men was described by Mr Pleming QC, on behalf of the appellant, as having been made in unholy haste. That claim must be seen against the timetable that the Act prescribed for the presentation of appeals against the directives, however. Section 36(6) stipulated that an appeal must be made within ten days...</p></li></ul>