Ashcroft bank accused of diverting £5m aid for poor of Belize to its own coffers

Conservative Party deputy chairman Lord Ashcroft is facing claims that a bank he controls in Belize ‘diverted’ £5million intended to help the country’s poor to its own coffers.

The money was a gift from Venezuela to the tiny Central American nation, where the controversial Tory donor’s multi-million business empire is based.



According to the Belize government, half of it arrived but the rest vanished.



It was later revealed that the funds had been routed, via London,

to the Belize Bank Limited, (BBL) owned by one of Lord Ashcroft’s holding companies.

Powerful: Lord Ashcroft with his wife Suzie at a New York reception

The bank says it is keeping the £5million because, it argues, it is repayment of a debt guaranteed by the impoverished country’s former prime minister, Said Musa.



But the current administration claims Mr Musa acted without authorisation from his national assembly.



It says the money was meant to pay for housing for low-income families and is suing BBL to get it.



At a hearing at Belize’s Supreme Court on Friday, Chief Justice Abdulai Conteh said he will rule in the next few days on whether the dispute – dubbed by lawyers ‘the case of the missing millions’ – should go before a special tribunal.

Protesters march through Belize city demanding the return of the money





The Mail on Sunday has been told by a highly-placed source that a complaint to police about how the funds were allegedly appropriated by BBL is also imminent.



‘Once that complaint is made the authorities will be automatically obliged to mount a criminal investigation,’ said the source.



The government’s lawyer, Lois Barrow Young, told The Mail on Sunday: ‘We have said that the money was diverted but my view is that, basically, this is plain and simple theft of money.



‘The money was transferred to BBL’s Bank of America account in London, where it was held for a few weeks, and on the account statement it says all the money was for the Government of Belize for housing repairs and construction.’

Protesters reach the Bank of Belize where they air their grievances





It is unclear what role, if any, Lord Ashcroft played in the affair, but it is already proving embarrassing for him. In Belize, formerly British Honduras, where the peer also owns a TV station, a telecommunications company and hotels, the dispute has caused widespread anger and prompted a public demonstration.



It was organised by a pressure group called the Committee to Oust Lord Ashcroft, which believes their country is seen by the billionaire entrepreneur as his personal fiefdom.



More than 300 people, including politicians, marched on BBL’s offices in Belize City, a mile from the 62-year-old tycoon’s seafront home.



Organiser Evan Hyde said the protest was ‘about getting back the money that belongs to the people of Belize’.



He added: ‘There are many people who believe Lord Ashcroft has become a pervasive influence in politics and the economy here. He has become too big a fish in too small a pond.



‘He was close to Mr Musa and to a great extent Musa facilitated Lord Ashcroft’s rise. There has been no control over the way he has been allowed to dominate our country.’



The Belize Bank controversy revolves around an unremarkable-looking

private hospital on the outskirts of Belize City, established by a company called Universal Health Services (UHS).



To finance the project the company borrowed large sums from both the government and BBL in 1998 and continued to do so over the following six years.



By December 2004 UHS owed BBL £7.7million and Mr Musa stepped in and agreed to guarantee repayment of all UHS’s obligations to the bank.



Crucially, court documents show that the guarantee was not made public and Mr Musa did not inform his cabinet.



Further funds were then released to UHS and the debts continued to pile up.



Then a new deal was drawn up between the BBL and the government in March last year in which Musa promised to start paying back the debt. But he failed to secure the approval of his national assembly, breaching financial legislation, say lawyers.



Meanwhile, details of the first agreement became public and shortly afterwards the 2007 deal was also revealed.



Legal action was taken to prevent the government paying BBL back, with lawyers arguing that the first deal should have been taken to cabinet

and the second violated the country’s finance act.



Meanwhile, BBL maintained it was still entitled to its money. But the government’s solicitor general undertook not to make any payments until the legal action was concluded.



By the end of 2007 Mr Musa was facing the prospect of election defeat the following February. He needed money if he was to stand any chance and he went cap in hand to Taiwan and Venezuela, both friendly to Belize.



Court documents show that on December 28 the Central Bank of Belize received $10million from Venezuela for housing and a sports stadium.



But the gift failed to secure Mr Musa’s re-election and on February 7 a new prime minister, Dean Barrow, was installed.



The following day the new administration received a letter from the Venezuelan government asking for ‘an accounting’ of its $20million gift.



‘We thought there had been a typing error,’ said government lawyer Michael Young.



‘Up until this point it was assumed the gift was for 10 not 20million. It was astonishing.’



So what happened to the missing $10million? Court papers show that instead of going to the Central Bank of Belize it was transferred on December 28 by Venezuela’s Bank of Economic and Social Development to Belize Bank’s account – numbered 68332015 – with Bank of America in London.



The transfer contained the instructions ‘Single disbursement [to] GOB (the Government of Belize) for construction and repair of housing’.



On January 24, the money was transferred to an account held with BBL in the Turks and Caicos islands, where Lord Ashcroft is a ‘belonger’ or citizen.



Ms Barrow Young said a contract between Mr Musa’s government and Venezuela clearly says the $20million gift was meant for ‘a programme of construction and the repairs of housing for low-income persons.’



She added: ‘There is much poverty here and the money was desperately needed.’

Mark Espat, a minister under Mr Musa who lost his cabinet job for opposing the guarantee, said money was ‘diverted from its intended purpose to honour a debt that should never have been agreed in the first place’.



On April 10, the government sued BBL for the return of $10million (£5million).



In a direct swipe at his predecessor Mr Barrow told the national assembly later that month that ‘the days of doing things in the dark behind the backs of the Belizean people in order to screw the Belizean people are over’.



Philip Johnson, the chairman of Belize Bank, told The Mail on Sunday in a

letter: ‘I am not in a position to discuss this matter with you in detail as it is the subject of arbitration proceedings...



'[However] the allegation by Ms Lois Barrow Young that there was a “diversion” or “theft” of funds is simply untrue and baseless.



‘UHS owed the bank very substantial sums that had been advanced in part

at least in reliance upon a guarantee by the Government of Belize.



That guarantee was signed by the then Prime Minister of Belize in his capacity as

the Minister of Finance and witnessed by the then Attorney General of Belize.



‘The bank believes that guarantee was lawful and valid and only committed to further funding of UHS on that basis.’



Mr Musa could not be contacted last night. A spokesman for Lord Ashcroft declined to respond to questions. He said: ‘It is a Belize Bank matter.’



The billionaire peer haunted by controversy



Lord Ashcroft, who has given the Tories more than £2.5 million since 2003, spent part of his youth in Belize – his father was a colonial civil servant – and later returned

to base some of his business activities there.



He holds dual UK and Belize nationality. And it is his association with the country, squeezed between Mexico and Guatemala, which has been at the heart of many of the controversies that have shadowed his career.



In Britain he was seen to pay too little income tax due to his domicile there.

Recently, Tory attacks on Labour over its party funding scandal were met with counter claims about the peer’s tax status.



His elevation to the peerage, which was heavily criticised by Labour, was approved only after he promised to take up permanent residence in the UK.



But he persistently refused to say if he had done so – only relenting earlier this year after Conservative leader David Cameron summoned him to a face-to-face meeting and insisted he clarify his position.









