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Jun 14, 2023

The Definitive Agreement and Its Importance in Cruise Tourism

In tonight’s episode of the Five Point Breakdown, we take a closer look at the Definitive Agreement, what it is and whether or not the contract signed between Portico and the Government of Belize is legally binding.  We also ask whether the agreement can stand on its own, independent of parliament.  Here’s News Five’s Isani Cayetano with that story.


Isani Cayetano, Reporting

For several weeks, public discussion has centered around cruise tourism development and the dispute that has arisen out of a compact entered into by Portico Enterprises Ltd. and the Government of Belize.  Aside from a glaring spelling mistake, much is being made about the Definitive Agreement and the incidental consequences ever since that shocking document saw the light of day.  But how is such a divisive contract important to advancing big business in Belize?


What is a Definitive Agreement?


Dean Barrow

Dean Barrow, Attorney-at-law

“A Definitive Agreement is supposed to be a binding agreement between, in this case the government and the private entity.  But we must not forget that on its own the Definitive Agreement is valueless, it’s worthless.  What the Definitive Agreement does or is supposed to do is to commit the government to, on the basis of that Definitive Agreement then go further and pass a law that would give effect to the Definitive Agreement.”


That document includes all the important details of the deal, such as warranties, representations and covenants, as well as any other essential provisions.  A Definitive Agreement represents the final terms and conditions between two parties and ensures that, in this case, Portico and GOB understand their rights and obligations as part of a strategic alliance.


Dean Barrow

“In the Definitive Agreement, this particular Definitive Agreement, Mr. Contreras commits the government to passing a law that will give all these tax breaks that will ensure that the recipient, the beneficiary of the Definitive Agreement won’t have to get foreign exchange permissions, all sorts of things.”


…outrageous government obligations, including tax relief in the form of allowable deductions, for example, business losses.   The most divisive condition, however, requires government to ensure that no third party competing with Portico, shall within a twenty-five mile radius, be given any tax benefits or duty concessions for a period of twenty-five years from the Commencement Date.  This includes Stake Bank and Port of Belize Ltd., both developments would fall within that area.


Is Portico’s Definitive Agreement Lawful?


Shyne Barrow

Shyne Barrow, Leader of the Opposition

“The previous government, from prime minister down to attorney general down to minister of cabinet, a minister that was in that economic development ministry is now saying that it was fraudulent.  How do we get to a point where we’re still even talking to Portico.  If there is an emergency in the cruise port sector and we need to find a solution to docking that does not require tender, why aren’t we looking at the Port of Belize and the Feinstein Group?”


It’s an interesting question raised by the Leader of the Opposition, who is quite vocal in his objection to the Definitive Agreement with Portico.


Anthony Mahler

Anthony Mahler, Minister of Tourism

“You have to really ask the developers and the financing organization, or the primary financing organization for Stake Bank what is happening.  The developers have said that they would open 2021, 2022, 2023.  I don’t see it, but I hope they can prove me wrong.  We have done everything possible as a government to ensure that Stake Bank can open for business.  It is important, like I said, in the short to medium term and even in the long term, as we develop tourism here in Belize.”


Stake Bank is at a virtual standstill.  A recent tour around the island proves that little is being done to complete that project in a timely manner.  By comparison, the accord between the Government of Belize and Stake Bank Enterprises is typical for developments of this nature.  There are exemptions under the Fiscal Incentives Act, including freedom from import duty while the project is being constructed.  Portico, on the other hand, is exempted from all customs and excise and revenue replacement duties, stamp duties, general sales taxes, environmental taxes, income taxes, and the list goes on.


Is a Definitive Agreement Independent of Parliamentary Approval?


Dean Barrow

“In particular, the tax breaks, no minister, no prime minister, and that’s been litigated here in Belize as well, has any authority to give anybody any tax break, except under a law that mandates that.  So the commitment of a minister or the government in a Definitive Agreement to do things like exempt the beneficiary of the agreement from paying taxes, on its own means nothing.  The government will have to pass a law because no government can simply exempt anybody from existing taxes.”


According to Minister of Tourism Anthony Mahler, the flagrant overreach in the Definitive Agreement has forced the principals of Portico to return to the drawing board.


Anthony Mahler

“The information that I am getting right now is that they are going to be willing to renegotiate and start from scratch. You have Port of Magical that I truly, and I’ve said this to the principals, I truly, truly didn’t take it seriously, but they’ve gotten to a point that now I am taking it seriously. I’ve spoken to Boskalis, I’ve spoken to Royal Caribbean and they are dead serious about completing this project and so we have to listen.  I think cruise provides an opportunity for small operators and small vendors to be able to earn a decent living.”


Is the Definitive Agreement Legally Binding?


Dean Barrow

“We now hear, while there is no confirmation, that [the] attorney general who is leaving office at the end of the month refused to give any opinion that the agreement was binding.  That tells me that in effect, if that is so, the attorney general would say it’s not binding and the attorney general is a good lawyer, a senior lawyer, senior counsel, somebody who is skilled and knowledgeable and so it wouldn’t surprise me at all to hear that indeed, she said this can’t fly.”


With all the legal controversy that Portico’s Definitive Agreement has stirred, will the Port of Magical Belize truly get off the ground with Royal Caribbean as a major investor?


Should Royal Caribbean Proceed as a Stakeholder in Port of Magical Belize?


Dean Barrow

“My sense is this, because, and give Port of Belize and now Stake Bank their due, they have been so fierce, so unrelenting in pointing out all that was wrong with the way this Definitive Agreement first came into being and with the way the new administration, at least the prime minister sought to embrace it and make it his own, that a company such as Royal Caribbean, I understand it’s U.S. based and subject to the Foreign Corrupt Practices Act, some law in the U.S. which would make clear that a company such as Royal Caribbean has to be very, very careful.  Let me put it a little more clear, would need to stay away from any project that, it appears, is born out of corruption.”

Isani Cayetano for News Five.

Viewers please note: This Internet newscast is a verbatim transcript of our evening television newscast. Where speakers use Kriol, we attempt to faithfully reproduce the quotes using a standard spelling system.

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