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Oct 31, 2006

Audits showed that all not well at D.F.C.

Story PictureThings were relatively quiet at today’s public hearings as members of the Commission of Inquiry sought to find out exactly what the D.F.C.’s outside auditors knew about the inner workings of the corporation. News Five’s Janelle Chanona reports.

Janelle Chanona, Reporting
Today?s public hearing of the Development Finance Corporation took an administrative turn with the testimonies of two certified public accountants. During the period of investigation, Claude Burrell and Giacomo Sanchez worked at Deloitte Belize, the firm that audited the D.F.C.

David Price, Chair, D.F.C., Commission of Inquiry
?Can you recall, off the cuff, any instances of such impropriety over the six year period that you??

Giacomo Sanchez, C.P.A., Castillo, Sanchez and Burrell
?No.?

David Price
?You can?t recall??

Giacomo Sanchez
?No.?

David Price
?That doesn?t mean that there might not have been??

Giacomo Sanchez
?If that possibility exists, I can?t recall at this time.?

But Sanchez would later reveal that while Deloitte gave D.F.C. an unqualified opinion for the period 1999 through 2002, in 2003 and 2004, the auditors gave the corporation an adverse opinion, signalling that there were significant limitations in verifying the numbers presented.

Giacomo Sanchez
?The point of contention had to do with the block of assets held for resale as reported in the corporation?s financial statements. In the 2003, we were unable to determine a dollar value or an estimate of what it may or may not, a proper valuation of that. It was in our opinion, that as reported, at historical cost and the financial statement, was not in accordance with international standards.?

Merlene Bailey Martinez, Commissioner
?Anything else??

Giacomo Sanchez
?The issue of recoverability of the government contribution to the corporation. If you examine the entire period from 1999 to 2004, the government attempted in the early years to meet its obligations and for whatever reasons, years 2003/2004 it didn?t amount to anything other than just a commitment, which was booked.?

Merlene Bailey Martinez
?How should it have been reflected? You should some impairment should have been recognized??

Giacomo Sanchez
?It should have been written off or not recorded at all.?

What the auditors did record, was the presence of the now infamous fifty million dollar transaction between the Belize Bank, the D.F.C. and the Government of Belize.

Merlene Bailey Martinez
?You did not query this transaction at all for fifty million dollars??

Claude Burrell, C.P.A., Castillo, Sanchez and Burrell
?Not to the extent, of where we, from the perspective of how it was being disclosed in the financial statements because for our purpose it was being properly disclosed.?

Merlene Bailey Martinez
?Did Deloitte ever question the legitimacy of the transaction itself??

Claude Burrell
?I would have to go back to that file to see what all we done.?

Merlene Bailey Martinez
?Okay, we?ll allow you to go back.?

This afternoon, the commissioners also recalled the D.F.C.?s former Financial Controller, Roy Pandy, to ask him additional questions about the same transaction.

Roy Pandy, Financial Controller, D.F.C.
?What happened is that a CD was established in the favour of the Government of Belize and a liability was established that D.F.C. owes the Belize Bank fifty million that is actually took place.?

Merlene Bailey Martinez
?The CD. You are saying there was no physical movement from the Belize Bank to the D.F.C., you?re saying a CD was established.?

Roy Pandy
?Yeah.?

Merlene Bailey Martinez
?Did you see that CD??

Roy Pandy
?I did not see the CD.?

Merlene Bailey Martinez
?How did you know it was established??

Roy Pandy
?The Government of Belize confirmed that.?

Merlene Bailey Martinez
?In what way??

Roy Pandy
?Well at the end when it was surrendered they told me that they would be surrendering …?

Merlene Bailey Martinez
?Mr. Pandy I?m not there yet.?

Roy Pandy
?Well I am running away from the point of view where you are asking me if I saw a CD to the point where it was surrendered.?

Merlene Bailey Martinez
?No I am asking you did you see a CD??

Roy Pandy
?I told you already. I did not see a CD.?

Merlene Bailey Martinez
?Last time you said you couldn?t recall.?

Roy Pandy
?I can?t recall and I have not seen it.?

Merlene Bailey Martinez
?It?s really refreshing to get a straightforward answer. Thank you.?

Roy Pandy
?Well, I am all about straightforward answers. Government has been advancing money to the D.F.C. so as it required it. I am certain at that time that the advances to the D.F.C. were in excess of fifty million.?

Merlene Bailey Martinez
?So your statement, your testimony is that this fifty million dollars was passed to the Government to offset advances that the government had made to D.F.C. Is that what you are testifying to??

Roy Pandy
?Yeah, but I?d like to do a change to that, slightly. In the sense that, we didn?t apply the fifty million directly to the amounts that were advanced to the D.F.C. It was treated as a loan to government and as you look at the agreement that …?

Merlene Bailey Martinez
?Thank you so much Mr. Pandy! Because in one breath you?re telling me it was to offset advances and now you?re telling me it wasn?t to offset advances, it wasn?t applied in that way.?

Roy Pandy
?It wasn?t applied that way.?

Merlene Bailey Martinez
?So it wasn?t applied against any outstanding balances owed to the Government of Belize??

Roy Pandy
?No it wasn?t.?

Merlene Bailey Martinez
?Why did you say it was??

Roy Pandy
?You know you ask me to come and be before the commission but you did not take the pleasure of telling me what is it you want to ask me about.?

Merlene Bailey Martinez
?You have been advised.?

Roy Pandy
?You ask me to come, that?s all. And what I was trying to do was remember what happened.?

Subsequent testimony would reveal that the fifty million dollar ?loan? was later reversed but by then, the D.F.C. had already incurred interest costs of more than four hundred thousand dollars. On Thursday, former Board Member Belizario Carballo Junior will take the hot seat.

Reporting for News Five, I am Janelle Chanona.

Today’s proceedings were delayed because as many as eight witnesses summoned to appear before the Commission have requested that legal counsel accompany them while testifying. So as to not hold up the process this morning, Burrell and Sanchez agreed to waive that right. We understand that the majority of those witnesses are represented by the law firm of W.H. Courtenay.

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