GLENN GODFREY MADE ME DO IT!

UNCLAS BELIZE 000971 SIPDIS SENSITIVE SIPDIS DEPT FOR WHA/CEN (MACK),CA/VO/L/A (SETTJE),INL/C/CP (BECKER, BRANDOLI KOHN) TREASURY FOR IA/WHA (LEVINE) E.O. 12958: N/A TAGS: ECON EFIN PGOV PREL BH SUBJECT: GLENN GODFREY MADE ME DO IT! Ref:QBelize 708 QBelize 678 This cable is sensitive but unclassified. Please protect accordingly. ¶1. (U) Summary. On the first day of testimony at the resumed Developm Finance Corporation (DFC) investigative hearings, former general manage Roberto Bautista said that changes in policy left the Corporation vulne to significant losses. Lending policies were Qrelaxed,Q and the DFC Bo instructed staff to process all government housing projects. BautistaQ testimony also implicated former DFC Chairman Glenn Godfrey, who is rum to have reaped extensive financial benefits from this and other governm entities but has, thus far, remained untouchable. End summary. ¶2. (U) On October 24, the investigative hearing into the financial dea of the Development Finance Corporation (DFC) resumed after a two-month (As reported in reftels, the DFC is the Belizean equivalent of an agric bank, development bank, Freddy Mac, Sallie Mae, and Fannie Mae all roll one. For years, the DFC granted loans for small- and large-scale agric educational, and housing development projects). For the first time, a of the DFCQs top management testified before the investigative committe implicated Glenn Godfrey Q former DFC chairman, attorney, local busines and ruling PeopleQs United Party (PUP) crony. ¶3. (U) Roberto Bautista, previous DFC general manager and current mana credit administration for the Corporation, testified that in 1999 the D BZ$86 million and, while a portion of those funds were to be delivered Social Security Board, the remainder was deposited into the Belize Cent where it would earn 8.5 percent interest. (Note: US$1 equals BZ$2. E The funds were to be used for housing development so that the governing fulfill its campaign promise to construct 10,000 new homes in Belize. ¶4. (U) At the same time, Bautista said, some of the DFCQs strict lendi guidelines Q such as the one requiring borrowers to provide down paymen mortgage loans Q were relaxed. The DFC Board also instructed staff to any government housing projects. ¶5. (U) Despite the policy changes, the DFC continued to disburse funds borrowers in a series of payments rather than in one lump sum. Bautist testified that DFC Chairman Glenn Godfrey made an exception to this rul instructed him Q by telephone and in writing Q to disburse the BZ$30 mi loan to NoveloQs Bus Line in one lump sum. Bautista said that Godfrey him and suggested that, rather than letting the money QidleQ at the Cen for 8.5 percent interest, the DFC should disburse the funds Q borrowed percent Q to NoveloQs. Because Godfrey followed up this conversation w signed authorization letter, Bautista disbursed the funds. Full disbur was premature because all of the collateral had not been secured. In a GodfreyQs law firm Q which represented NoveloQs Q benefited to the tune BZ$2 million for legal work in connection with the loan. The bus line receivership and behind in its loan payments. According to Bautista, t outstanding balance on the loan is BZ$32 million. ¶6. (SBU) Comment. As far as Post knows, BautistaQs testimony represen first time a high-ranking official or political crony has been directly Q with tangible documentation Q to the DFC scandal. Poloff did not att hearings on October 24, and so is unable to confirm if GodfreyQs signed authorization letter was produced as evidence. If it was, then it may in building a 212(f) case against Godfrey. End comment. DIETER