Amandala – $30 million still in dispute at BTL

Original Story:

BTL says GOB will forgo $5.9 million in taxes for Intelco transaction of “no value”

With continued growth in its cellular base, the Belize Telecommunications Limited (BTL) is boasting another year of record revenues—a hefty $132 million—for the financial year ending March 31, 2006. The books read pretty on the surface, but a more detailed look at the financials will reveal two major issues that have purportedly left the company and its shareholders over $30 million short. Even with this loss, though, the company is this year boasting $26 million in profits.

Appearing visibly again on the books of BTL are the missing millions—the BZ$6.232 million reported last year, and a further BZ$1.4 million reported in this year’s financials, which were allegedly swindled from the company in dubious parallel market exchanges for US dollars.

As the report indicates, “The former Head of Finance [Gaspar Aguilar] reported that despite representations from sources that the US$ would be delivered in exchange, no such US$ were received by the company.”

The Financial Intelligence Unit (FIU) and the police were called upon to investigate the matter and interestingly enough, the former director of the FIU, Keith Arnold, who also chaired BTL, resigned from the FIU, but has since remained BTL’s chairman. Authorities have failed to bring closure on the missing millions at BTL.

Apart from the still missing millions is the $23.357 million, which BTL’s present directors say Innovative Communication Corporation owes BTL. The financials detail that this money was spent for Intelco-related transactions and BTL is insisting that Prossers’s ICC pay. The dividends owed to ICC’s subsidiary, Belize Telecom (BT), have been held to set off this claimed debt, says this year’s financial report. But the amount deducted is a mere $285,000, which reduced the total claimed just a notch, from $23.642 million to $23.357 million.

What is most striking in the report is that BTL is claiming a credit of BZ$5,877,866.30 from the Government of Belize, which, it asserts, is due for an Alliance Bank loan for “the purchase of Intelco assets.” But the present directors further claim that, “…no value was obtained by the Company.”

The directors’ report says, “The Government has honored a guarantee amounting to BZ$5,877,866.30 in relation to the purchase of Intelco assets, which was paid by BTL to the Alliance Bank Limited, by confirming that such sum shall constitute a credit for present or future taxes due and owing by BTL.”

That’s bad news for taxpayers, but the good news for BTL’s shareholders is that the company is offering dividends of 50 cents per ordinary share for the year ended March 31, 2006, a marked improvement over last year’s declaration of a disheartening 2.5 cents per share.

In his letter to shareholders, chairman Arnold, a former Central Bank governor, informs them that they have the alternative of taking script dividends in place of cash dividends this year. The price of a share under this offer is BZ$2.84 per share. This price contrasts sharply with the price of script dividends in 2001: The price was $4.44 per share in November and $4.25 in July. In November 2003, script dividends sold at BZ$2.75 a share.

The volume of script dividends that shareholders can buy depends on the total dividend payments due to them, after tax. This means that those who are due more dividends, and hence the bigger shareholders, can buy more new shares. Notably, the bulk of the shares in BTL are owned by the Carlisle Group, or BB Holdings Limited and its affiliates.

Arnold says that shareholders would be asked to ratify the cash dividend and the script dividend offer at BTL’s AGM, slated for 6:00 p.m. on Monday, September 25, 2006, at the Best Western Biltmore Plaza Hotel.

All in all, it has seemingly been a wonderful year for BTL. Even with Smart/SpeedNet competing in cellular services, BTL reports that it has experienced an increase in the number of GSM cellular customers by 29% to a total of 93,089. Along with 10,335 analog customers, BTL boasts 103,424 customers as at the end of the financial year, March 2006. At the same time, it offered customers price incentives on some services.

The company also reports that, “Favorable changes during the year included a $4.5 million increase in pre-paid card sales (fixed and cellular services), a $1.3 million increase in cellular roaming (primarily from visitors to Belize), a $1.7 million increase from a range of Internet and data services, and a $1.4 million increase in net international settlements.”

BTL says that there has been a 32% reduction in revenues from fixed lines as more customers switch to cellular and high-speed Internet services.

Notably, this year, no proxy forms are included in BTL’s shareholder packets, and the emphasis seems to be the script dividend offer to shareholders, for which a form was included.

BTL is presently controlled by a group of Ashcroft-related companies, primary among them being ECOM, whose director, Dean Boyce, is chairman of BTL’s executive committee. Boyce along with Arnold are the two trustees of the Belize Telecommunications Limited Employees Trust, which BTL workers, under the umbrella of the Belize Communication Workers Union, have rejected, saying that the company cannot act on their behalf.

According to BTL’s financial report, ECOM earned $2.4 million in management fees from the company.


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