Stanford charges spark run on banks

The criminal investigation into the business empire of cricket tycoon Allen Stanford sowed panic in the Caribbean and Latin America on Wednesday as governments and investors scrambled to uncover the extent of the alleged $8-billion fraud.

The prime minister of Antigua warned of “catastrophe” for the nation, depositors rushed to withdraw funds in bank branches around the region, and authorities in Colombia, Panama, Peru and Venezuela began their own investigations into the Texas billionaire’s financial dealings.

United States television channels reported that Stanford had attempted to leave the country by private jet from Houston to Antigua but had failed when the plane-leasing company refused his credit card.

On Tuesday, the US Securities and Exchange Commission accused Stanford of fraudulently selling $8-billion in high-yield certificates of deposit. It sought to freeze assets and appoint a receiver. Stanford International Bank has 30 000 clients in 131 countries as well as broker-dealer and investment advisers in 30 US offices.

Antigua, a sleepy island with a population of just 70 000, forming half of a Caribbean nation with Barbuda, risks being the worst hit. It was here that Stanford set up his headquarters in a grand Georgian-style hilltop building.

Stanford is the island’s biggest investor and private employer. He has lived there for more than 20 years and holds dual US-Antiguan citizenship. He was the first American to receive a knighthood from the island’s government.

“The fallout threatens catastrophic and immediate consequences … There is no need for panic,” Baldwin Spencer, the Prime Minister, said on television.

Spencer said his government was working on a contingency plan to tackle the crisis with the six-nation Eastern Caribbean Central Bank and Antigua’s central bank.

The island was in shock. “Run on Stanford’s bank” ran the front-page headline in the Daily Observer. “I have my savings in there in fixed deposits and I want it. I need to get my money,” said a women who identified herself as Harriet. “I’m stunned. I’ve been hearing rumours about him all the time, but I didn’t want to believe them,” said Genevieve Gore, a 55-year-old manager of N&J’s Fashion and Variety Store, in St John’s, the capital city.

The affair has invited comparisons with the events surrounding Wall Street investment manager Bernard Madoff, who is suspected of $50-billion fraud.


In Venezuela hundreds of depositors tried for a second day to withdraw savings in the Caracas branches of Stanford International. Venezuelans have about $2,5-billion invested in the bank, the country’s regulator said. The government tried to calm clients of a Venezuelan sister firm whose assets were not linked to the business.

In Peru, security regulators sent inspectors to the Lima office of the Stanford Financial Group. A Stanford employee said the company was still operating. Stanford’s Colombian arm halted trading activities, and, in Central America, Panamanian bank regulators took over the local affiliate of the organisation.

In Houston, the Stanford Financial office was open for business but “under the management of a receiver”, according to a sign taped to the door.

The fallout shook English cricket. Giles Clarke was urged to consider his position as the chairperson of the England and Wales Cricket Board after admitting that the decision to bond the sport to Stanford, a sports promoter as well as a banker, had been “a mistake”. — guardian.co.uk

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