VZCZCXRO8017
RR RUEHGR
DE RUEHBE #0973 3061942
ZNR UUUUU ZZH
R 021942Z NOV 06
FM AMEMBASSY BELIZE
TO RUEHC/SECSTATE WASHDC 0669
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS BELIZE 000973 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR WHA/CEN (MACK), CA/VO/L/A (SETTJE), 
DEPT FOR INL/C/CP (BECKER, BRANDOLINO, 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: A. Belize 708 
 
 ¶B. Belize 678 
 
This cable is sensitive but unclassified.  Please protect 
accordingly. 
 
¶1.  (U) Summary.  On the first day of testimony at the resumed 
Development Finance Corporation (DFC) investigative hearings, former 
general manager Roberto Bautista said that changes in policy left 
the Corporation vulnerable to significant losses.  Lending policies 
were "relaxed," and the DFC Board instructed staff to process all 
government housing projects.  Bautista's testimony also implicated 
former DFC Chairman Glenn Godfrey, who is rumored to have reaped 
extensive benefits from this and other government entities but has, 
thus far, remained untouchable.  End summary. 
 
¶2.  (U) On October 24, the investigative hearing into the financial 
dealings of the Development Finance Corporation (DFC) resumed after 
a two-month hiatus.  (As reported in reftels, the DFC is the 
Belizean equivalent of an agricultural bank, development bank, 
Freddy Mac, Sallie Mae, and Fannie Mae all rolled into one.  For 
years, the DFC granted loans for small- and large-scale 
agricultural, educational, and housing development projects).  For 
the first time, a member of the DFC's top management testified 
before the investigative committee and implicated Glenn Godfrey - 
former DFC chairman, attorney, local businessman, and ruling 
People's United Party (PUP) crony. 
 
¶3.  (U) Roberto Bautista, previous DFC general manager and current 
manger of credit administration for the Corporation, testified that 
in 1999 the DFC received BZ$86 million and, while a portion of those 
funds were to be delivered to the Social Security Board, the 
remainder was deposited into the Belize Central Bank, where it would 
earn 8.5 percent interest.  (Note:  US$1 equals BZ$2.  End note). 
The funds were to be used for housing development so that the 
governing PUP could fulfill its campaign promise to construct 10,000 
new homes in Belize. 
 
¶4.  (U) At the same time, Bautista said, some of the DFC's strict 
lending guidelines - such as the one requiring borrowers to provide 
down payments for mortgage loans - were relaxed.  The DFC Board also 
instructed staff to implement any government housing projects. 
 
¶5.  (U) Despite the policy changes, the DFC continued to disburse 
funds to borrowers in a series of payments rather than in one lump 
sum.  Bautista testified that DFC Chairman Glenn Godfrey made an 
exception to this rule and instructed him - by telephone and in 
writing - to disburse the BZ$30 million loan to Novelo's Bus Line in 
one lump sum.  Bautista said that Godfrey called him and suggested 
that, rather than letting the money "idle" at the Central Bank for 
8.5 percent interest, the DFC should disburse the funds - borrowed 
at 13 percent - to Novelo's.  Because Godfrey followed up this 
conversation with a signed authorization letter, Bautista disbursed 
the funds. Full disbursement was premature because all the 
collateral had not been secured.  Also, Godfrey's law firm - which 
represented Novelo's - benefited to the tune of some BZ$2 million 
for legal work in connection with the loan.  The bus line is now in 
receivership and behind in its loan payments.  According to 
Bautista, the current outstanding balance on the loan is BZ$32 
million. 
 
¶6.  (SBU) Comment.  So far as Post knows, Bautista's testimony 
represents the first time a high-ranking official or political crony 
has been directly linked - with tangible documentation - to the DFC 
scandal.  Poloff did not attend the hearings on October 24, and so 
is unable to confirm if Godfrey's signed authorization letter was 
produced as evidence.  If it was, then it may be helpful in building 
a 212(f) case against Godfrey.  End comment. 
 
DIETER