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Thursday, December 17, 2009

Antigua: Friend, or Foe, to Former Stanford Investors

In the wake of jailed financier Allen Stanford's alleged fraud, questions have emerged as to the role the tiny Caribbean island of Antigua played in the scheme. Former investors allege the government benefited enormously from Stanford's enterprises, and some argue the country owes money and has seized properties that belong to alleged victims of the fraud.

Legislators in the United States are attempting to block the Antiguan government's application for a loan from the International Monetary Fund and allegations of government corruption and cover-ups run rampant among critics of the island nation.

FOX Business Network's Adam Shapiro traveled to Antigua for an exclusive interview with the Honorable Justin Simon, the Antiguan Attorney General and Minister of Legal Affairs, to discuss several issues related to the purported Stanford fraud, including the potential corruption of Antiguan government officials, as well as the hundreds of millions of dollars in Stanford assets that now rests in the hands of the Antiguan government.

STANFORD’S INVESTORS WAIT FOR ANTIGUA TO ACT
It could be a long wait before investors who purchased CDs from Stanford’s failed bank see any of the hundreds of millions of dollars in property and funds currently in the possession of the government of Antigua and Barbuda.

According to Simon, Stanford’s investors fall third in line to recover any of the assets controlled by the island nation, and Simon would not say when or if that money would ever be paid.

THE ANTIGUAN INVESTIGATION
Simon revealed that an investigation of the Antiguan Federal Services Regulatory Commission [FSRC] has just been completed and the results of that report could be made public by the end of the year.

“We’re expecting that the [FSRC] board will then fully report to the Prime Minister who will then take the matter to cabinet — so at this stage we are still ignorant of the report of the investigation team,” he told Shapiro.

The investigation focused on the role of former FSRC director Leroy King, who has been charged in the United States with accepting more than $150,000 in bribes from Stanford. The complaint against King alleges he tipped Stanford off to an investigation by the Securities and Exchange Commission in 2005 and 2006, and blocked the FSRC from fulfilling its role as regulator.

Former Stanford CFO James Davis, who has pleaded guilty and is cooperating with U.S. prosecutors, says others within the Antiguan FSRC helped King and Stanford pull off the crime. Simon says additional Antiguan government officials could be charged, stating, “if it comes to criminal prosecutions then so be it.” However, neither King nor Stanford has been charged by the Antiguan prosecutor with a crime.

“I think it would be in our best interest, if the investigative report reveals that there has been wrongdoing, for us to ensure that the charges are in fact initiated and then we can determine where we go to from there,” Simon said.

The just-completed FSRC investigation is the only review of potential criminal acts by Antiguan government officials, despite the current government’s admission that there was a close relationship between Stanford and the former Antiguan Prime Minister Lester Bird.

During Bird’s tenure as Prime Minister, Stanford donated thousands of dollars to Bird’s political party, the ALP (Antigua Labor Party), and lent hundreds of millions of dollars to the Antigua government. In the late 1990’s, at the urging of Stanford and despite protests from former Antiguan FSRC employees, the Bird administration changed its bank regulatory laws, prompting the U.S. Treasury Department to send a letter to the Bird administration, saying Antigua had, “weakened its anti-money laundering laws to the point they are now significantly below international standards making Antigua more vulnerable to money laundering.”

Bird initially agreed to an interview with FOX Business last Sunday, but changed his mind after reporters arrived. Clad in a stained T-shirt and Bermuda shorts inside of his opulent mountaintop luxury home in Antigua’s Blue Water district, Bird said he would not comment on the matter with a TV camera present.

Attorney General Simon admits Stanford and members of Bird’s administration did maintain close ties.

“They had a close relationship,” Simon said. “I’m not sure how financially beneficial it may have been to them individually, but they did have a close relationship.”

HUNDREDS OF MILLIONS OF DOLLARS IN STANFORD ASSETS IN QUESTION
Of the $7.2 billion dollars Stanford allegedly swindled from more than 28,000 people worldwide, some of the funds were lent to the Antiguan Government to pay bills and build hospitals, and some were used to purchase land in the Caribbean. Many Stanford International Bank investors now wonder if those assets will be sold and used to pay back former depositors and investors.

Simon argues that the Antiguan government is “very conscious” of its financial obligations.

“We want to make every effort to ensure that those various claims are satisfied in addition to the claims of the various investors and depositors,” Simon said.

He declined to say when that might happen.

The country’s former Minister of Finance and the Economy, Honorable L. Errol Cort, wrote in his 2005 official Budget Statement, “Mr. Stanford confirmed his willingness to write off $50 million of the estimated $230 million debt the Government of Antigua Barbuda owes his organization.”

In return for this write-off, the Antiguan government cleared the way for Stanford to acquire Guiana Island and other property in Antigua.

Stanford investors say the Antiguan government should give them the hundreds of millions of dollars the government owed Stanford. Simon says the money, “is still being paid back and it is being paid back through the Bank of Antigua,” which is a former Stanford owned financial institution.

Simon said the Eastern Caribbean Central Bank took over the Bank of Antigua and that future litigation will have to determine if money paid to the bank should instead be paid to make restitution to Stanford’s depositors and investors, “despite the fact that, or even if Stanford is out, the bank remains as an entity and it’s a debt to the bank so that we have to deal with it on those lines.” Something else that has to be dealt with involves more than 250 acres of prime luxury real estate worth hundreds of millions of dollars that once belonged to Stanford.

Early this year the Antiguan government took control of roughly 250 acres of land that were owned by Stanford and his several development companies.

“Let me also make it abundantly clear that we do not seize land,” said Simon. “The constitution of Antigua and Barbuda provides that the Government can compulsory acquire. It also makes provision that compensation must be paid to the former owners of the land and we intend to deal with it on that basis.”

Simon said no value has been placed on the former Stanford lands, but lawyers representing Stanford’s investors say the properties are worth between $200 million and $800 million. The Antiguan government intends to sell the property at some point, but proceeds from the sale of those lands will first go to the hundreds of Antiguans who once worked for Stanford who lost their jobs when Stanford was arrested.

“Severance payments first off the top, thereafter the utilities since they are government owned,” Simon said.
Victims will be last in line.

That’s not good enough for several alleged Stanford victims who have filed a multi-billion dollar class-action lawsuit against the government of Antigua and Barbuda to recover assets that once belonged to Stanford.

“It’s a rather very fanciful suit,” Simon said. “We are going to be taking it seriously, but I think one of the foundations which would have certainly to be established is that there was this intimate or intricate link between Mr. Stanford’s commercial enterprises and the government of Antigua and Barbuda and from where I sit, I have not seen that.”

WHAT'S NEXT?
Stanford’s depositors and investors wait for justice and restitution almost a year after the alleged Ponzi scheme imploded. Simon said the Antiguan Government is about to finalize a Mutual Legal Assistance Treaty (MLAT) with the U.S., which will allow it to exchange evidence that could be used to prosecute Stanford and others in the U.S. Simon says his government is cooperating with U.S. investigators but the Antiguan Government faces other more immediate problems.

Tax revenue has fallen more than 25%, and without Stanford to supply funding, the Antiguans are attempting to borrow millions of dollars from the IMF and World Bank, a loan several U.S. Senators are attempting to block.


King, the former director of the Antiguan FSRC, remains in Antigua. His extradition hearing to the U.S. was postponed without explanation last Monday when the Chief Magistrate moved his docket to the neighboring island of Barbuda.

Despite all of the accusations against the tiny nation and its government, Simon insists the country understands what is at stake, and argues that blaming the Antiguan government for Stanford’s alleged crimes is akin to blaming President Obama for the SEC’s failure to detect Bernard Madoff’s fraud.

“It is a challenging experience,” Simon said. “But it is one that we’re not going to be running away from and we are going to address so that at the end of the day we can bring some closure and satisfaction to investors, creditors and past employees of the Stanford entities.”

1 comment:

  1. So lets get this straight. The Antiguan government are going to pay Stanford's employees first, these are the same people who sold bogus CD's to the victims of Stanford's massive fraud. They are going to receive their commissions and bonuses for selling worthless CDs!

    The loans Simon's says is still being repaid is being paid to the Bank of Antigua! WHY, the loans were from Allen Stanford and should go to his estate i.e. the receiver.

    And who is selling the lands? The Antiguan government of course, so they can magically make the money disaapear or sell it off cheap to their crooked government ministers or families.
    If they were genuine they would hand over the land and property to the receiver....but this is Antigua.

    ReplyDelete