Reporter – BTL’s $5.8M tax write-off: Another can of worms for Musa

Original Story:

http://www.reporter.bz/index.php?option=content&task=view&id=1411&Itemid=2

An agreement signed between government minister Ralph Fonseca and American businessman Jeffrey Prosser in July 2004 has left taxpayers picking up the tab for $5.8 million.

Reporter investigation has revealed Fonseca, on July 29, 2004, signed an agreement with Prosser, to cover Prosser’s loan with the Alliance Bank of Belize.

Prosser secured the loan when he was Chairman of the telecommunications giant, B.T.L., and B.T.L. has been obliged to pay it back.

Now government has agreed to compensate B.T.L. for this by allowing it to deduct the amount of $5.8 million from taxes owed.

Government in April 2004 handed majority control of B.T.L. to Prosser on a platter, after he promised to pay the government some U.S. $52 million for the majority shares in B.T.L. on the strength of a promissory note.

After securing majority control of B.T.L., Prosser secured the $5.8 million loan from the bank and used the money to pay off an Intelco loan which had been guaranteed by the Social Security Board as part of the securitisation programme with the Royal Bank of Trinidad and Tobago.

The Intelco deal did not materialise and now B.T.L., wants its money back.

The startling revelation of the $5.8 million tax write-off is reflected in the B.T.L’ 2006 financial report, which acknowledges “the Government of Belize has agreed to re-imburse the company (B.T.L.) for a total of $5,87,866.

This amount, says B.T.L’s financial statement, covers a significant portion of the principal and interest related to the Alliance Bank loan secured by B.T.L.

In a report to its directors B.T.L. explains the money was used for the purchase of “Intelco assets, which have now been paid by B.T.L. to the Alliance Bank Limited.”

“Such sum,” the telephone company says, “shall constitute a credit for present or future taxes due and owing by B.T.L.”


Jose Coye, a Cabinet member who sits on the Public Finance Committee, told Reporter this week that this was the first time he had heard of such deal.

“As far as I know the government of Belize does not have any obligation and does not owe B.T.L. any money for such a transaction,” he declared.

Coye said the first time he heard of such a transaction was through a local television report.

He said no such proposal has ever come up before the Public Finance Committee. Neither has the Prime Minister, who is the Minister of Finance, been advised by the Committee of such a decision for a tax write-off for B.T.L.

Coye telephoned this newspaper later in the evening to say he has been given a reasonable explanation as to what the $5.8 million deal is all about.

He confirmed the $5.8 million tax write-off has everything to do with the July 2004 agreement between Prosser and Fonseca.

Prosser signed the agreement on behalf of his Belize Telecom company.

Coye says he has been informed that government financial experts are looking at ways to pay off the $5.8 million to B.T.L. other than by a tax write off.

Coye says government now must do everything in its power to recover the money, especially since tax payers will have to pick up the tab.

A senior government official, said there is no hope government will ever recover the money from Prosser, who has now filed for bankruptcy in the U.S. Virgin Islands.

Legal experts in Belize advised the Minister of Finance does not have legal authority to write-off or to cancel the tax debt of a company.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: