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Monday, February 22, 2010

Attorney for Stanford investors says ECCB sending mixed messages

The attorney representing Stanford investors who have just filed a lawsuit against the Eastern Caribbean Central Bank (ECCB) has identified what he says are inconsistencies in the institution’s claimed intentions for the Bank of Antigua (BoA).

Peter Morgenstern of New York firm Morgenstern & Blue LLC said two statements issued by the ECCB – one after fraud charges were laid against BoA owner Allen Stanford last February and the other in response to the Stanford Victims Coalition lawsuit announcement last week – have sent mixed messages about what the Central Bank plans for BoA.

“I think that there is a great deal of contradictory information that is being disseminated by the government officials of Antigua and now the Eastern Caribbean Central Bank and it’s very difficult for us as representative of the investors to know precisely what the position of either the government or the ECCB is under the circumstances,” he told The Daily OBSERVER.

Morgenstern pointed out that in a statement dated February 25, 2009, in which the ECCB sought to reassure the public following the run on BoA, the Central Bank said that to protect the interest of depositors and to preserve the stability of the financial system of Antigua & Barbuda, it had used its emergency powers to assume control of BoA and “took exclusive custody control and possession of all the funds, assets and other property and undertaking of the Bank wherever situated including funds on deposit at the Bank.”

“The Central Bank is therefore by law currently in control of the bank to the exclusion of the shareholder and any and all former directors of the institution,” it added.

Then last week, Morgenstern said, in outlining the facts relevant to its intervention, the ECCB insisted that it had not sold or otherwise disposed of the property, assets and undertaking of or any shareholding of BoA and that the Eastern Caribbean Amalgamated Financial Company Ltd, which was set up to run the day-to-day operations of the bank, was simply managing the bank.

“That’s clearly contradictory to the earlier statement,” Morgenstern argued. “The above clearly indicates that the ECCB was taking on much more than the management role that they and the government now allege they were taking on.”

Efforts to reach the ECCB Governor Sir Dwight Venner for a response to Morgenstern’s claims have so far been unsuccessful.

Meantime, the lawyer has sought to clarify that while his clients agree that the ECCB had both the power and obligation to stabilise the situation after the run on BoA, it’s what they did, or rather didn’t do, after that they have taken issue with.

The attorney claimed that the ECCB did not follow through on its own laws and regulations.

“Once they took the action they took, legally under their own governing statute they were required to retain an independent, outside auditor to determine the value of the bank and to distribute the value of the institution to the owners of the bank if there was a value, and we think it was very valuable and continues to be a very valuable financial institution,” he said, insisting that the rightful owners in this case are the victims of Stanford’s alleged US $8 billion fraud.

Finance Minister Harold Lovell had earlier indicated that the BoA would be valued but to date, there has been no update on whether it has been completed.

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