Five LatAm countries crack down on Stanford
19 Feb 2009
Action is being stepped up against Texas billionaire R Allen Stanford, under a cloud for fraudulent practices. Five Latin American countries have cracked down on companies belonging to Stanford, who is under investigation by US authorities for serious fraud.
Stanford International Bank Ltd, set up in Antigua, is accused of selling $8 billion in high-yield 'certificates of deposit' with false assurances. The bank attracted millions of clients around the world with promises that its CDs were at least as safe as US government bonds.
While most of his clients were in South and Central America, his enterprises are also under investigation in the UK.
Stanford's investment arm had its greatest success in Venezuela, where clients trusted it with some $2.5 billion, nearly a third of the total amount Stanford sold in CDs. Other countries taking action against Stanford along with Venezuela are Peru, Panama, Ecuador, and Colombia.
While Venezuela has taken over the local bank operated by Stanford, Peru has suspended the operations of the local office of Stanford Financial Group for 30 days. Panama's banking authorities have also taken over Stanford Bank (Panama).
Ecuador has also suspended an affiliate of the Stanford Financial Group from operating in the Quito stock exchange for 30 days, as authorities investigate a $15 million investment fund run by Stanford.
In Colombia, the local arm of the Stanford Financial Group agreed has to halt its activities on the Bogota stock exchange, but has said it has sufficient solvency to provide guarantees to its local investors.
The UK connection comes because Antigua-based accounting firm CAS Hewlett, which reportedly had audited Stanford's books, moved its operations to London after its founder Charlesworth Hewlett died last month. "It's a situation where there is the possibility there may be a UK link and so we are monitoring the situation," a spokesman for UK's Serious Frauds Office said.
