The Government of Belize is again being dragged into court for allegedly breaching a string of multi-million-dollar agreements involving yet another privatized entity controlled by a ruling party insider – Luke Espat.
The quarrel is not just over developments in the cruise tourism sector, but extends to the control of the country’s three main ports in Belize City and the South.
On Tuesday afternoon, September 11, Courtenay, Coye and Co. filed a claim in the Supreme Court for Port of Belize (POB) and its majority shareholder, Belize Ports Limited (BPL), in which they are suing the Government of Belize for an unspecified amount in damages and costs. The claim alleges that the Government has breached a series of agreements it has with the parties, putting their investment at risk.
They accuse the Government of entering into agreements with the investors knowing and/or being negligent as to whether the statements and representations made to them by the Minister of Finance are false.
The companies also say that the Government has failed to provide tax and duty exemptions it had promised to them. They say that they had agreed to develop the main port, as well as finance, manage and operate a cruise ship port, a Belize Port Free Zone, a hotel and a casino, along with other related projects, and the Government had promised to facilitate the venture. Now, they are saying that the Government has breached the Cruise Terminal Agreement by failing to make the necessary arrangements to ensure their revenue flow.
They go on to claim that the Government owes Port of Belize money, and has failed to execute a promissory note to settle the debt. However, they do not specify what the debt is for and exactly how much is owing to them.
Their allegations go beyond the cruise port development, however. The companies say that Government has also failed to complete the sale of the Big Creek Port (the banana and oil exporting site) to them, and has failed to issue to them a freehold title for the main citrus port at Commerce Bight, a few miles south of Dangriga. Government has not taken steps for Port of Belize and Belize Ports Limited to legally manage and operate the Commerce Bight Port in Stann Creek, they also declare.
In addition, they claim that the Government has failed to enact legislation for a free zone in Port Loyola.
In March 2002, the Government sold 99.55% of Port of Belize Limited to Espat’s company, Belize Ports Limited, for $39.8 million. Two years later the Government, Port of Belize and a major international cruise line – Carnival Corporation – broke champagne at the grounds of the port over a $100 million cruise terminal that was to have been built on the site of the port.
Now, POL and BPL say that Government breached the very prospectus for the sale, dated January 2002, and several subsequent agreements namely (1) the share sale agreement of March 2002, (2) an investment agreement it signed with BPL, Carnival Corporation and their joint venture company – the Belize Cruise Terminal Limited, on April 29, 2004, (3) a privatization cooperation agreement dated December 2005, (4) a license dated January 2002, and (6) a lease dated January 2002.
On Tuesday, September 11, when Port of Belize and Belize Ports Limited made the filing in court, Cabinet made a controversial decision to support another cruise port project at Stake Bank, controlled by Michael Feinstein. Feinstein had an exclusive contract for a cruise port at the Fort Street Tourism Village (FSTV), but sold to Diamonds International/Royal Caribbean several years ago, before moving on to the Stake Bank venture.
It did not come as a surprise that Carnival, Royal Caribbean’s rival, eventually wanted its own port. At the time when the $100 million Carnival-Port of Belize joint venture was announced in 2004, the owners of the FSTV protested that Government was breaching its contract with them.
Nonetheless, Government moved full speed ahead with endorsing the Carnival-Port of Belize project, touting it as an avenue to boost employment, entrepreneurial activity and development on the City’s impoverished Southside.
Settling the dispute was an expensive undertaking as the Government had to enter into a compensation contract with the then owners of the FSTV – a deal that will cost Belizean taxpayers millions of dollars annually to offset what FSTV claims would be revenues lost because of the new port.
It became clear several months ago that the investors in the Southside port and the Government have been at odds over the intricacies of the investment deal. Things came to a head this week, when the investors made a final decision to take their case to court.
Undeterred by that lawsuit, Government made a strategic move on Tuesday when it held a Cabinet meeting and decided that it would support Feinstein’s project, giving him the same status as the Carnival-Port of Belize port.
Cabinet Secretary Robert Leslie told our newspaper that Cabinet decided that it would give “equal treatment” to both the Port of Belize/Carnival cruise port project and the Stake Bank project. He added that the major cruise lines – RCCL and Carnival - have said that they want a cruise ship docking facility built by Winter 2009 – the high season.
Cabinet looked at two projects and intends to satisfy its arrangements with both Stake Bank and Port of Belize, he said, adding that Cabinet hopes that one or both of them could build the docking facility within the timeline.
When we asked him what was the trigger for the Cabinet discussion on the cruise ports, Leslie said that they had observed that while cruise tourism is growing internationally, Belize has seen a decline in cruise passenger arrivals. One reason given for the decline in arrivals is the docking facilities and the lack of infrastructure to accommodate cruise ships, he added.
As things stand currently in Belize, cruise ships don’t dock directly at a port, but passengers who want to venture inland have to be transported ashore via smaller vessels called tenders. The new trend is for the construction of ports where passengers go directly from ship to landing site and then to their desired destinations/tours.
The FSTV is still the designated port for cruise passengers in Belize, and we understand that Royal Caribbean is supporting the Stake Bank development. |
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