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Aug 1, 2006

D.F.C. of Inquiry opens with frank testimony

Story PictureThe long awaited public hearings by the Commission of Inquiry, appointed to look into the actions of the Development Finance Corporation from 1999 through 2004, got underway today. And if anyone thought that the three person panel would have trouble finding its investigative footing, they better think again. News Five’s Janelle Chanona reports from the Belize Institute of Management.

Janelle Chanona, Reporting
?During the first public hearing of the Commission of Inquiry into the Development Finance Corporation, three witnesses were called to answer questions. Eloisa Phillips, Cherry Berry and Henry Brown Sr. were all employees of the corporation during the investigation period. And although he was the last to take the hot seat, Brown brought the bombshells, describing reckless management of the corporation?s funds.?

During his tenure at D.F.C., Henry Brown worked in the Loan Recovery and Monitoring Unit. This afternoon Brown told investigators that more than half of the delinquent borrowers were allowed to slide because of political connections.

Henry Brown Sr., Former D.F.C. Employee
?I was told that some of these loans were sensitive loans and we cannot do anything about them. That was the reason given for us not to proceed.?

Merlene Bailey Martinez, D.F.C. Commission of Inquiry
?Sensitive in the sense of the description that we described or the definition that was given.?

Henry Brown Sr.
?The definition given that these are–some sort of political affiliation and we can?t proceed further with it. I know that there were several non-performing loans in my time that there was nothing being done to it. These persons have been given some huge sums, but no action was taken against them. Then there were those that after a while they said demand it. And even publish like in the case of real estate, with the intention to sell, and then the process was stopped. You don?t question the board; you don?t question the credit committee. They are the finally authority and they give the instruction, and then you carry out the instruction. I don?t think there is any situation you tell the boss, boss look we wah run the show this way ? no you can?t do that.?

Merlene Bailey Martinez
?I?m asking about a query not instructions to the director or to the manager but a query. Is it a culture to query to say this fits the criteria for things that should be auctioned off. Why are we not proceeding? Has that ever been done before??

Henry Brown Sr.
?Yes, but the query was limited to a certain level. It did not go beyond that. Within the office we would ask the general manager or the people we work along with, but beyond that we did not have that access to go to the query committee and say, sir we?ve been sitting on this loan for quite some time and we need to recover this money. It does not happen that way. You take it to a certain level and it rests there, and that?s where it sits.?

David Price, Chair, D.F.C. Commission of Inquiry
?If I use this definition here, there are three things defined as sensitive, economic circumstances, political circumstances or loans to government entities, which one of those three would account for most of the non-follow to the loan.?

Henry Brown Sr.
?I would say political.?

David Price
?Could it be inferred then that part of the reason for D.F.C.?s poor performance was as a result of a large number of politically sensitive loans??

Henry Brown Sr.
?I would say so. A lot of our staff became very frustrated. We talked about this at different levels and different forums that we have worked so hard and we have made so many sacrifices to see our funds go out in big trenches. That was very disappointing. This is why a lot of our committed D.F.C. workers either resigned or moved on to something else, because they had seen the handwriting on the wall that this would not last for a long time.?

Between January 1999 and December 2004, Eloisa Phillips worked as secretary to the D.F.C. Board and executive assistant to the General Manager. This morning, Phillips described the common practice of ?circulation by telephone?.

Eloisa Phillips, Former D.F.C. Employee
?We sent the papers to be circulated to each board member. We mentioned to them that it was urgent and we needed the reply in lets say two days. And if at the time that we called back, I called back, for the answer the Board member was not ready yet, then it would be left without an approval or disapproval for that Board member.?

David Price
?So am I to understand that approvals by circulation was not always unanimous? There was not a need for all members to agree??

Eloisa Phillips
?We had a majority approval which was four.?

Merlene Bailey Martinez
?We have government directors on the board and we have private sector directors on the board was there any attempt made to ensure that both of these sectors were included in these majority decisions or was it four and that is it??

Eloisa Phillips
?It was four.?

Merlene Bailey Martinez
?The composition of the four did it matter??

Eloisa Phillips
?No.?

Merlene Bailey Martinez
?Was there no discussion to say, well it should be a composition of private sector and government directors??

Eloisa Phillips
?No. Not that I recall.?

Merlene Bailey Martinez
?So it could have been all government directors or the private sector??

Eloisa Phillips
?Correct.?

Phillips was also privy to documentation and discussion about some of the D.F.C.?s largest, and most controversial loans.

David Price
?Late 2003/2004 your records, board records that is, records several loans to Novelo?s Limited, James JanMohammed and Arnaldo Pena. These loans were for working capital in quotes and were secured by promissory notes. A couple of questions in respect to those. What papers were tabled at the board in support of those loans? Did these borrowers apply for these loans??

Eloisa Phillips
?Not that I can recall. I don?t know if they applied, no.?

David Price
?So why were they given these loans??

Eloisa Phillips
?These were papers that were given to the board from our accounting department saying, requesting such a loans for the Novelo?s for working capital, passed to the General Manager and through to the Board of Directors.?

David Price
?What was purpose of these loans???

Eloisa Phillips
?For working capital as the record state.?

Merlene Bailey Martinez
?Mrs. Phillips what was actually tabled in the case of Mr. Pena? We actually have fourteen such instances. What was actually tabled??

Eloisa Phillips
?As I am telling you there was no paper tabled.?

Merlene Bailey Martinez
?No paper tabled??

Eloisa Phillips
?I don?t recall any paper being tabled.?

Merlene Bailey Martinez
?For the record, what you?re saying is confirmed by the files, because we don?t see anything. But we need to confirm that from you.?

Eloisa Phillips
?There was concern at board level.?

Merlene Bailey Martinez
?Expressed by whom??

Eloisa Phillips
?By Board members in general, I can?t recall who specifically. But there was concern at all levels about losses etc.?

Merlene Bailey Martinez
?What would have tipped the scale as far as approving this process.?

Eloisa Phillips
?In my opinion and this is simply my opinion, if you are already in it, you have to try to get out of it. And by putting in some more you can probably get out of it.?

Merlene Bailey Martinez
?Do you think they had a choice? From what you have experienced at the discussion of Board level??

Eloisa Phillips
?If they had a choice to go ahead with it??

Merlene Bailey Martinez
?Yes.?

Eloisa Phillips
?That would be hard for me to say, because as I tell you–we were already?D.F.C. was already more than half way into to securitization.?

David Price
?Would you say that there was a certain level of impropriety at the D.F.C.??

Eloisa Phillips
?No, I can?t say that. I can?t say that.?

David Price
?So you think that everything was quite in order at the D.F.C. during that period.?

Eloisa Phillips
?(Chuckles)There were some things in between that really struck you. For example, the securitization, which I don?t understand. Never understood it.?

Janelle Chanona
?Today?s proceedings have set the tone for what is slated to be more than three months of public hearings. And by all accounts, Commissioners Herbert Lord, Merlene Bailey Martinez and Chairman David Price have taken on their mandate with zeal … intent on uncovering the nitty gritty of the inner workings of the now defunct Development Finance Corporation. From the Belize Institute of Management, I am Janelle Chanona reporting for News Five.?

Today’s third witness, Cherry Berry, is the Supervisor of Records Management at the D.F.C. She testified regarding technical aspects of storing borrowers’ files and to the integrity of those documents. The hearings will continue every Tuesday and Thursday, likely through late October or early November with a short break in September. They are televised live as a public service right here on Channel 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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