Business

Luke Espat owes bank nearly 30 million for failed project

By Aaron Humes
Freelance Reporter

BELIZE CITY, Mon. June 16th, 2014
Businessman Luke Espat is now personally liable for nearly $30 million in personal guarantees made to the Belize Bank, after the Court of Appeal refused his application for leave to appeal a summary judgment handed down by the Supreme Court.

Supreme Court Justice Courtney Abel ruled against Espat last October, saying he was not able to understand the complex nature of the dealings between Espat, a financier and noted developer, and the Belize Bank Limited, with which he signed guarantees for four of his group of companies, totalling $29.4 million.

The guarantees, says Espat’s attorney, Senior Counsel Said Musa, were signed long after the companies incurred the debt, and were based on a personal relationship with Bank president Philip Johnson.

In court, Musa argued that Justice Abel’s judgment failed to fully consider several key points of fact that led to legal errors.

According to Musa, Espat’s Port of Belize Limited, now under receivership, was involved in a joint venture over the Carnival Cruise Port in Port Loyola, in which Johnson personally held shares, and that Johnson personally assured Espat that if he signed the guarantees he would receive the financing for the Port project and help the Bank satisfy the Central Bank which was investigating them, which he says explains why Espat agreed.

The Bank negligently misrepresented itself to Espat when it induced him into signing the agreements because of the special relationship between them, which led to a duty of care to Espat, Musa argued.

Arguing for the Bank, Senior Counsel Godfrey Smith replied that none of the points raised were of any legal importance to necessitate intervention by the Court of Appeal, which is bound to resolve serious issues, matters involving Constitutional provisions, or matters which are of sufficient public interest and may have dire public consequences if not resolved.

Justice Abel, Smith said, made no errors of fact in his judgment – in fact, he inferred some facts in Espat’s favor – and applied the law accurately. The matter of misrepresentation could not be raised here as it was not below.

Espat himself noted, “there is law, as it is literally interpreted. And there is the reality of the agreements that made whatever possible in the development process of what we were doing.”

While the Port of Belize continues to earn, he added, the bankers are going after the smaller companies and distancing themselves from him.
Costs were awarded to the Bank.

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