- The Washington Times - Saturday, February 21, 2009

ST. JOHN’S, Antigua | Regulators in the Caribbean took over Antiguan banks owned by Texas financier R. Allen Stanford on Friday, hoping to contain damage to the local economy as U.S. investigators explore a suspected fraud involving billions of dollars.

The Bank of Antigua suffered a run on deposits, even though it has not been named in the fraud complaint by the U.S. Securities and Exchange Commission. A failure of the local bank could have severe consequences in the twin-island nation of Antigua and Barbuda, the Eastern Caribbean Central Bank said in explaining its intervention.

The SEC complaint filed Tuesday focuses on the billionaire’s offshore investment bank, Stanford International Bank Ltd., where an estimated $8 billion is now being controlled by a team of accountants working for Vantis Business Recovery Services. Antigua’s banking regulatory commission said it appointed the British firm as receiver to protect “the reputation and integrity” of its banking sector.

Private international banking has been used worldwide to protect assets from economic crisis, hyperinflation, political instability and high taxes. Such “cross-border assets” reached $4.6 trillion in June 1999, with $900 billion, or 20 percent, banked offshore in some 13 Caribbean island nations, according to the most recent data available from the International Monetary Fund.

U.S. authorities suspect that Mr. Stanford lured these clients by promising unrealistic returns on certificates of deposit and other investments. And offshore-banking experts say he chose an ideal headquarters: an island where he could acquire power, prestige and even a knighthood to help win investors’ confidence while keeping enforcement agencies at bay.

While these clients’ life savings are now at risk, experts say red flags were clearly flying in Antigua, one of the world’s least-regulated and least-transparent banking havens.

“In the offshore world, you have a hierarchy, and Antigua is at the bottom,” said David Marchant, an offshore-banking analyst based in Miami. “Antigua was the wild west, and Stanford was the chief cowboy.”

Mr. Stanford was warmly welcomed in 1990 as Antiguan politicians sought to diversify their tourism-dependent economy. Before long, he acquired dual Antiguan citizenship, became the largest private employer and developed a level of influence over local regulators that worried U.S. watchdogs.

Mr. Stanford also has had considerable influence in Washington, where his campaign donations, mostly to Democrats, reached a peak as efforts to strengthen financial regulations died in the Senate.

Mr. Stanford’s Antigua enterprises include a newspaper, two restaurants, a development company and the ornately landscaped Stanford cricket grounds. He shook up the staid world of professional cricket last year by bankrolling the purse in a $20 million winner-take-all match.

Foreign investors who went to Stanford’s white-columned international bank near the airport Friday, in hope of getting cash, came away instead with a flier informing them about the bank’s new receivers.

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