St. Maarten Private Eye

Let me describe a scenario for the readers here at SXMPE. In 2005 the then management of Telem and Smitcoms were desperate to find financing to refinance the group's existing loans with several local banks on St. Maarten.

Telem alone needed to consolidate and refinance $20 million dollars in outstanding loans. Telnet needed $2 million and Tellcell needed over $5 million. Smitcoms desperately needed $11 million to finance phase two of its Caribbean Fiber Cable Network.

No new money was forthcoming from the locals banks (WIB and RBTT) and Smitcoms had contractual obligations to fulfil. Hence the desperate need to find financing elsewhere and find it fast.

Management traveled on several occasions to the USA to meet several financial brokers and investors and in desperation even went to Cuba, the route often traveled by many Antillian corporate leaders in financially dire straits.

All the while the banks in St. Maarten stood by idly on the side looking on and laughing at the amateurish and infantile attempts of Telem to secure financing for the company's debt consolidation elsewhere through a host of brokers and financial institutions, some legit, some semi-legit and some down-right illegitimate.

Obviously the case of Merit vs Smitcom is a direct result of the scrambling and desperation of Telem Group of Companies to enter into agreement with every and any financial services broker to find financing to cover the gapping holes in the companies' finances as a direct result of all the waste, squandering, corruption, embezzlements and defrauding these companies had to withstand because the powers that be at the time drained the group's resources for their own private gains and personal enrichment.

(Sidebar: In this light. it is easy to give loads of donations when the money is not yours nor can be accounted for. For years, outside accountants refused to sign off on Telem's Group of Companies financial reports and statements.)

Apparently, from the Merit complaint (point 9), the financing need had risen to $78 million dollars.

Ofcourse, when the local banks found the timing right, they stepped in and refinanced the outstanding loans and offered new financing for the Telem Group of Companies pending projects. Certainly huge concessions on the part of the Island Government were made.

I heard the bankmanagers laughed all the way back to their banks with the huge profits they made off the deals. RBTT being the biggest winner of all. WIB a lesser winner because it has always been the holding company, MCB's, objective not to let WIB make too much money else it will cost them more to eventually buy out the Wathey's share in the bank.)

So no need to proceed with the deal brokered by Merit with Citibank Group's affiliate who would underwrite Telem's debts.

I am sure Merit will be found meritorious in their claims and the St. Maarten taxpapers will again end up footing the bill. But what I find meritless in this whole affair is the fact that these financial brokers - given the track record of Telem and other government owned companies and even the government of The Netherlands Antilles & Aruba - willingly and knowingly entered into contractual agreement with these banana republic officials we have here in St. Maarten (an almost backward and third world island looking for country status), whereby it was already common knowledge in the financial community and among other financial brokers that eventually this government owned company would default on their obligation by not going ahead with the deal. It is the modus operandi of government owned companies.

Yet they willingly entered into the agreement, given me cause to suspect that it was all about the claim they would eventually file suit for and obviously will be awarded. it is nice to get $2.34 million dollar (3% of $78M) because your contractual party defaulted on the agreement. Who wouldn't want easy money?