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