Statement from the Government of Antigua & Barbuda on the Stanford Victims Coalition Claims
ST. JOHN'S, Antigua - The allegation by the self styled Stanford Victims Coalition that the State of Antigua & Barbuda was a partner in, and beneficiary of, R. Allen Stanford's alleged criminal behavior is totally unfounded.
Despite the Coalition’s claims and insinuations, the Baldwin Spencer Administration, which assumed office in March 2004, did not sell any Crown lands to Stanford; received no loans from Stanford; and was not a beneficiary of any largesse of Stanford. In fact, R. Allen Stanford considered this administration an obstacle to his ambitions.
Stanford was the sole owner of two banks in Antigua & Barbuda: Stanford International Bank Ltd., an off-shore financial entity registered under our International Business Corporations Act with, and regulated by, our Financial Services Regulatory Commission (FSRC), and the Bank of Antigua, registered under the Companies Act and licensed to operate ordinary banking business under our Banking Act, but regulated by the Eastern Caribbean Central Bank (ECCB).
The business of Stanford International Bank Ltd. was run from Houston, Texas, and its books maintained in Memphis, Tennessee. The bank was operating in Antigua as a transit point and for purposes of registration and regulation.
While the Government and People of Antigua & Barbuda can understand the frustration and disappointment being experienced by the SIBL depositors, we cannot countenance the attack these persons have begun to wage on our country without first looking at other entities and organizations – including the United States’ regulatory authorities.
Information in our possession supports the following:
1. In late 1998, despite objections by the State of Florida’s top banking lawyer, Richard Donelan, Florida’s regulators gave sweeping powers to Stanford that allowed him to operate and open a trust office in Miami, which was hardly regulated by the US authorities.
2. In December 1998, a Memorandum of Agreement was signed by Arthur M. Simon, the then Director of the Division of Banking for the State of Florida’s Department of Banking and Finance, and Yolanda Suarez, the then Secretary of Stanford Trust Company Limited, authorizing the establishment of a foreign trust office – the first company of its kind ever set up in the state.
3. Between 1998 and 2003, over 2000 customers purchased certificates of deposit from the Miami office lured by the promise of receiving yields higher than those offered by other United States banks.
4. Brokers generated millions of unreported dollars from depositors, particularly Latin Americans, who were lured by the promise of high returns and who hardly questioned Stanford's bona fides as long as their accounts grew on paper. In the first six years, the office, known as Stanford Fiduciary Investor Services, took in US$600 million from customers, Florida state and court records show.
5. It is reported that some of the millions went to support Stanford’s lavish lifestyle, which included private jets, personal loans, expensive cars, and mansions, including a US$10.5 million home in Gables Estates, Florida that he has since torn down, the records show.
6. Nevertheless, as far back as 2003, some investors had begun questioning the legitimacy of SIBL's certificates of deposit, and the United States’ Securities & Exchange Commission was aware to the best of our information, knowledge and belief of these reports and other complaints some of which had been lodged by former Stanford employees, themselves. We are not aware whether, or to what extent, the SEC took investigative or corrective measures.
7. Since the arrest of Stanford, Arthur Simon has admitted that his actions in 1998 should have been done differently, that he would have liked to have stopped the Trust company from doing what it did, and that, in hindsight, “tighter provisions” should have governed the operations. Further, Linda Charity, Florida’s Director of the Division of Financial Institutions, admits that “there was no one that specifically regulated the office”.
8. On Tuesday February 16, 2009, a Court Order was made by a judge in the Northern District of Texas appointing a Receiver over all of Stanford's assets wherever located. When the international and local media reported this breaking news, there began literally a run on the Bank of Antigua, with customers withdrawing millions from the bank.
9. By February 18, 2009 the Eastern Caribbean Central Bank (ECCB) had to extend credit to the bank in the sum of EC$19M; by February 24, the amount was EC$79M, and the final figure stood at EC$89M when normalcy was restored. The amount represents a debt for which Antigua & Barbuda is currently responsible.
10. The prompt intervention by the ECCB was necessary in order to maintain the stability of the OECS Monetary Union as well as, the stability of the common currency shared by 8 OECS countries.
11. On February 23, 2009 the ECCB assumed control and management of the Bank under its emergency powers given by the law which created it. A new corporate entity, the Eastern Caribbean Amalgamated Financial Company Ltd., comprising representatives of the indigenous banks in the OECS, was incorporated as an agent of the ECCB to run the day-to-day affairs of the Bank of Antigua. That was necessary to prevent a financial meltdown within the OECS grouping, given our common currency, which is tied to the US$ and has remained constant and stable since its pegging in 1971.
The Bank of Antigua continues to do business and credibility has been restored and is being maintained. The ECCB has commissioned an international firm to evaluate the Bank's assets and worth with a view to purchasing the Bank, given Stanford’s continued inability to provide policy directives. There has, to date, been no purchase of the Bank. Both the SEC Receiver and Stanford's representatives have been kept informed by the ECCB of its operations and intentions regarding the Bank.
It is alleged that, by failing to properly regulate SIBL, Leroy King, the former Administrator of the FSRC, facilitated Stanford's Ponzi Scheme for personal gain. In the wake of his indictment on these charges in the United States Federal Court, the Cabinet of Antigua & Barbuda moved to officially strip King of his position. He is now the subject of pending extradition proceedings to stand trial in the USA. There is neither now nor was there any collusion between Stanford and the Spencer administration.
Following the revelations surrounding the alleged Ponzi fraud scheme operated by Stanford, our Government commissioned an investigation of the FSRC to identify any systemic failures or breaches in operational procedures both within the FSRC and in its examinations of off-shore financial institutions. This was conducted by a group of international experts, whose findings were that Antigua & Barbuda’s international finance laws and regulations, of themselves, could not be faulted.
As everyone knows by now, Stanford International Bank Ltd. is in liquidation. Apart from the Bank of Antigua – which, as an integral part of the OECS banking system had to be rescued by the ECCB’s intervention – none of Stanford’s other local businesses were profitable; in fact, some have been closed, since they were highly dependent on massive monthly injections of capital from Houston, Texas.
The Bank of Antigua has invested a large part of the funds of its depositors – including monies from citizens and residents of Antigua & Barbuda and customers in the United States – in Florida, particularly, and these assets continue to be under the control of the SEC Receiver. As to the source of the funds used to purchase the Bank's fixed assets (three parcels of land in St. John's), to date, there has not yet been any determination of this matter by the Liquidator.
To date there has not been any service of any legal process on the government through the Ministry of Foreign Affairs or the diplomatic channel by any person or persons in this matter.
The Government of Antigua & Barbuda continues to take every practical and legal measure to position ourselves to win this battle. We do not take lightly the threats of the self styled Stanford Victims Coalition. Our overseas missions and consulates are playing and will continue to play a critical role in the government’s actions, as will our Tourism offices. We are in discussions with overseas counsel and intend to defend our country, our Treasury, our citizens’ welfare and our patrimony.
We encourage all patriotic Antiguans and Barbudans – wheresoever they may reside – to marshal their forces and join in our collective defence of fair Antigua and Barbuda.
Saturday, March 27, 2010
Here is finally something from the Spencer Administration who currently leads our government.