By Bob Cusack - 04/13/05 12:00 AM EDT
Lawmakers and a former Clinton administration insider are pressuring the government of Belize to make amends for what a Florida court has characterized as an illegal takeover of a U.S.-held company.
Lanny Davis, former White House special counsel to President Clinton and now a litigation partner at Orrick, Herrington & Sutcliffe, is representing a U.S. foreign investor whose telephone company was seized by the Belize government in February.
Belize, formerly British Honduras, has enjoyed a close relationship with the United States, but this telecommunications case has riled lawmakers and triggered a strong rebuke from the judicial branch.
Needing to repair its beleaguered phone service, Belize contacted Jeffrey Prosser, the U.S. foreign investor, and persuaded him to buy a controlling share of a Belizean telephone company with the aim of enhancing its operations. Davis said After Prosser did that, Belize failed to live up to its regulatory commitments. Prosser subsequently sued Belize.
After Belize failed to recognize a finding that the country illegally seized the company, U.S. District Court Judge Ursula Ungaro-Benages found Belize in contempt and said, “It does seem as though the government of Belize wants to be hit over the head by a 2-by-4.”
The Belize government said it seized control of the Belise Telecom Ltd., owned indirectly by a U.S. firm called Innovative Communication Co. LLC (ICC LLC), because it owed over $57 million. Davis strongly disputes that claim. He said that, because of the government’s takeover of ICC LLC, it could not secure financing for the money owed. Had the government maintained its agreements, financing was assured, Davis said.
Lawmakers agree. In an April 1 letter to the prime minister of Belize, Rep. Jerry Weller (R-Ill.) said, “Aside from the clearly illegal and costly actions the government has taken against this company, there is an important precedent that is set by this case. Foreign investors will be watching very closely to see the outcome of this matter and will make decisions about whether Belize is a good choice for investing based on the actions in this case.”
Weller, who is vice chairman of the International Relations Subcommittee on the Western Hemisphere, personally delivered his letter to the prime minister of Belize. Rep. Emanuel Cleaver (D-Mo.) has also sent a letter objecting to Belize’s actions.
The Bush administration has yet to weigh in, but ICC LLC officials have met with the Department of State on the matter. The World Bank has also been apprised of the situation while the Overseas Private Investment Corporation sent a letter to Belize last week seeking a resolution to the case.
It is rare for a court to find a government in contempt, partly because most governments do not waive their sovereign immunity. But Belize did that when it entered into agreements that involved the borrowing of millions of dollars from the International Bank of Miami relating to the telecommunications project. The move enabled ICC LLC to successfully convince the Florida court that it has jurisdiction.
After the Florida court ruling, Belize’s chief justice issued a decision supporting the Belizean government.
In anticipation of such a ruling, Ungaro-Benages said, “The law in this country is that that kind of activity will not oust this court of jurisdiction.”
Davis said it is “remarkable” that the Belizean government seized ICC LLC “after hours” and then defied the court’s order to give control of the company back to its owners.
Before ICC sought legal action, Davis traveled to Belize to negotiate a deal. Davis said he told top government officials in Belize that if the country is going to act like an international outlaw, it should expect repercussions. Davis said the officials rejected his proposed compromises.
This is not the first time Davis has waded into international politics. He has represented Pakistan, brokering multi-billion dollar arrangements between the U.S and the Middle East country.
Meanwhile, Ungaro-Benages is expected to rule soon on sanctions against Belize, though the enforcement of those penalties will likely fall to U.S. policymakers.
Belize government officials did not respond to requests for comment.