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Dec 7, 2010

U.S. dollar freeze at the Commercial Free Zone

We have reported that businesses in the Commercial Free Zone have been unable to make deposits in US dollars. The freeze has been going on for about a week. The problem goes back to October when a global bank note services contract with Hongkong and Shanghai Banking Corporation (HSBC) was discontinued for Belize and the rest of Central America. According to the Governor of the Central Bank, Glen Ysaguirre, in the past the Central Bank facilitated commercial banks in Belize with US cash transfers to help reduce cost and it is now seeking to do the same with the Bank of America. News Five’s Isani Cayetano reports.

Isani Cayetano, Reporting

Business at the Commercial Free Zone in Corozal carried on as usual today as consumers from the nearby state of Quintana Roo, Mexico went about their Christmas shopping at the many duty free stores on the compound.  Over the past few days however, there have been serious financial constrictions by various international banks including Bank of America that handle wire transfers from accounts held by businesses inside CFZ.  It is a problem that sees a substantial amount of money being tied up locally that, otherwise, is reserved for the purchase and importation of goods into the marketplace.  Since taking over in 2008, David Akierman and the committee of management of the Commercial Free Zone have been able to eliminate quite a number of companies that were registered in CFZ that only existed in writing.  Akierman attributes the current situation of foreign banks being reluctant to accept money coming out of the free zone to questionable practices that were overlooked by the previous management.

david akierman

David Akierman, Executive Chairman, CFZ

“All these companies were created by the past administration, you know, I personally, my board we removed two hundred and forty companies in two years.  Companies that were just sitting, paper companies; companies that in two years, in a period of five, six years only did one transaction and never came back.  I think proper due diligence work was not done.  I can tell you that that is not happening now.  This, to come in and invest in this free zone is not just like walking in, knocking [on] the chairman’s door and you walk out with a certificate of compliance now.”

While majority of the companies operating within the zone are in compliance with existing regulations Akierman says that it is only a handful that is being affected directly by this financial crisis.

David Akierman

“This is not a hundred percent of the private sector.  [There is a] small group of people that, because transactions are happening, transactions are happening.  If anybody tells you that there are not transferring money it’s totally false, right.  I am confident that this will be solved because it’s nothing; this has occurred in the early 2000s too.  This is not the first time.”

Though it is not the first time such a thing has happened the Central Bank of Belize which is controlled by government has stepped in to broker the situation during an emergency meeting last Friday.  The Government of Belize has five of the nine seats on CFZ’s board of directors.  Akierman, though absent from the meeting, said that a solution is being sought.

David Akierman

“We have met even as a group [with] Central Bank and we have come to the table to discuss the matter and make suggestions and I think that’s where it is.  That meeting which was held on Friday from what I understand is not the first meeting.  We had met two weeks prior to that as all stakeholders discussing and trying to put ways and discuss ways for us to carry out better business in the, to carry out business in a more transparent manner in the free zone.”

Despite the restriction on the transfer of money Akierman says they are still clearing up to fifty containers of goods weekly.

David Akierman

“It is a concern yes because it’s high season but I have containers coming in everyday.”

Isani Cayetano

“And these are being cleared and there is money being spent on…”

David Akierman

“I can tell you how many containers were discharged yesterday and how much entries we stamp every day, you know.  We’re doing like thirty-five, forty, fifty [containers].  We’re doing okay.  Yes there are certain things that we need to address and we are going to address it and I’m certain that within a couple days a positive note will come up on this issue.  It’s not the first time, in 2000 there was the same problem.”

In light of this recent debacle nonetheless, there is the allegation that the clamp being placed on monies from the free zone is the result of ongoing money laundering activities.

David Akierman

“If we’re talking about money laundering and free zones then where do we leave the casinos?  This type of business is happening in the US/Mexico border.  I have an investor right here who has a chain; has forty-two stores in the US/Mexico border in the United States and I met with the vice president last week.  I met with the vice president and all the transactions they do is cash transactions.  Mexicans come, purchase; how they take it into their country that’s their problem.  Here we have everything on paper trail within our country.”

It is not clear whether a solution will be derived before the end of the week but we do note that the matter was set to be discussed in Cabinet today. Reporting for News Five, I am Isani Cayetano.

In answer to our questions, Ysaguirre also pointed out that the responsibility to provide credit and liquidity for the Free Zone is a matter for the commercial bankers in the Zone.  He said “The proceeds of electronic transfers and credit card sales should be immediately available to businesses and should help relieve liquidity pressures due to the delay in cash transfers. It is also the responsibility of the commercial banks to provide deposit and transfer services for their customers in the Zone. The ideal situation, and that which the Central Bank is encouraging, is for each commercial bank to establish their own cash transfer service with the foreign bank of their choice. However, the Central Bank will continue to assist domestic banks, when and where it can, until their independent arrangements are in place.”

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4 Responses for “U.S. dollar freeze at the Commercial Free Zone”

  1. belizeanpride says:

    why don’t they give us the local belizeans a break to buy there at least this month so they’ll have more business and a few thousands of belize dollars. come on give us break we want to buy also at economic prices noh.

  2. BELIZEANGYPSY says:

    Free Zone for who, certainly not for Belizeans – they should call it Mexico Free zone occupying Belizean soils . You bet when the businesses at the Free Zone start going bankrupt they will gladly open their doors to every Belizeans.

  3. daveyt says:

    They face a double whammy now – WalMart is open just over the border!

    All the GOB SUV’s will be bypassing the Freezone and going there for the XMas shopping spree.

    The Free Zones were money laundering adventures anyway, very few Belizeans benefitted from it – Remember the Casa de Cambios that were set up a while back under the last administration. Died a death as soon as the US authorities started asking questions!

    The only people who will suffer, should the Free Zone close is the Belizean workers from there, who were paid pennies anyway.

    If it were a proper Free Zone, Belizeans would have been allowed to shop there too, with both US & Belize Dollars, but that was never the intention. Tax payers footed the bill for money laundering. No wonder we are in the crap that we are!

  4. leah says:

    ??????????free zone i have no idea what belize has to do with it….

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