CaribWorldNews, NEW YORK, NY, Weds. Feb. 18, 2009: As the U.S. Securities and Exchange Commission moved to charge billionaire R. Allen Stanford with defrauding investors in an alleged $8 billion scheme involving certificates of deposit, questions quickly turned to the possible impact on the Antigua and Barbuda economy, where the businessman runs his Stanford International Bank.
The bank is headed by Juan Rodriguez-Tolentino and Stanford serves as chair of the Board of Directors. The bank reported $8.5 billion in total assets as of November, 2008. The bank serves clients from more than 140 countries on six continents and is an employer of several Antiguans.
On Thursday night, in an address to the nation hours after the SEC complaint was made public, Antigua and Barbuda Prime Minister, Baldwin Spencer, admitted that the `breaking developments in the United States involving the Stanford Group have profoundly serious implications for Antigua and Barbuda.`
`The fallout threatens catastrophic and immediate consequences,` he said, but quickly added that the Eastern Caribbean Central Bank has been in contact with the Ministry of Finance on the matter and a contingency plan is being formulated.
`There is therefore no cause for panic,` Spencer said.
Stanford owns Antigua’s biggest commercial and offshore banks and Antigua’s biggest newspaper. And he is the former chairman of the government board that oversees Antigua’s offshore financial sector.
He also lent a lot of money to the past government. There is little on Antigua that is not branded as Stanford, who was knighted by the current government, a former critic of his, in 2006. Stanford also spent millions on a cricket stadium, hotel, cinema and restaurant – the Sticky Wicket – which is located on the grounds of the Antigua airport, an EC$750 million development. The buildings sit on 60 acres of land and includes two banks with off-shore facilities, a Caribbean-style five-star hotel, the 3,500-seat cricket stadium which features a grandstand and terraced seating around the field, the Sticky Wicket Restaurant and Bar which features a cricket hall of fame, choice entertainment facilities, which includes a bowling alley, a twin-cinema, and a health spa with Olympic-size pool, and the Sun Publishing group which produces the Antigua Sun.
Stanford, who admits to being `incredibly blessed,` bought his own private island, Maiden-a tiny island just off Antigua. He became a dual citizen of Antigua in 1999 under the Bird administration of the Antigua Labor Party and went on to underwrite the construction of a majestic state hospital that was mired in a corruption scandal and new executive offices for the then government.
An investigation into the hospital construction found that Stanford’s Bank of Antigua was repaid a $30 million construction loan with money coming directly from the island’s social-security system.
Stanford, 58, has made no bones about the money he lends to the government, telling the Wall Street Journal in 2002 that he doesn’t lend money to the government `without an absolute guarantee of getting paid.`
These come reportedly in the form of airport-exit taxes, property taxes and landing fees signed over to his bank. In the past, he has faced US State Department and Treasury scrutiny but he has dismissed the reports as political and false, claiming there was a clear `misperception` to what he was doing in the Caribbean.
Securities Industry Attorney, Bill Singer, said the economic impact on Antigua and Barbuda `could be as devastating as the bankruptcy of Iceland.`
`Ultimately, firms such as Stanford choose to base their banks and other operations in Antigua and its ilk because they are counting on a confluence of favorable factors: corruption, lackadaisical regulation, lazy regulators, and a myopia that fails to see the need to keep such riff-raff from whatever shores it washes up on,` added Singer. `During the past two years I have warned the Caribbean securities industry that it should not seek as its ultimate goal to be little more than a dirty back-office for the dalliances of America’s major brokerage firms or shady market manipulators. I urged the finalization of the now delayed One Caribbean Exchange as a way for the region to begin to chisel a credible identity among the world’s financial markets. Instead, as has too often been the history, the Caribbean community played politics and cited the now tired excuses for another round of failed initiatives. `
Former Antigua Ambassador Lionel Hurst admits that if the SEC request for all assets held by Stanford be returned to US is granted, this could be tough for the Antiguan financial sector.
`If the injunction is granted it will have a devastating impact on Antigua,` Hurst told CWNN last night. `The banking sector could collapse since he’s a major player in financial sector there.
The NY-based Hurst added that given the global economic crisis that has already caused a spike in unemployment in the country from the slowdown in tourism, more unemployment from lay-offs could be triggered by this charge.
`It will have a profound impact on Antigua’s economy,` saidd Wall Street banker Val Williams.
But analyst, Keith Bernard is more cautious. `In these types of cases, a lot of unintended consequences are unearthed during the period of recovery – so you never know what surprises there are lurking in the dark,` added Keith Bernard. `It is the latter (unknowns) than could have dire impacts of the country and the people.` – By CWNN Staffwriter