PetroCaribe Loan Motion passed: Legitimizes GOB spending without House of Representatives’ approval

Members of Parliament and the Senate approved the PetroCaribe Loan motion of 2015, which allows the Government of Belize (GOB) absolute power to borrow monies from ALBA PetroCaribe funds without prior authorization from the House of Representatives. The loan motion goes contrary to the Finance and Audit Act, which requires government to seek approval from the National Assembly to borrow and spend money exceeding $10 million. The motion was presented on March 26th and was moved through all stages immediately after the Budget Debate on March 27th. Despite meeting strong objection by the People’s United Party (PUP), it was sent to the Senate on March 30th for ratification.
The ALBA PetroCaribe fund is the result of an agreement made in June 2005 between the Republic of Venezuela and several Caribbean countries, including Belize, through the PetroCaribe initiative. In September of 2005, both countries entered into a bilateral Energy Cooperation Agreement, in which Venezuela agreed to supply Belize with crude oil, refined products and Liquid Petroleum Gas (LPG) up to 4,000 barrels per day on an annual basis, through Petroleos de Venezuela SA (PDVSA).
The bilateral agreement was subject to certain terms and conditions which called for the establishment of a joint venture company called ALBA PetroCaribe (Belize Energy) Limited (APBEL). It was agreed that Venezuelan owned PDV Caribe and the Government of Belize (GOB) owned Belize Petroleum and Energy Limited (BPEL). APBEL has been jointly designated by Belize and Venezuela as the importing entity in Belize for petroleum products purchased from PDVSA. The importation would be consisting of two portions – a cash portion and a financed portion equally distributed in a ration of 50%. Under the agreement, the cash portion would be paid in 90 days to PDVSA by APBEL and the other portion would be lent to GOB by APBEL on a concessionary term which would be repayable over a 25-year period.
In the act presented by PM Barrow on March 26th, Section 3-1 states that “Notwithstanding anything contained in the Finance and Audit (Reform) Act, 2005, or any other law to the contrary, it shall be lawful for the Government of Belize to borrow money from ALBA Petrocaribe (Belize Energy) Limited in any amounts without the prior authorization of the National Assembly and to enter into a loan agreement with APBEL.”
The PetroCaribe Loan motion moved to validate any spending retrospective of 1st September 2012 diverting from the Finance and Audit Act “Without prejudice to the generality of the foregoing provisions and notwithstanding anything contained in the Finance and Audit (Reform) Act, 2015… In the event of a conflict between the provisions of this Act and any other law, the provisions of this Act shall prevail.”
With the passage of the act, it legitimizes government spending of the PetroCaribe funds retroactive of 1st September 2012. The act validates GOB spending of a loan of US$114,307,356 entered into without legal approval from September 2012 to August 2014. In addition it also makes provision for other loan agreements totaling US$28,776,243.39 entered into by GOB during the period September 2014 to February 2015.
During his presentation of the motion, Leader of the Opposition’s PUP Francis Fonseca indicated that it was “scandalous and unconstitutional.” In his remarks Fonseca said, “I want to place on the record that we object to the passage of this bill through all its stages today Mr. Speaker. This is not only a scandalous piece of legislation, it is unconstitutional, and the Belizean people should have an opportunity to read this bill, to understand this bill and to express their views on this bill before it is passed through this House.”
In his response to the bill, PM Barrow said that he is prepared to return to the House of Representative periodically to explain how the PetroCaribe monies are being spent. “Every time there is any withdrawal to continue to fund the transformation of this country, it goes through the Ministry of Finance under the complete supervision oversight of the Financial Secretary and all the officials in the Ministry of Finance. Periodically again, as we spend, we will come to the House with the supplementary bills to in fact indicate where the spending has reached, at a particular point in time – allow a debate on the spending that has taken place and then try to pass the supplementary appropriation. In fact, I am undertaking that we will do that half yearly. I’ve already signaled that we will come back with a mid-year budget, or if they want we can do it every three months. There is nothing to hide,” stated Barrow.
The debate over the loan motion went into long hours before it was approved by the UDP-majority in the House of Representative. On March 30th it was sent to the Senate for ratification. While the government appointed Senators all voted in favor of the Loan motion, Opposition Senators adamantly objected to its passage. One vocal PUP senator was Lisa Shoman. “We have a loan motion asking us to approve after the fact, in complete contravention with the law – the language has changed – to confirm and validate the borrowing. Not to approve it, because they know we can’t approve it after the fact. We’re being asked to confirm and validate the borrowing, and I’m not going to do that Mr. President. And I will tell you why I will not do that. I will not do that on the basis of a paragraph when we have asked time and again – give us the details as to how this is going to be spent. Give us a breakdown. Give us an assurance that there is somewhere accounting of specifically what amounts were spent on what. Tell me what are the capital projects that you’re financing and how much. With this money, tell me what sporting facilities are going to be constructed and how much, and tell me where is the provision of social and community assistance to the poor and socially marginalized in accordance with what government social and economic programs,” indicated Senator Shoman. Despite those strong objections, the loan motion was approved and is expected to be signed into law by the Governor General.
One organization that has joined the condemnation of the approved loan bill is the Christian Workers Union (CWU). This comes after the fact that Senator Ray Davis, who is the union’s senator in the Senate, abstained when a division vote was called. The abstention is a most unusual act by Senator Davis because the National Trade Union Congress of Belize (NTUCB) agitated for the enactment of the Finance and Audit Reform Act in 2010, compelling government to seek the House of Representative approval on all loans and spending exceeding $10 million.
A release from the CWU states that the bill lacks transparency and accountability and seeks to legalize an illegal act of GOB. The CWU also calls on other unions to, quote, “denounce this act and to unite to demand the repeal of this law.” It adds that “it is not proper that our government enters any agreement or contract that violates our laws or constitution.”
Interestingly, the NTUCB has remained mum on the issue, despite growing concern about the context of motion. In addition it also brings into question the manner in which it was introduced and subsequently passed through all its stages without consultation.