The following article raises the question are HSBC not also liable for acting as custodian for Allen Stanford?
HSBC Holdings Plc (HSBA), Europe’s biggest bank, agreed to pay $62.5 million to settle a group lawsuit in New York, filed by investors in a fund that lost money in Bernard Madoff’s fraud while the bank acted as custodian.
The accord, which needs court approval, applies to a class- action case against several HSBC units and other defendants by investors in the Ireland-based Thema International Fund Plc, whose assets were invested with Bernard L. Madoff Securities LLC, HSBC said in a statement today.
The settlement “shall in no way be construed” as an admission of fault, HSBC said in the statement. The London-based bank, which faces other Madoff-related lawsuits in Germany, Luxembourg and other countries, has “good defenses” against them, it said.
Thema Fund, a so-called Madoff feeder fund, was controlled by Bank Medici AG, according to a statement by the fund’s law firm, Chapin Fitzgerald Sullivan & Bottini LLP. Bank Medici with its founder Sonja Kohn is part of a $59 billion suit by the trustee liquidating Madoff’s firm.
HSBC units acted as custodian for Thema and other funds that funneled money to Madoff. Irving Picard, the trustee liquidating New York-based Bernard L. Madoff Investment Securities LLC, in December sued HSBC and a dozen feeder funds for $9 billion in U.S. Bankruptcy Court in Manhattan, saying they should have known of the fraud.
HSBC Losses
HSBC didn’t know of the fraud and lost $1 billion of its own money investing in funds that in turn put money with Madoff, the bank said last month in court papers seeking dismissal of Picard’s lawsuit.
The bank was warned twice by auditors that entrusting as much as $8 billion in client funds to Madoff opened it up to “fraud and operational risks,” according to KPMG LLP reports obtained in March by Bloomberg News. The investors claim HSBC failed to act on the warnings.
According to HSBC’s May filing, Picard, who sued HSBC saying he was doing so on behalf of Madoff investors, is competing with the feeder funds and investors that have sued HSBC, and intends to claim any money they recover from the U.K. bank to give it to other investors.
“He is attempting to steal their claims, along with the funds’ claims, and planning to provide the fruits of any recoveries to other parties,” on the principle of “robbing Peter to pay Paul,” HSBC said as it asked a judge to dismiss Picard’s suit.
Amanda Remus, a Picard spokeswoman, declined at the time to comment.
Alpha Suit
On May 27, Alpha Prime Fund Ltd. and Senator Fund SPC, two funds sued along with HSBC by the Madoff firm’s trustee, filed so-called cross claims against HSBC to try to recoup “hundreds of millions of dollars” in losses they incurred in the fraud.
HSBC in December was sued by a group of 650 mainly private German investors in Luxembourg seeking compensation for losses they suffered through Herald (Lux) US Absolute Return Fund, which placed assets with Madoff. That suit seeks about 25 million euros ($36.6 million) in damages.
Thema and another fund, AA (Alternative Advantage) Plc, sued HSBC in January 2009 in Dublin’s High Court.
HSBC is facing about 50 investor complaints in Ireland for allegedly failing in its duties as custodian for Thema, a European-Union regulated fund, and AA (Alternative Advantage) Plc. Both funds suspended redemptions after Madoff’s fraud was uncovered. Custodians are responsible for oversight of funds, and manage deposits and payments to investors.
Dublin Court
A court in Dublin in January ordered HSBC to disclose a report on the status of the Thema fund without ruling on whether HSBC had made the necessary data available. Almost all of the funds invested in Thema “are currently lost, apparently as a result of the fallout from the collapse of the Madoff empire,” Judge Frank Clarke said in the Jan. 10 order in a case filed by French investor Aforge Finance SAS, which lost about 54 million euros in Thema.
HSBC’s Luxembourg unit was also custodian for the Herald (Lux) fund, which had assets of $225.7 million as of Oct. 31, 2008, according to Bloomberg data. The fund was forced to dissolve because of Madoff-related losses.
The Luxembourg-based liquidators of the Herald Lux fund are suing HSBC for the return of lost assets. Luxembourg’s financial market regulator in November 2009 ordered HSBC Securities Services in Luxembourg to review its internal rules related to its role as custodian bank of local mutual funds.
Luxembourg Liquidators
In Luxembourg, the liquidators may be the only possibility for Herald (Lux) investors to recoup some of their lost money after a March 4 ruling by a commercial court that liquidators alone can recover capital assets.
Documents from Madoff’s company show the value of HSBC- serviced funds as of Nov. 30, 2008, was about $8.4 billion, including fake profit from Madoff’s Ponzi scheme, according to HSBC’s statement. The funds’ actual transfers to Madoff’s firm minus their actual withdrawals during the period HSBC acted as custodian, totaled about $4.3 billion, it said.
The settlement provides for a $10 million litigation fund that will allow investors to try to recover money from defendants that haven’t settled, said Thema Fund’s law firm in the statement.
Showing posts with label HSBC. Show all posts
Showing posts with label HSBC. Show all posts
Tuesday, 7 June 2011
Wednesday, 12 January 2011
U.S. Embassy Turned a Blind Eye as Suspected CIA Banker Allen Stanford Bilked Investors, Secret Cables Reveal
Soure: Inteldaily (Tom Burghardt)
While R. Allen Stanford was happily ensconced on the Caribbean island of Antigua, allegedly bribing officials there as he expanded his banking empire, secret cables released by the whistleblowing web site WikiLeaks revealed that U.S. Embassy officials held themselves at arm’s length even as they provided the accused fraudster with political cover.
As Antifascist Calling reported last summer, Stanford International Bank (SIB) and Stanford Financial Group (SFG), once conservatively valued at $50 billion, were no more legitimate than penny stock frauds or advance fee scams on the internet. To make matters worse, for years federal regulators turned a blind eye towards the bank’s reckless practices.
As it turns out, so too did the U.S. Embassy.
Cablegate file 06BRIDGETOWN755, “Cricket Breakfast Serves Up First Encounter with Allen Stanford,” dated 03 May 2006, revealed that “Ambassador Kramer met controversial Texan billionaire Allen Stanford for the first time at an April 21 ‘Legends of Cricket’ breakfast in Barbados.”
The confidential embassy cable reported that “Stanford bent the Ambassador’s ear concerning his significant new tourism and property investments in Antigua and plans for his Caribbean Star and Caribbean Sun airlines.”
The occasion for the meeting, an inadvertent encounter if the embassy’s account is to be believed, was an April 21, 2006 breakfast at the Barbados Hilton.
Stanford, who went on to donate some $20 million to the England and Wales Cricket Board, attended the lavish affair in the company of Barbados Prime Minister Owen Arthur, U.S. Ambassador Mary E. Kramer, assorted sports stars and local luminaries.
The cable averred that “Allen Stanford is a controversial Texan billionaire who has made significant investments in offshore finance, aviation, and property development in Antigua and throughout the region. His companies are rumored to engage in bribery, money laundering, and political manipulation.”
Rumored by whom, one might reasonably ask? An important point since this was certainly not general knowledge at the time, particularly amongst those who were being fleeced.
But rather than blowing the whistle when it could have mattered most to investors and Antiguan citizens, the Bush-appointed official took cover. “Embassy officers do not reach out to Stanford” we read, “because of the allegations of bribery and money laundering. The Ambassador managed to stay out of any one-on-one photos with Stanford during the breakfast.”
Why would Kramer have done otherwise? After all, as Secretary of State Hillary Clinton piously intoned last month denouncing WikiLeaks, “this is the role our diplomats play in serving America.”
A “Unique Investment Strategy”
When “Sir Allen” was arrested in 2009, the federal indictment charged that the high-flying Texan had sold more than $7 billion in fraudulent certificates of deposit and some $1.2 billion in mutual funds.
The centerpiece of SIB’s “unique investment strategy” were financial instruments that were claimed to be safe, liquid and redeemable at a moment’s notice.
According to a blurb on the “Sir Allen Stanford” web site, the Stanford Financial Group “provides private and institutional investors with global expertise in asset allocation strategies, investment advisory services, equity research, international private banking and trust administration, commercial banking, investment banking, merchant banking, institutional sales and trading, real estate investment and insurance.”
The reality was far different, however. In fact, the majority of Group “assets” were in very illiquid real estate holdings and private accounts managed by just two individuals, Allen Stanford and his college roommate, James M. Davis, the bank’s chief financial officer.
According to federal prosecutors, accounts were divided into three tiers, I, II and III with Tier III accounts representing “more than 80% of the purported total value of SIBL’s investments.”
“STANFORD and DAVIS” the charge sheet reads, “directed, managed, and monitored … the Tier III investments. According to internal SIBL documents, as of June 30, 2008, these Tier III investments comprised the majority of the purported value of SIBL’s investment portfolio. Approximately 50% of the purported value of Tier III (approximately $3.2 billion) included investments in artificially valued real estate and approximately 30% of the purported value of Tier III (approximately $1.6 billion) included notes on personal loans to STANFORD. STANFORD, DAVIS and others did not disclose to, and actively concealed from, investors, SGC and SIBL employees, and others the fact that approximately $4.8 billion in purported Tier III investments consisted of such artificially valued real estate and notes on personal loans to STANFORD.”
A sweet deal if you’re in on the fix.
Lured by “high rates that exceed those available through true certificates of deposits offered by traditional banks,” thousands of investors were indelicately relieved of their life savings. Of the more than $8 billion hoovered up by the banker and his cronies, only about $500 million has been recovered.
This raises the question: where did all that money go? Did it just simply vanish into thin air, secret Stanford accounts, or perhaps, was it diverted elsewhere by the banker’s silent partners in a certain three-lettered agency?
When asked during a 2009 interview by CNBC’s Scott Cohn whether he had been “helpful” to U.S. authorities in Latin America, Stanford replied, “Are you talking about the CIA?” Cohn: “Well, you tell me?” Stanford: “I’m just not going to talk about that.”
Stanford’s reticence to discuss possible Agency connections are certainly understandable.
We do know however, that like many dubious banking ventures before it, Stanford Financial Group had powerful friends in high places, in the White House, Congress, amongst regulatory agencies and, plausibly, the CIA; all of whom tripped over themselves furnishing Stanford’s “family” of companies with a watertight “roof.”
The More Things “Change”
According to available evidence, why would the banker have believed his shady empire was on the brink of collapse in 2009, or that well-connected friends wouldn’t come to the rescue? After all, it happened before.
Last year The New York Times disclosed that Stephen J. Korotash, an associate regional director of enforcement at the Ft. Worth, Texas office of the Securities and Exchange Commission (SEC) said the regulatory agency “stood down” their investigation “at the request of another federal agency, which he declined to name.”
A curious admission all the more damning for regulators considering that suspicions, and hastily-closed investigations, have dogged the bank for the better part of two decades.
Damning perhaps, but not surprising.
Nearly a quarter century before charges were laid against Allen Stanford, the late investigative reporter Penny Lernoux recounted in her still-timely book, In Banks We Trust, a fraudulent scheme by Citibank (now Citigroup) to evade paying taxes while cooking the books and dodging “legal requirements on bank reserves, liquidity, and lending limits.” And, similar to the Stanford grift, the SEC did worse than nothing.
Lernoux averred that even after a whistleblower and former bank vice president proved “conclusively” that Citibank had “systematically” violated the law, “the SEC’s enforcement staff refused to take any action against the bank on the ground that its pursuit of unlawful profits accorded with ‘reasonable and standard business judgement’.”
Here’s the kicker. Lernoux wrote that the “SEC also concluded that Citibank’s management had no duty to disclose improper actions since the bank had never claimed its top officers possessed ‘honesty and integrity’.” Sound familiar?
Fast forward to the era of the Bush crime family and we learn that in 2006, BusinessWeek revealed that the president “bestowed on his intelligence czar … broad authority, in the name of national security” to excuse companies from “their normal accounting and securities-disclosure obligations” if they revealed “certain top-secret defense projects.”
Would such “broad authority” also cover financial institutions accused of laundering drug money for select “War on Terror” allies?
Interestingly enough, Bush’s “intelligence czar” at the time, John D. Negroponte, was U.S. Ambassador in Honduras during the 1980s at the height of the Reagan administration’s anticommunist jihad in Central America.
In addition to covering for the CIA as the Agency stood-up death squads in Honduras, Negroponte, as The Baltimore Sun revealed in 1995, turned a blind eye as America’s “freedom fighters,” the Nicaraguan Contras, financed their terrorist insurgency against the leftist Sandinista government by importing billions of dollars of cocaine into the United States with a major assist from their ideological soul-mates, the Medellín and Cali drug cartels.
Recall that during this period of intensified U.S. covert operations, the Reagan Justice Department signed a Memorandum of Understanding with the CIA. That 1982 memo, brokered between U.S. Attorney General William French Smith and CIA Director William Casey, absolved the Agency from reporting drug smuggling by their assets, the Nicaraguan Contras and Afghan mujahideen.
Leveraging their anticommunist bona fides to import massive quantities of drugs into the United States, and laundering the proceeds through a spider’s web of U.S. and offshore banks including, as several investigative reports have alleged, a Stanford bank, one can only wonder whether similar cosy arrangements are in force today.
Recall also that illegal activities by institutions as diverse as Paul Helliwell’s Castle Bank and Trust in the Bahamas, Frank Nugan and Michael Hand’s Nugan Hand Bank in Sydney, Saudi Arabia and the Cayman Islands, or the far-flung, crooked empire of Agha Hasan Abedi’s Bank of Credit and Commerce International, were all financial black holes where organized crime, drug-fueled intelligence operations and geopolitical intrigue freely intermixed.
Separated in time and geography, what all three banks had in common was their close proximity to international drug trafficking networks and the CIA, particularly in areas of acute interest to U.S. policy planners. Did Stanford International Bank have an analogous relationship with the Agency?
After all the Stanford bank, like Castle, Nugan Hand and BCCI before it had been focal points of unseemly financial practices for years. Indeed, nearly thirty years ago investigative journalist Nancy Grodin reported in CovertAction (Number 16, March 1982), that like SIB, Nugan Hand enticed prospective investors “with offers of private banking services, high interest rates (higher than anywhere else in the region), tax-free deposits and complete secrecy.”
Across the decades, investigations revealed that leading figures in Castle, Nugan Hand and BCCI had actively conspired with drug traffickers to import narcotics into the United States.
Top bank officials Helliwell, Nugan, Hand and Abedi worked alongside organized crime figures and former intelligence and Pentagon officials, including a past director of the CIA. And when the chips were down, all managed to evade being held to account for the most serious charges: drug trafficking, money laundering, arms smuggling, murder, terrorism, even nuclear proliferation, precisely because such exposure would have revealed “sensitive intelligence operations.”
While some might argue that in the broad scheme of things considering the depth of capitalism’s economic meltdown, Stanford’s alleged grift was mere chump change compared to the trillions of dollars plundered by even bigger fish.
From a parapolitical perspective however, the multiple obfuscations, smokescreens and outright falsehoods surrounding the scandal indicate this is no simple case of greed or another tawdry example of “elite deviance.”
Rather, as researcher Peter Dale Scott has assiduously documented over the years, the vicissitudes of “L’affaire Stanford” may be emblematic of “continuous U.S. involvement in the global drug connection,” a “global financial complex of hot money uniting prominent business … and government as well as underworld figures” for purposes of “achieving and maintaining global American dominance.”
Drug Links Covered-Up
While Ambassador Kramer may have avoided having her photo snapped with the accused fraudster, her rather pedestrian concerns pale in comparison to the fact that Stanford has been the subject of multiple drugs investigations over a 20-year period that have all been scrupulously covered-up.
Indeed, years before the federal government ran SIB to ground, earlier probes, including those investigating drug-money laundering during the Iran-Contra period were killed.
Stanford’s Montserrat-based Guardian International Bank, a suspected conduit for Contra drug funds, short-circuited investigators when it pulled-up stakes, surrendered its banking license and left the island.
By 1986, evidence emerged that top Contra officials and the Agency enjoyed cosy ties with both Pablo Escobar and the Orejuela brothers, respective kingpins of the Medellín and Cali drug cartels.
Under pressure from the Reagan administration however, Congress and corporate media buried the drug angle to the investigation, as Consortium News journalist Robert Parry has documented in a series of groundbreaking reports.
After his departure from Montserrat under a cloud, the banker trained his sights on Antigua and Barbuda where he developed a close relationship with former prime minister Lester Bird.
The Independent reported that during the course of a joint Scotland Yard-FBI investigation, the bank “was suspected of laundering drug money from the notorious Medellin and Cali drug cartels run by Pablo Escobar and the Orejuela brothers.”
“Under the Bird family leadership” The Independent disclosed, “the island was widely regarded as one of the most corrupt in the Caribbean, with well-documented links to arms and drug smuggling and money laundering.”
The former FBI agent who led the Guardian probe, Ross Gaffney, told The Independent “we suspected that Stanford’s bank was involved in money laundering.” Gaffney said that even after Guardian closed, the FBI “continued to take an interest in Stanford and set up a second inquiry into that bank after receiving intelligence that it continued to launder money for the Medellin and Cali cartels.”
The former federal agent said, “We had hard intelligence about what he was doing and we began to develop it” but that investigation died or more likely, was deep-sixed, by officials higher-up the food chain.
According to The Observer, a second FBI source “confirmed the agency was looking at links to international drug gangs as part of the huge investigation into Stanford’s banking activities.”
Other sources “in the US Drug Enforcement Administration” The Observer reported, “also confirmed that while the investigations into Stanford’s affairs were ‘with the FBI and Securities Exchange Commission, there may well have been a trail connecting his Mexican affairs to narco-trafficking interests’.”
But even after the stench of Iran-Contra faded from the headlines, drug probes targeting the bank continued well into the 1990s. The Houston Chronicle reported that according to court documents “operatives of the Juarez cartel began opening accounts at Stanford’s Antigua-based bank in an effort to launder money amassed under one of Mexico’s most vicious drug lords, Amado Carrillo Fuentes.”
“Together,” the Chronicle disclosed, “they used Stanford International Bank to open 10 accounts and deposit $3 million–a small sliver of the cartel’s fortunes but enough to pique authorities’ interest.”
Despite long-running investigations, federal sources told the Chronicle, “any alleged Stanford connection to drug cartels and their money could lie buried in the paperwork gathered for the Security and Exchange Commission’s civil inquiry.”
Federal officials claimed, despite probes that resulted in stiff fines for illicit practices by other U.S. banks including, most recently, Wachovia, as Bloomberg Markets magazine reported, that tracing drug profits laundered through offshore banks like Stanford’s “is difficult to document.”
That is, acutely “difficult” if investigators are ordered to look away, and evidence suggests they were. How else would one interpret the statement by The Observer’s DEA source who told the British newspaper, “I think we’ll find that any possible drug-related trail and SEC priorities are not all in the same frame.”
When the scandal broke, Cablegate file 09BRIDGETOWN114, 18 February 2009, “Antigua: Upheaval on the Eve of Elections,” informs us that the 17 February announcement of new parliamentary elections “was almost immediately overshadowed by an announcement by the Securities and Exchange Commission of action being taken against U.S.-Antiguan citizen Sir Allen Stanford for ‘massive, on-going fraud’.”
The Embassy informed the State Department that “local fears over Stanford indictment have led to a run on the Stanford Financial Group’s subsidiary the Bank of Antigua, with depositors lining up for an hour or more to withdrawal their money.”
As reported above, through a series of maneuvers and what were alleged to be illicit payments to former Antiguan Prime Minister Lester Bird, Stanford set up shop on the Caribbean island in 1990, and gobbled up prime real estate, acquired dual citizenship and a knighthood, and eventually took control of the Bank of Antigua in a highly-dubious “reorganization.”
The ripples from the indictment spread like a rogue wave across Antigua and the Eastern Caribbean. Antiguan officials, and the U.S. Embassy, were concerned that once the depth of the fraud sank in, “unrest” would follow in its wake.
Shortly after that 2009 embassy cable, The Guardian, reported that an investigation by the Antiguan government uncovered “large payments … in Isle of Man bank accounts controlled by Antiguan politicians.”
According “to documents seen by The Guardian, HSBC bank, in the Isle of Man, accepted $3.2m (£2.3m) on behalf of Asot Michael, once chief of staff to the former Antigua prime minister Lester Bird.”
“The cash under investigation” the British newspaper disclosed, “came via an Israeli businessman, Bruce Rappaport, who is alleged to have diverted Antiguan funds into his own pocket while making payments to local politicians.”
HSBC denied all wrongdoing and “would publicly neither confirm nor deny information about individual Manx accounts,” saying the bank “has robust anti-money laundering policies and clearly defined policies and procedures concerning politically exposed persons.”
“It is unclear” the Embassy averred, “if either party will try hard to use the Stanford indictment as an election issue–Stanford amassed his fortune under an ALP [Antiguan Labor Party] government, and was knighted by a UPP [United Progressive Party] government, so all hands are likely equally dirty.”
“Many worry that these issues [crime, fraud and violence] could not only spell disaster for the UPP, but for the country’s economy as a whole, leading to a severe economic depression and intolerable unemployment creating more violence and a cycle of less tourism, more unemployment and more crime.”
Curiously, while corporate media have focused on Stanford’s lavish lifestyle, girlfriends and upscale island properties, nary a word has been whispered about the banker’s alleged links to notorious drug cartels or to some of the CIA’s dirtiest operations.
Even at this late date, it appears that the dodgy banker has well-connected friends who want to bury this angle of a scandal that has defrauded thousands and wrecked entire economies.
The question is, why?
Follow the Money, but Where?
Investors in the Stanford Ponzi scheme have lost their shirts, and its likely they’ll never recover even a fraction of their losses.
“In the past two years” the Houston Chronicle reported, “Stanford himself has ceased to be the story. The most amazing aspect of the Stanford saga is how little money has been recovered. As the court-appointed receiver has chased assets around the globe, he’s found Stanford’s accounts stunningly empty.”
During the investigation that led to the indictments, auditors learned that that funds were moved through Stanford-controlled accounts to offshore banks, including HSBC London; Bank Julius Baer, Zurich; Credit Suisse, United Kingdom; SG Private Banking, Geneva; Banque Franck Galland & Cie S.A., Geneva; RBS Coutts, Zurich; Coutts Bank Von Ernst, Geneva and Toronto Dominion Bank, Canada; banks which have figured in past money laundering or tax-avoidance scandals. In all, 28 numbered accounts were listed by prosecutors, veritable black holes that escaped regulatory scrutiny.
Nearly a decade ago, investigative journalist Stephen Bender wrote in Z Magazine that “an understanding of the drug trade’s machinations is incomplete without an analysis of the crucial role transnational banks play in the laundering of drug proceeds.”
The House Permanent Subcommittee on Investigations reported back in 2000: “Despite increasing international attention and stronger anti-money laundering controls, some current estimates are that $500 billion to $1 trillion in criminal proceeds are laundered through banks worldwide each year, with about half of that amount moved through United States banks.”
Recall that at the height of capitalism’s current global economic meltdown, Antonio Maria Costa, the director of the United Nations Office on Drugs and Crime told The Observer that “drugs money worth billions of dollars kept the financial system afloat at the height of the global crisis.”
Costa told the British newspaper he saw substantial evidence that that proceeds from the illicit trade were “the only liquid investment capital” available to some banks on the brink of collapse last year and that “a majority of the $352bn (£216bn) of drugs profits was absorbed into the economic system as a result.”
The UN drugs chief said that in “many instances, the money from drugs was the only liquid investment capital.” And with markets tanking and major bank failures a near daily occurrence, “liquidity was the banking system’s main problem and hence liquid capital became an important factor.”
If only a tiny portion of these illegal proceeds were siphoned-off by secret state agencies, including the CIA, funds available for covert operations and other dubious purposes, such as suborning treason amongst foreign officials to spy on their own governments, as WikiLeaks diplomatic cables revealed, the amounts would be staggering.
Bender informed us that one conduit for laundering drug profits is the private banking system.
“U.S.-based private banks” Bender wrote, “operate in a regulatory twilight zone enabling the laundering of drug profits as confirmed by the GAO. Private banks are ‘not subject to the Bank Secrecy Act,’ thus exempting banks from complying with ‘specific anti-money-laundering provisions…such as the one requiring that suspicious transactions be reported to U.S. authorities’.”
And with “international private banking” a prominent selling-point of the Stanford firm’s dark web, one might reasonably surmise that drug traffickers would also view this regulatory black hole in the most favourable light.
Indeed, this “twilight zone” was precisely where Allen Stanford operated. As The Miami Herald reported, state and federal regulators allowed SIB to move “vast amounts of money offshore–without reporting a penny to regulators.”
SIB’s arrangements with the Florida Office of Financial Regulation were so lax that the company “was allowed to sell hundreds of millions in bank notes without allowing regulators to check for fraud.” Indeed, Florida regulators granted Stanford’s bank “sweeping powers never given to a private company.”
But what if that “private company” were handed an exemption from “their normal accounting and securities-disclosure obligations” as BusinessWeek reported, on grounds of “national security,” and investigations into that firm were squashed “at the request of another federal agency,” wouldn’t this also suggest that Stanford’s Ponzi scheme may have also been a cover for ongoing U.S. intelligence operations?
And once the scope of the fraud became too large to ignore, it wouldn’t be a stretch to conclude that the Agency decided to cut their losses and “move on”?
As investigative reporters Jonathan Beaty and S.C. Gwynne uncovered in their stunning exposé, The Outlaw Bank, it wouldn’t be the first time.
For years the CIA had concealed their close involvement with the crooked Bank of Credit and Commerce International (BCCI), tied to everything from drug trafficking to money laundering and from nuclear proliferation to the financing of terrorist groups, including those that morphed into Al-Qaeda.
And when they “came clean” to Treasury Department officials in a report that remains classified to this day, “suddenly, and for no apparent reason,” Beaty and Gwynne wrote, Treasury “lost all interest in BCCI.”
Perhaps for similar reasons too, in the years ahead we’ll find that “any alleged Stanford connection to drug cartels and their money could lie buried in the paperwork gathered for the Security and Exchange Commission’s civil inquiry,” where its likely to stay buried.
While R. Allen Stanford was happily ensconced on the Caribbean island of Antigua, allegedly bribing officials there as he expanded his banking empire, secret cables released by the whistleblowing web site WikiLeaks revealed that U.S. Embassy officials held themselves at arm’s length even as they provided the accused fraudster with political cover.
As Antifascist Calling reported last summer, Stanford International Bank (SIB) and Stanford Financial Group (SFG), once conservatively valued at $50 billion, were no more legitimate than penny stock frauds or advance fee scams on the internet. To make matters worse, for years federal regulators turned a blind eye towards the bank’s reckless practices.
As it turns out, so too did the U.S. Embassy.
Cablegate file 06BRIDGETOWN755, “Cricket Breakfast Serves Up First Encounter with Allen Stanford,” dated 03 May 2006, revealed that “Ambassador Kramer met controversial Texan billionaire Allen Stanford for the first time at an April 21 ‘Legends of Cricket’ breakfast in Barbados.”
The confidential embassy cable reported that “Stanford bent the Ambassador’s ear concerning his significant new tourism and property investments in Antigua and plans for his Caribbean Star and Caribbean Sun airlines.”
The occasion for the meeting, an inadvertent encounter if the embassy’s account is to be believed, was an April 21, 2006 breakfast at the Barbados Hilton.
Stanford, who went on to donate some $20 million to the England and Wales Cricket Board, attended the lavish affair in the company of Barbados Prime Minister Owen Arthur, U.S. Ambassador Mary E. Kramer, assorted sports stars and local luminaries.
The cable averred that “Allen Stanford is a controversial Texan billionaire who has made significant investments in offshore finance, aviation, and property development in Antigua and throughout the region. His companies are rumored to engage in bribery, money laundering, and political manipulation.”
Rumored by whom, one might reasonably ask? An important point since this was certainly not general knowledge at the time, particularly amongst those who were being fleeced.
But rather than blowing the whistle when it could have mattered most to investors and Antiguan citizens, the Bush-appointed official took cover. “Embassy officers do not reach out to Stanford” we read, “because of the allegations of bribery and money laundering. The Ambassador managed to stay out of any one-on-one photos with Stanford during the breakfast.”
Why would Kramer have done otherwise? After all, as Secretary of State Hillary Clinton piously intoned last month denouncing WikiLeaks, “this is the role our diplomats play in serving America.”
A “Unique Investment Strategy”
When “Sir Allen” was arrested in 2009, the federal indictment charged that the high-flying Texan had sold more than $7 billion in fraudulent certificates of deposit and some $1.2 billion in mutual funds.
The centerpiece of SIB’s “unique investment strategy” were financial instruments that were claimed to be safe, liquid and redeemable at a moment’s notice.
According to a blurb on the “Sir Allen Stanford” web site, the Stanford Financial Group “provides private and institutional investors with global expertise in asset allocation strategies, investment advisory services, equity research, international private banking and trust administration, commercial banking, investment banking, merchant banking, institutional sales and trading, real estate investment and insurance.”
The reality was far different, however. In fact, the majority of Group “assets” were in very illiquid real estate holdings and private accounts managed by just two individuals, Allen Stanford and his college roommate, James M. Davis, the bank’s chief financial officer.
According to federal prosecutors, accounts were divided into three tiers, I, II and III with Tier III accounts representing “more than 80% of the purported total value of SIBL’s investments.”
“STANFORD and DAVIS” the charge sheet reads, “directed, managed, and monitored … the Tier III investments. According to internal SIBL documents, as of June 30, 2008, these Tier III investments comprised the majority of the purported value of SIBL’s investment portfolio. Approximately 50% of the purported value of Tier III (approximately $3.2 billion) included investments in artificially valued real estate and approximately 30% of the purported value of Tier III (approximately $1.6 billion) included notes on personal loans to STANFORD. STANFORD, DAVIS and others did not disclose to, and actively concealed from, investors, SGC and SIBL employees, and others the fact that approximately $4.8 billion in purported Tier III investments consisted of such artificially valued real estate and notes on personal loans to STANFORD.”
A sweet deal if you’re in on the fix.
Lured by “high rates that exceed those available through true certificates of deposits offered by traditional banks,” thousands of investors were indelicately relieved of their life savings. Of the more than $8 billion hoovered up by the banker and his cronies, only about $500 million has been recovered.
This raises the question: where did all that money go? Did it just simply vanish into thin air, secret Stanford accounts, or perhaps, was it diverted elsewhere by the banker’s silent partners in a certain three-lettered agency?
When asked during a 2009 interview by CNBC’s Scott Cohn whether he had been “helpful” to U.S. authorities in Latin America, Stanford replied, “Are you talking about the CIA?” Cohn: “Well, you tell me?” Stanford: “I’m just not going to talk about that.”
Stanford’s reticence to discuss possible Agency connections are certainly understandable.
We do know however, that like many dubious banking ventures before it, Stanford Financial Group had powerful friends in high places, in the White House, Congress, amongst regulatory agencies and, plausibly, the CIA; all of whom tripped over themselves furnishing Stanford’s “family” of companies with a watertight “roof.”
The More Things “Change”
According to available evidence, why would the banker have believed his shady empire was on the brink of collapse in 2009, or that well-connected friends wouldn’t come to the rescue? After all, it happened before.
Last year The New York Times disclosed that Stephen J. Korotash, an associate regional director of enforcement at the Ft. Worth, Texas office of the Securities and Exchange Commission (SEC) said the regulatory agency “stood down” their investigation “at the request of another federal agency, which he declined to name.”
A curious admission all the more damning for regulators considering that suspicions, and hastily-closed investigations, have dogged the bank for the better part of two decades.
Damning perhaps, but not surprising.
Nearly a quarter century before charges were laid against Allen Stanford, the late investigative reporter Penny Lernoux recounted in her still-timely book, In Banks We Trust, a fraudulent scheme by Citibank (now Citigroup) to evade paying taxes while cooking the books and dodging “legal requirements on bank reserves, liquidity, and lending limits.” And, similar to the Stanford grift, the SEC did worse than nothing.
Lernoux averred that even after a whistleblower and former bank vice president proved “conclusively” that Citibank had “systematically” violated the law, “the SEC’s enforcement staff refused to take any action against the bank on the ground that its pursuit of unlawful profits accorded with ‘reasonable and standard business judgement’.”
Here’s the kicker. Lernoux wrote that the “SEC also concluded that Citibank’s management had no duty to disclose improper actions since the bank had never claimed its top officers possessed ‘honesty and integrity’.” Sound familiar?
Fast forward to the era of the Bush crime family and we learn that in 2006, BusinessWeek revealed that the president “bestowed on his intelligence czar … broad authority, in the name of national security” to excuse companies from “their normal accounting and securities-disclosure obligations” if they revealed “certain top-secret defense projects.”
Would such “broad authority” also cover financial institutions accused of laundering drug money for select “War on Terror” allies?
Interestingly enough, Bush’s “intelligence czar” at the time, John D. Negroponte, was U.S. Ambassador in Honduras during the 1980s at the height of the Reagan administration’s anticommunist jihad in Central America.
In addition to covering for the CIA as the Agency stood-up death squads in Honduras, Negroponte, as The Baltimore Sun revealed in 1995, turned a blind eye as America’s “freedom fighters,” the Nicaraguan Contras, financed their terrorist insurgency against the leftist Sandinista government by importing billions of dollars of cocaine into the United States with a major assist from their ideological soul-mates, the Medellín and Cali drug cartels.
Recall that during this period of intensified U.S. covert operations, the Reagan Justice Department signed a Memorandum of Understanding with the CIA. That 1982 memo, brokered between U.S. Attorney General William French Smith and CIA Director William Casey, absolved the Agency from reporting drug smuggling by their assets, the Nicaraguan Contras and Afghan mujahideen.
Leveraging their anticommunist bona fides to import massive quantities of drugs into the United States, and laundering the proceeds through a spider’s web of U.S. and offshore banks including, as several investigative reports have alleged, a Stanford bank, one can only wonder whether similar cosy arrangements are in force today.
Recall also that illegal activities by institutions as diverse as Paul Helliwell’s Castle Bank and Trust in the Bahamas, Frank Nugan and Michael Hand’s Nugan Hand Bank in Sydney, Saudi Arabia and the Cayman Islands, or the far-flung, crooked empire of Agha Hasan Abedi’s Bank of Credit and Commerce International, were all financial black holes where organized crime, drug-fueled intelligence operations and geopolitical intrigue freely intermixed.
Separated in time and geography, what all three banks had in common was their close proximity to international drug trafficking networks and the CIA, particularly in areas of acute interest to U.S. policy planners. Did Stanford International Bank have an analogous relationship with the Agency?
After all the Stanford bank, like Castle, Nugan Hand and BCCI before it had been focal points of unseemly financial practices for years. Indeed, nearly thirty years ago investigative journalist Nancy Grodin reported in CovertAction (Number 16, March 1982), that like SIB, Nugan Hand enticed prospective investors “with offers of private banking services, high interest rates (higher than anywhere else in the region), tax-free deposits and complete secrecy.”
Across the decades, investigations revealed that leading figures in Castle, Nugan Hand and BCCI had actively conspired with drug traffickers to import narcotics into the United States.
Top bank officials Helliwell, Nugan, Hand and Abedi worked alongside organized crime figures and former intelligence and Pentagon officials, including a past director of the CIA. And when the chips were down, all managed to evade being held to account for the most serious charges: drug trafficking, money laundering, arms smuggling, murder, terrorism, even nuclear proliferation, precisely because such exposure would have revealed “sensitive intelligence operations.”
While some might argue that in the broad scheme of things considering the depth of capitalism’s economic meltdown, Stanford’s alleged grift was mere chump change compared to the trillions of dollars plundered by even bigger fish.
From a parapolitical perspective however, the multiple obfuscations, smokescreens and outright falsehoods surrounding the scandal indicate this is no simple case of greed or another tawdry example of “elite deviance.”
Rather, as researcher Peter Dale Scott has assiduously documented over the years, the vicissitudes of “L’affaire Stanford” may be emblematic of “continuous U.S. involvement in the global drug connection,” a “global financial complex of hot money uniting prominent business … and government as well as underworld figures” for purposes of “achieving and maintaining global American dominance.”
Drug Links Covered-Up
While Ambassador Kramer may have avoided having her photo snapped with the accused fraudster, her rather pedestrian concerns pale in comparison to the fact that Stanford has been the subject of multiple drugs investigations over a 20-year period that have all been scrupulously covered-up.
Indeed, years before the federal government ran SIB to ground, earlier probes, including those investigating drug-money laundering during the Iran-Contra period were killed.
Stanford’s Montserrat-based Guardian International Bank, a suspected conduit for Contra drug funds, short-circuited investigators when it pulled-up stakes, surrendered its banking license and left the island.
By 1986, evidence emerged that top Contra officials and the Agency enjoyed cosy ties with both Pablo Escobar and the Orejuela brothers, respective kingpins of the Medellín and Cali drug cartels.
Under pressure from the Reagan administration however, Congress and corporate media buried the drug angle to the investigation, as Consortium News journalist Robert Parry has documented in a series of groundbreaking reports.
After his departure from Montserrat under a cloud, the banker trained his sights on Antigua and Barbuda where he developed a close relationship with former prime minister Lester Bird.
The Independent reported that during the course of a joint Scotland Yard-FBI investigation, the bank “was suspected of laundering drug money from the notorious Medellin and Cali drug cartels run by Pablo Escobar and the Orejuela brothers.”
“Under the Bird family leadership” The Independent disclosed, “the island was widely regarded as one of the most corrupt in the Caribbean, with well-documented links to arms and drug smuggling and money laundering.”
The former FBI agent who led the Guardian probe, Ross Gaffney, told The Independent “we suspected that Stanford’s bank was involved in money laundering.” Gaffney said that even after Guardian closed, the FBI “continued to take an interest in Stanford and set up a second inquiry into that bank after receiving intelligence that it continued to launder money for the Medellin and Cali cartels.”
The former federal agent said, “We had hard intelligence about what he was doing and we began to develop it” but that investigation died or more likely, was deep-sixed, by officials higher-up the food chain.
According to The Observer, a second FBI source “confirmed the agency was looking at links to international drug gangs as part of the huge investigation into Stanford’s banking activities.”
Other sources “in the US Drug Enforcement Administration” The Observer reported, “also confirmed that while the investigations into Stanford’s affairs were ‘with the FBI and Securities Exchange Commission, there may well have been a trail connecting his Mexican affairs to narco-trafficking interests’.”
But even after the stench of Iran-Contra faded from the headlines, drug probes targeting the bank continued well into the 1990s. The Houston Chronicle reported that according to court documents “operatives of the Juarez cartel began opening accounts at Stanford’s Antigua-based bank in an effort to launder money amassed under one of Mexico’s most vicious drug lords, Amado Carrillo Fuentes.”
“Together,” the Chronicle disclosed, “they used Stanford International Bank to open 10 accounts and deposit $3 million–a small sliver of the cartel’s fortunes but enough to pique authorities’ interest.”
Despite long-running investigations, federal sources told the Chronicle, “any alleged Stanford connection to drug cartels and their money could lie buried in the paperwork gathered for the Security and Exchange Commission’s civil inquiry.”
Federal officials claimed, despite probes that resulted in stiff fines for illicit practices by other U.S. banks including, most recently, Wachovia, as Bloomberg Markets magazine reported, that tracing drug profits laundered through offshore banks like Stanford’s “is difficult to document.”
That is, acutely “difficult” if investigators are ordered to look away, and evidence suggests they were. How else would one interpret the statement by The Observer’s DEA source who told the British newspaper, “I think we’ll find that any possible drug-related trail and SEC priorities are not all in the same frame.”
When the scandal broke, Cablegate file 09BRIDGETOWN114, 18 February 2009, “Antigua: Upheaval on the Eve of Elections,” informs us that the 17 February announcement of new parliamentary elections “was almost immediately overshadowed by an announcement by the Securities and Exchange Commission of action being taken against U.S.-Antiguan citizen Sir Allen Stanford for ‘massive, on-going fraud’.”
The Embassy informed the State Department that “local fears over Stanford indictment have led to a run on the Stanford Financial Group’s subsidiary the Bank of Antigua, with depositors lining up for an hour or more to withdrawal their money.”
As reported above, through a series of maneuvers and what were alleged to be illicit payments to former Antiguan Prime Minister Lester Bird, Stanford set up shop on the Caribbean island in 1990, and gobbled up prime real estate, acquired dual citizenship and a knighthood, and eventually took control of the Bank of Antigua in a highly-dubious “reorganization.”
The ripples from the indictment spread like a rogue wave across Antigua and the Eastern Caribbean. Antiguan officials, and the U.S. Embassy, were concerned that once the depth of the fraud sank in, “unrest” would follow in its wake.
Shortly after that 2009 embassy cable, The Guardian, reported that an investigation by the Antiguan government uncovered “large payments … in Isle of Man bank accounts controlled by Antiguan politicians.”
According “to documents seen by The Guardian, HSBC bank, in the Isle of Man, accepted $3.2m (£2.3m) on behalf of Asot Michael, once chief of staff to the former Antigua prime minister Lester Bird.”
“The cash under investigation” the British newspaper disclosed, “came via an Israeli businessman, Bruce Rappaport, who is alleged to have diverted Antiguan funds into his own pocket while making payments to local politicians.”
HSBC denied all wrongdoing and “would publicly neither confirm nor deny information about individual Manx accounts,” saying the bank “has robust anti-money laundering policies and clearly defined policies and procedures concerning politically exposed persons.”
“It is unclear” the Embassy averred, “if either party will try hard to use the Stanford indictment as an election issue–Stanford amassed his fortune under an ALP [Antiguan Labor Party] government, and was knighted by a UPP [United Progressive Party] government, so all hands are likely equally dirty.”
“Many worry that these issues [crime, fraud and violence] could not only spell disaster for the UPP, but for the country’s economy as a whole, leading to a severe economic depression and intolerable unemployment creating more violence and a cycle of less tourism, more unemployment and more crime.”
Curiously, while corporate media have focused on Stanford’s lavish lifestyle, girlfriends and upscale island properties, nary a word has been whispered about the banker’s alleged links to notorious drug cartels or to some of the CIA’s dirtiest operations.
Even at this late date, it appears that the dodgy banker has well-connected friends who want to bury this angle of a scandal that has defrauded thousands and wrecked entire economies.
The question is, why?
Follow the Money, but Where?
Investors in the Stanford Ponzi scheme have lost their shirts, and its likely they’ll never recover even a fraction of their losses.
“In the past two years” the Houston Chronicle reported, “Stanford himself has ceased to be the story. The most amazing aspect of the Stanford saga is how little money has been recovered. As the court-appointed receiver has chased assets around the globe, he’s found Stanford’s accounts stunningly empty.”
During the investigation that led to the indictments, auditors learned that that funds were moved through Stanford-controlled accounts to offshore banks, including HSBC London; Bank Julius Baer, Zurich; Credit Suisse, United Kingdom; SG Private Banking, Geneva; Banque Franck Galland & Cie S.A., Geneva; RBS Coutts, Zurich; Coutts Bank Von Ernst, Geneva and Toronto Dominion Bank, Canada; banks which have figured in past money laundering or tax-avoidance scandals. In all, 28 numbered accounts were listed by prosecutors, veritable black holes that escaped regulatory scrutiny.
Nearly a decade ago, investigative journalist Stephen Bender wrote in Z Magazine that “an understanding of the drug trade’s machinations is incomplete without an analysis of the crucial role transnational banks play in the laundering of drug proceeds.”
The House Permanent Subcommittee on Investigations reported back in 2000: “Despite increasing international attention and stronger anti-money laundering controls, some current estimates are that $500 billion to $1 trillion in criminal proceeds are laundered through banks worldwide each year, with about half of that amount moved through United States banks.”
Recall that at the height of capitalism’s current global economic meltdown, Antonio Maria Costa, the director of the United Nations Office on Drugs and Crime told The Observer that “drugs money worth billions of dollars kept the financial system afloat at the height of the global crisis.”
Costa told the British newspaper he saw substantial evidence that that proceeds from the illicit trade were “the only liquid investment capital” available to some banks on the brink of collapse last year and that “a majority of the $352bn (£216bn) of drugs profits was absorbed into the economic system as a result.”
The UN drugs chief said that in “many instances, the money from drugs was the only liquid investment capital.” And with markets tanking and major bank failures a near daily occurrence, “liquidity was the banking system’s main problem and hence liquid capital became an important factor.”
If only a tiny portion of these illegal proceeds were siphoned-off by secret state agencies, including the CIA, funds available for covert operations and other dubious purposes, such as suborning treason amongst foreign officials to spy on their own governments, as WikiLeaks diplomatic cables revealed, the amounts would be staggering.
Bender informed us that one conduit for laundering drug profits is the private banking system.
“U.S.-based private banks” Bender wrote, “operate in a regulatory twilight zone enabling the laundering of drug profits as confirmed by the GAO. Private banks are ‘not subject to the Bank Secrecy Act,’ thus exempting banks from complying with ‘specific anti-money-laundering provisions…such as the one requiring that suspicious transactions be reported to U.S. authorities’.”
And with “international private banking” a prominent selling-point of the Stanford firm’s dark web, one might reasonably surmise that drug traffickers would also view this regulatory black hole in the most favourable light.
Indeed, this “twilight zone” was precisely where Allen Stanford operated. As The Miami Herald reported, state and federal regulators allowed SIB to move “vast amounts of money offshore–without reporting a penny to regulators.”
SIB’s arrangements with the Florida Office of Financial Regulation were so lax that the company “was allowed to sell hundreds of millions in bank notes without allowing regulators to check for fraud.” Indeed, Florida regulators granted Stanford’s bank “sweeping powers never given to a private company.”
But what if that “private company” were handed an exemption from “their normal accounting and securities-disclosure obligations” as BusinessWeek reported, on grounds of “national security,” and investigations into that firm were squashed “at the request of another federal agency,” wouldn’t this also suggest that Stanford’s Ponzi scheme may have also been a cover for ongoing U.S. intelligence operations?
And once the scope of the fraud became too large to ignore, it wouldn’t be a stretch to conclude that the Agency decided to cut their losses and “move on”?
As investigative reporters Jonathan Beaty and S.C. Gwynne uncovered in their stunning exposé, The Outlaw Bank, it wouldn’t be the first time.
For years the CIA had concealed their close involvement with the crooked Bank of Credit and Commerce International (BCCI), tied to everything from drug trafficking to money laundering and from nuclear proliferation to the financing of terrorist groups, including those that morphed into Al-Qaeda.
And when they “came clean” to Treasury Department officials in a report that remains classified to this day, “suddenly, and for no apparent reason,” Beaty and Gwynne wrote, Treasury “lost all interest in BCCI.”
Perhaps for similar reasons too, in the years ahead we’ll find that “any alleged Stanford connection to drug cartels and their money could lie buried in the paperwork gathered for the Security and Exchange Commission’s civil inquiry,” where its likely to stay buried.
Sunday, 5 December 2010
Trustee Sues HSBC Over Cash Sent to Madoff
At long last people are realising the part HSBC played as a correspondent bank in both the Madoff and the Stanford ponzi schemes. Let us all hope HSBC are held to account for their failure to practice due diligence when dealing with Madoff and Stanford, it is HSBC who should pay for their failure NOT the VICTIMS!The trustee seeking assets for victims of Bernard L. Madoff’s global Ponzi scheme filed a lawsuit on Sunday seeking $9 billion from a roster of defendants headed by HSBC, the London-based financial giant with hedge fund clients that fed piles of cash into the enormous fraud.
The lawsuit is the third multibillion-dollar complaint the Madoff trustee, Irving H. Picard, has filed against major financial institutions in the last two weeks. It almost certainly will not be the last.
Under federal bankruptcy law, the trustee must file all his recovery claims within two years of the initial bankruptcy filing. That did not occur until Dec. 15, 2008, but the bankruptcy court has defined the filing date as Dec. 11, 2008, the day of Mr. Madoff’s arrest.
That gives Mr. Picard until midnight on Saturday either to sue to recover cash withdrawn from Madoff accounts before the Ponzi scheme collapsed or to seek punitive damages from anyone involved in those withdrawals.
The large banks the trustee has sued — the Swiss-based UBS, JPMorgan Chase in New York, and now HSBC in London — were not alone in providing services or marketing products related to the Madoff fraud. For example, several other global banks sold investment vehicles that tracked Mr. Madoff’s performance, and some smaller banks provided services to “feeder funds” that channeled investments into Mr. Madoff’s funds.
It is unclear how many of those other entities may be in Mr. Picard’s sights. With the deadline approaching, Mr. Picard said in a recent report to the bankruptcy court that he “anticipates that he will file extensive additional litigation in the coming weeks.” Some complaints may be filed in foreign jurisdictions. The trustee has law firms working for him in Europe, Gibraltar, Canada, Bermuda and the Caribbean to help untangle connections between Mr. Madoff and “foreign individuals, feeder funds and international banking institutions,” he said in the court filing.
The latest lawsuit contends that the Madoff’s fraud “could not have been accomplished or perpetuated unless the HSBC defendants agreed to look the other way and to pretend that they were ensuring the existence of assets and trades when, in fact, they did no such thing.”
It asserts that HSBC and a dozen of its subsidiaries “aided, enabled and sustained” Mr. Madoff’s fraud in two important ways: by lending the bank’s prestige and performing services for hedge funds that raised money for Mr. Madoff; and by developing complex derivative products that provided additional sources of cash for the Ponzi scheme.
A dozen hedge funds, nearly two dozen European money-management businesses and 13 individuals were included as defendants in the 170-page complaint.
Among them were Sonja Kohn, the prominent Viennese financier who had ties to some of the largest Madoff feeder funds, and UniCredit, the Italian holding company whose Bank Austria unit was a partner with Ms. Kohn in her flagship company, Bank Medici.
Representatives of the defendants in Europe could not be reached for comment Sunday evening.
But in vigorous defenses against similar lawsuits filed by investors, lawyers for the HSBC units, the UniCredit subsidiaries and the Bank Medici defendants have all consistently denied that their clients had any knowledge of the Madoff fraud or were responsible in any way for not detecting it before its collapse.
To outsider investors, the “labyrinth” created by the hedge funds, managers and HSBC subsidiaries named as defendants looked like “a formidable system of checks and balances,” said Oren J. Warshavsky, a partner at Baker & Hostetler, the trustee’s law firm. “Yet the purpose of this complex architecture was just the opposite,” he said, “to avoid scrutiny and generate more fees.”
The trustee’s HSBC claim, filed electronically in United States District Court in Manhattan, is the largest, surpassing a $7.2 billion demand filed against the estate of Jeffry Picower, a longtime Madoff investor who died last year.
By the end of September, Mr. Picard had filed 19 lawsuits seeking to recover a total of $15.5 billion from members of Mr. Madoff’s immediate family, longtime individual investors such as Mr. Picower, and major feeder funds, including those operated by the Fairfield Greenwich Group and J. Ezra Merkin, a prominent Wall Street investment manager.
Mr. Picard’s recent lawsuits against JPMorgan, UBS and HSBC have added $17.4 billion to the amount he is claiming on behalf of victims, for a total of more than $32 billion.
That amount, which includes demands for punitive damages, is 50 percent more than the $20 billion he has estimated as the actual cash losses in the fraud, but he is not assured of recovering all the money he is seeking.
JPMorgan, UBS and HSBC have already vowed that they will fight the trustee’s claims in court and those battles could take years.
The total shown on investor account statements on the eve of the fraud’s collapse was nearly $65 billion, the sum of fictional paper profits that had accumulated in some accounts for decades. Mr. Picard has recovered approximately $1.5 billion through asset sales and out-of-court settlements.
Mr. Madoff is serving 150 years in prison after pleading guilty to orchestrating the fraud.
The lawsuit is the third multibillion-dollar complaint the Madoff trustee, Irving H. Picard, has filed against major financial institutions in the last two weeks. It almost certainly will not be the last.
Under federal bankruptcy law, the trustee must file all his recovery claims within two years of the initial bankruptcy filing. That did not occur until Dec. 15, 2008, but the bankruptcy court has defined the filing date as Dec. 11, 2008, the day of Mr. Madoff’s arrest.
That gives Mr. Picard until midnight on Saturday either to sue to recover cash withdrawn from Madoff accounts before the Ponzi scheme collapsed or to seek punitive damages from anyone involved in those withdrawals.
The large banks the trustee has sued — the Swiss-based UBS, JPMorgan Chase in New York, and now HSBC in London — were not alone in providing services or marketing products related to the Madoff fraud. For example, several other global banks sold investment vehicles that tracked Mr. Madoff’s performance, and some smaller banks provided services to “feeder funds” that channeled investments into Mr. Madoff’s funds.
It is unclear how many of those other entities may be in Mr. Picard’s sights. With the deadline approaching, Mr. Picard said in a recent report to the bankruptcy court that he “anticipates that he will file extensive additional litigation in the coming weeks.” Some complaints may be filed in foreign jurisdictions. The trustee has law firms working for him in Europe, Gibraltar, Canada, Bermuda and the Caribbean to help untangle connections between Mr. Madoff and “foreign individuals, feeder funds and international banking institutions,” he said in the court filing.
The latest lawsuit contends that the Madoff’s fraud “could not have been accomplished or perpetuated unless the HSBC defendants agreed to look the other way and to pretend that they were ensuring the existence of assets and trades when, in fact, they did no such thing.”
It asserts that HSBC and a dozen of its subsidiaries “aided, enabled and sustained” Mr. Madoff’s fraud in two important ways: by lending the bank’s prestige and performing services for hedge funds that raised money for Mr. Madoff; and by developing complex derivative products that provided additional sources of cash for the Ponzi scheme.
A dozen hedge funds, nearly two dozen European money-management businesses and 13 individuals were included as defendants in the 170-page complaint.
Among them were Sonja Kohn, the prominent Viennese financier who had ties to some of the largest Madoff feeder funds, and UniCredit, the Italian holding company whose Bank Austria unit was a partner with Ms. Kohn in her flagship company, Bank Medici.
Representatives of the defendants in Europe could not be reached for comment Sunday evening.
But in vigorous defenses against similar lawsuits filed by investors, lawyers for the HSBC units, the UniCredit subsidiaries and the Bank Medici defendants have all consistently denied that their clients had any knowledge of the Madoff fraud or were responsible in any way for not detecting it before its collapse.
To outsider investors, the “labyrinth” created by the hedge funds, managers and HSBC subsidiaries named as defendants looked like “a formidable system of checks and balances,” said Oren J. Warshavsky, a partner at Baker & Hostetler, the trustee’s law firm. “Yet the purpose of this complex architecture was just the opposite,” he said, “to avoid scrutiny and generate more fees.”
The trustee’s HSBC claim, filed electronically in United States District Court in Manhattan, is the largest, surpassing a $7.2 billion demand filed against the estate of Jeffry Picower, a longtime Madoff investor who died last year.
By the end of September, Mr. Picard had filed 19 lawsuits seeking to recover a total of $15.5 billion from members of Mr. Madoff’s immediate family, longtime individual investors such as Mr. Picower, and major feeder funds, including those operated by the Fairfield Greenwich Group and J. Ezra Merkin, a prominent Wall Street investment manager.
Mr. Picard’s recent lawsuits against JPMorgan, UBS and HSBC have added $17.4 billion to the amount he is claiming on behalf of victims, for a total of more than $32 billion.
That amount, which includes demands for punitive damages, is 50 percent more than the $20 billion he has estimated as the actual cash losses in the fraud, but he is not assured of recovering all the money he is seeking.
JPMorgan, UBS and HSBC have already vowed that they will fight the trustee’s claims in court and those battles could take years.
The total shown on investor account statements on the eve of the fraud’s collapse was nearly $65 billion, the sum of fictional paper profits that had accumulated in some accounts for decades. Mr. Picard has recovered approximately $1.5 billion through asset sales and out-of-court settlements.
Mr. Madoff is serving 150 years in prison after pleading guilty to orchestrating the fraud.
Saturday, 27 November 2010
HSBC Paid off Wealthy Madoff Investors
HSBC not only failed in their duty of care in the Stanford case they also failed in the Madoff case, the difference being HSBC reimbursed their wealthy clients. It appears if you are wealthy and can afford a barrister HSBC will pay but if your a pensioner who lost all your money because of HSBC negligence they are not going to pay.
More than 720,000 victims of the fraudster Bernard Madoff have won an estimated $15.5bn (£11bn) back from non-American banks that had channelled the victims' money towards the corrupt Wall Street investment manager.
An alliance of victims' lawyers yesterday said that 14 months on from Madoff's conviction, dozens of European banks including Santander and HSBC had made partial reimbursement, for fear of losing long-standing and often lucrative customers. About 80% of Madoff investors represented by the alliance have struck deals with their banks. The average profile of a victim is a 54-year-old male who invested $35,000 in Madoff's phoney Wall Street fund management business.
Javier Cremades of Spanish law firm Cremades & Calvo-Sotelo, who is co-ordinating the victims' network, said customers were typically getting their original investment without the false profits the jailed financier claimed to have added. "Client confidence is banks' most important asset," he said at a press conference in New York. "They're facing a huge reputational problem at a time when confidence is not particularly abundant."
Generally speaking, banks are not refunding their customers in cash, but are using a variety of forms of credit or convertible paper intended to tie in victims as ongoing clients. Santander, one of the biggest sources of money to Madoff outside the US, has offered its clients a form of convertible paper redeemable in 10 years and has settled 98% of claims.
When asked about settlements in Britain, Cremades named HSBC as one of the banks involved in deals. The British bank has taken charges of $1.05bn to cover Madoff-related losses, and revealed in its annual report that it was the subject of litigation with "numerous defendants" over the Madoff scandal in jurisdictions including the US, Ireland and Luxembourg. However, sources close to HSBC expressed scepticism, saying they were not aware of such settlements.
Cremades said victims' lawyers had been surprised at the willingness of banks to settle: "In Europe, one year later, most of the victims have solved their problems through settlements. It has been easier than we thought."
An exception, however, is Switzerland, where the situation has been complicated by its banking privacy laws. Some victims had secret accounts and are unwilling to air their losses in litigation.
Regarded as the biggest financial crime in Wall Street history, Madoff Investment Securities claimed to have $65bn of assets under management. But the financial crisis led to attempts by investors to withdraw money, exposing Madoff's firm as a vast Ponzi scheme. He is serving a 150-year sentence in North Carolina.
Within the US, most of his victims were either direct investors or had channelled money through boutique firms that acted as so-called feeder funds. They face a longer struggle for recompense as a court-appointed trustee, Irving Picard, sorts through claims. European banks will wait in line with US victims to get their own share of any distribution, though they are not likely to get back anything close to the sums that they are reimbursing clients.
"They can't expect to get back much of what they've given," said Gaytri Kaychoo, a lawyer for US victims. "They [European banks]looked at their own situation and rationalised making their settlements with wealthy, very good clients, because they can't afford to lose them."
More than 720,000 victims of the fraudster Bernard Madoff have won an estimated $15.5bn (£11bn) back from non-American banks that had channelled the victims' money towards the corrupt Wall Street investment manager.
An alliance of victims' lawyers yesterday said that 14 months on from Madoff's conviction, dozens of European banks including Santander and HSBC had made partial reimbursement, for fear of losing long-standing and often lucrative customers. About 80% of Madoff investors represented by the alliance have struck deals with their banks. The average profile of a victim is a 54-year-old male who invested $35,000 in Madoff's phoney Wall Street fund management business.
Javier Cremades of Spanish law firm Cremades & Calvo-Sotelo, who is co-ordinating the victims' network, said customers were typically getting their original investment without the false profits the jailed financier claimed to have added. "Client confidence is banks' most important asset," he said at a press conference in New York. "They're facing a huge reputational problem at a time when confidence is not particularly abundant."
Generally speaking, banks are not refunding their customers in cash, but are using a variety of forms of credit or convertible paper intended to tie in victims as ongoing clients. Santander, one of the biggest sources of money to Madoff outside the US, has offered its clients a form of convertible paper redeemable in 10 years and has settled 98% of claims.
When asked about settlements in Britain, Cremades named HSBC as one of the banks involved in deals. The British bank has taken charges of $1.05bn to cover Madoff-related losses, and revealed in its annual report that it was the subject of litigation with "numerous defendants" over the Madoff scandal in jurisdictions including the US, Ireland and Luxembourg. However, sources close to HSBC expressed scepticism, saying they were not aware of such settlements.
Cremades said victims' lawyers had been surprised at the willingness of banks to settle: "In Europe, one year later, most of the victims have solved their problems through settlements. It has been easier than we thought."
An exception, however, is Switzerland, where the situation has been complicated by its banking privacy laws. Some victims had secret accounts and are unwilling to air their losses in litigation.
Regarded as the biggest financial crime in Wall Street history, Madoff Investment Securities claimed to have $65bn of assets under management. But the financial crisis led to attempts by investors to withdraw money, exposing Madoff's firm as a vast Ponzi scheme. He is serving a 150-year sentence in North Carolina.
Within the US, most of his victims were either direct investors or had channelled money through boutique firms that acted as so-called feeder funds. They face a longer struggle for recompense as a court-appointed trustee, Irving Picard, sorts through claims. European banks will wait in line with US victims to get their own share of any distribution, though they are not likely to get back anything close to the sums that they are reimbursing clients.
"They can't expect to get back much of what they've given," said Gaytri Kaychoo, a lawyer for US victims. "They [European banks]looked at their own situation and rationalised making their settlements with wealthy, very good clients, because they can't afford to lose them."
Thursday, 25 November 2010
HSBC Take Note!
UBS is sued for £1.25bn over Madoff fraud
A lawyer representing investors who fell victim to fraudster Bernard Madoff 's £40billion 'Ponzi' scheme is suing Swiss bank UBS and others for more than £1.25billion.
UBS stands accused of facilitating Madoff 's swindle - in which investors were shown false returns based on cash from new victims - by sponsoring so-called 'feeder' funds that channelled money into the fraudulent operation.
The complaint - lodged by court - appointed trustee Irving Picard - alleges that UBS lent the funds 'an aura of legitimacy', allowing the bank to collect nearly £50million in middleman fees. Picard said that despite identifying warning signs about Madoff Investment Securities, UBS 'chose to enable Madoff's fraud for their own gain'.
Complaint: UBS has been accused that it was party to 23 counts of fraudulent transfers and other misconduct
Picard has filed around 20 lawsuits to recover £11billion from feeder funds that poured money into Madoff 's pockets and claims to have recouped £950million from former clients of the conman, who is serving a 150-year jail term.
His case alleges that UBS worked with co-defendant Access International Advisors, led by French executive Thierry Magon de la Villehuchet who was found dead in an apparent suicide in New York following the discovery of Madoff's fraud. He was said to have been distraught at losing nearly £900million of clients' money and around £30million of his own.
UBS said investors had been well aware that funds were being directed to Madoff, adding that it 'does not have responsibility to these shareholders for the unfortunate results of the Madoff scandal'.
Picard has not yet said whether he intends to file claims against other European banks. But HSBC could yet find itself embroiled in the saga, due to a ruling by a Luxembourg court earlier this year.
The court told clients filing claims against UBS to seek redress through the US liquidation process being led by Picard.
The ruling means that investors who claim to have lost £630million through Herald, a fund affiliated with a Luxembourg division of HSBC, could add their claims to those being managed in the US.
HSBC declined to comment.
A lawyer representing investors who fell victim to fraudster Bernard Madoff 's £40billion 'Ponzi' scheme is suing Swiss bank UBS and others for more than £1.25billion.
UBS stands accused of facilitating Madoff 's swindle - in which investors were shown false returns based on cash from new victims - by sponsoring so-called 'feeder' funds that channelled money into the fraudulent operation.
The complaint - lodged by court - appointed trustee Irving Picard - alleges that UBS lent the funds 'an aura of legitimacy', allowing the bank to collect nearly £50million in middleman fees. Picard said that despite identifying warning signs about Madoff Investment Securities, UBS 'chose to enable Madoff's fraud for their own gain'.
Complaint: UBS has been accused that it was party to 23 counts of fraudulent transfers and other misconduct
Picard has filed around 20 lawsuits to recover £11billion from feeder funds that poured money into Madoff 's pockets and claims to have recouped £950million from former clients of the conman, who is serving a 150-year jail term.
His case alleges that UBS worked with co-defendant Access International Advisors, led by French executive Thierry Magon de la Villehuchet who was found dead in an apparent suicide in New York following the discovery of Madoff's fraud. He was said to have been distraught at losing nearly £900million of clients' money and around £30million of his own.
UBS said investors had been well aware that funds were being directed to Madoff, adding that it 'does not have responsibility to these shareholders for the unfortunate results of the Madoff scandal'.
Picard has not yet said whether he intends to file claims against other European banks. But HSBC could yet find itself embroiled in the saga, due to a ruling by a Luxembourg court earlier this year.
The court told clients filing claims against UBS to seek redress through the US liquidation process being led by Picard.
The ruling means that investors who claim to have lost £630million through Herald, a fund affiliated with a Luxembourg division of HSBC, could add their claims to those being managed in the US.
HSBC declined to comment.
Thursday, 16 September 2010
Replies to Letter Coming in
Replies are starting to come in, we have had a reply from David Cameron's office and the letter is being passed on to the Treasury.
Now is when we desperately need as many of you as possible to start sending out emails and printing and posting copies of the letter.
Send the letter to newspapers, journalists, financial organisations, as well as your MEP's and MP's.
Numbers count so please try and support all the hard work that has been put into this letter.
Now is when we desperately need as many of you as possible to start sending out emails and printing and posting copies of the letter.
Send the letter to newspapers, journalists, financial organisations, as well as your MEP's and MP's.
Numbers count so please try and support all the hard work that has been put into this letter.
Sunday, 12 September 2010
THE ROLE OF HSBC IN THE STANFORD BANK FRAUD
The following letter is being sent to the British and European MP's and MEP's by the Stanford Victims Coalition European Group.
I would urge all Europeans to write similar letters to their MP's, Prime ministers, newspapers and anyone else who will listen. The role of HSBC in Stanford's massive fraud must be brought to the Public's attention, and the bank forced to tell Stanford's victims where the money was sent and WHY they failed in their duty of care as a Correspondent Bank.
Dear Mr .........
THE ROLE OF HSBC IN THE STANFORD BANK FRAUD
I am writing to you as one of the thousand British and European Investors who lost their life savings and retirement funds following the collapse of Stanford International Bank (SIB) based in Antigua.
As you may be aware, Allen Stanford has been accused by the US Securities and Exchange Commission of running a massive Ponzi scheme. Moreover he used the British banking system as the conduit for all European deposits. HSBC in London acted as the correspondent bank. Most people around the world are aware of HSBC. Their willingness to act as correspondent gave Stanford an aura of respectability.
Stanford provided deposit instructions indicating that customers could make deposits in Antigua based SIB by wiring funds to HSBC in London. HSBC were aware of these instructions, and expressly agreed with Stanford to receive wire deposits for further transfer to SIB in Antigua. Further, these instructions specifically included a SWIFT code, purportedly for SIB in Antigua.
Depositors in SIB throughout Europe wired funds to HSBC with the intent that such funds would be transferred to SIB in Antigua for deposit in their accounts. HSBC conveyed to depositors in SIB that funds transmitted to HSBC were being deposited in Antigua, and being entrusted to a legitimate banking institution.
It has been determined by the receivers’ forensic accountants that all, or substantially all, of the funds never reached Antigua, but were redirected by HSBC, in concert with and/or at the direction of Stanford, to other Stanford controlled bank accounts in Toronto, Canada; Houston, Texas; and elsewhere. The funds were then distributed to other Stanford entities; “invested” in Allen Stanford’s private ventures; used to fund his lavish lifestyle; or paid out to earlier investors to perpetuate the fraudulent scheme.
Based upon its longstanding correspondent banking relationship with Stanford, HSBC knew, or should have known, that Stanford was conducting an illegal and fraudulent scheme, and that depositors were being deceived into believing their funds were being deposited in a legitimate banking institution in Antigua.
Furthermore, HSBC have refused to divulge the ultimate destination of the funds without a UK Court Order, and the Financial Services Ombudsman is powerless to investigate.
The UK Money Laundering Regulations, introduced throughout the EEA in 2007, and which were passed into British law as Statutory Instrument 2007 number 2157, state:-
1)A credit institution (“the correspondent”) which has or proposes to have a correspondent banking relationship with a respondent institution (“the respondent”) from a non-EEA state must—(a) gather sufficient information about the respondent to understand fully the nature of its business; (b) determine from publicly-available information the reputation of the respondent and the quality of its supervision.
In 1991 HM Treasury requested Allen Stanford surrender the banking licence of his earlier Guardian International Bank, then situated on Montserrat, for alleged money-laundering activities. Later, sanctions were imposed on Antigua following Stanford’s attempt to rewrite the Country’s banking regulatory laws. Stanford was repeatedly fined by FINRA for violations of the US Banking Code, and was made to hand over $3million of laundered Mexican drug money to the DEA. When determining his ‘reputation’ prior to agreeing to act as correspondent, HSBC would have been aware of all of this.
2)A credit institution must not enter into, or continue, a correspondent banking relationship with a shell bank….A “shell bank” means a credit institution, or an institution engaged in equivalent activities, incorporated in a jurisdiction in which it has no physical presence involving meaningful decision-making and management, and which is not part of a financial conglomerate or third-country financial conglomerate.
In the course of their investigation into SIB, the receiver has stated that, in his opinion no meaningful decision making or management was undertaken in Antigua. Hence, as defined in these regulations, SIB is a ‘shell’ bank. It would have been clear to HSBC that the management of SIB was not from Antigua, yet they continued to act as correspondent.
In 2002, The Wolfsberg Group, of which HSBC is a member, published its Principles for Correspondent Banking. In these Principles, ‘Higher Risk; correspondents are defined under; ‘Customer Risk,’ specifically, private offshore banks such as SIB; and ‘Country Risk,’ in particular, Countries such as Antigua, which have a history of sanctions, corruption, and inadequate anti-money laundering regulations. Under the Principles, such correspondents are required to be subject to even higher levels of due diligence, and those correspondents associated with shell banks, or where the results of the due diligence produce significant uncertainties that cannot be resolved, are to be specifically avoided.
The UK and EU Regulations, and the recommendations of the Wolfsburg Group are just a few of the guidelines that HSBC chose to ignore. Had they abided by the Basel II Accords, the Financial Action Task Force (FATF) Recommendations, or even the recognised Know Your Client (KYC) list of advice given to banks, it ought to have been very clear that Allen Stanford was perpetrating a fraud of enormous proportions with a clear aim of defrauding thousands of innocent victims of their money. The red flags are there, yet they went unheeded. HSBC had an obligation to report the Red Flags, and a duty of care that could have safeguarded many depositors from losing their life savings. It is clearly stated in the Basel II report that if a bank fails to deliver funds to the requested account, and account holders consequently lose money, then the bank has to make good those losses.
Whilst many of the subtleties of the Stanford scandal have only recently entered the public domain, HSBC as one of the worlds leading banks, has a wealth of industry knowledge, and considerable resources to undertake detailed due diligence. Their willingness to act as correspondent, not only gave Stanford a veneer of respectability, but enabled him to extend and perpetuate the fraud throughout Europe.
Prior to, and during, their establishment of a correspondent banking relationship with Stanford, HSBC gathered sufficient information concerning Stanford to understand Stanford’s business and, as a result, knew, or should have known, that Stanford was conducting a fraudulent scheme, and that it was both inappropriate, and illegal, for HSBC to continue to act as correspondent Bank.
HSBC must be made to answer why they failed in so many areas to abide by the regulations governing their correspondent relationship with Stanford; why
They chose not to report what was happening to the deposits they so willingly transferred; and must be held accountable that those funds were not delivered to the specified accounts.
Your help and assistance in this matter is requested to help the innocent victims who have suffered as a result of HSBC’s lack of care and due diligence, resulting in the loss of their life savings totalling £150 Million.
Whilst writing this letter, I have today learned that HSBC Chairman, Stephen Green, is to become the UK Minister of Trade. You can imagine my dismay.
I look forward to hearing what action you intend to take and how you can help all of the European victims in this fraud.
I would urge all Europeans to write similar letters to their MP's, Prime ministers, newspapers and anyone else who will listen. The role of HSBC in Stanford's massive fraud must be brought to the Public's attention, and the bank forced to tell Stanford's victims where the money was sent and WHY they failed in their duty of care as a Correspondent Bank.
Dear Mr .........
THE ROLE OF HSBC IN THE STANFORD BANK FRAUD
I am writing to you as one of the thousand British and European Investors who lost their life savings and retirement funds following the collapse of Stanford International Bank (SIB) based in Antigua.
As you may be aware, Allen Stanford has been accused by the US Securities and Exchange Commission of running a massive Ponzi scheme. Moreover he used the British banking system as the conduit for all European deposits. HSBC in London acted as the correspondent bank. Most people around the world are aware of HSBC. Their willingness to act as correspondent gave Stanford an aura of respectability.
Stanford provided deposit instructions indicating that customers could make deposits in Antigua based SIB by wiring funds to HSBC in London. HSBC were aware of these instructions, and expressly agreed with Stanford to receive wire deposits for further transfer to SIB in Antigua. Further, these instructions specifically included a SWIFT code, purportedly for SIB in Antigua.
Depositors in SIB throughout Europe wired funds to HSBC with the intent that such funds would be transferred to SIB in Antigua for deposit in their accounts. HSBC conveyed to depositors in SIB that funds transmitted to HSBC were being deposited in Antigua, and being entrusted to a legitimate banking institution.
It has been determined by the receivers’ forensic accountants that all, or substantially all, of the funds never reached Antigua, but were redirected by HSBC, in concert with and/or at the direction of Stanford, to other Stanford controlled bank accounts in Toronto, Canada; Houston, Texas; and elsewhere. The funds were then distributed to other Stanford entities; “invested” in Allen Stanford’s private ventures; used to fund his lavish lifestyle; or paid out to earlier investors to perpetuate the fraudulent scheme.
Based upon its longstanding correspondent banking relationship with Stanford, HSBC knew, or should have known, that Stanford was conducting an illegal and fraudulent scheme, and that depositors were being deceived into believing their funds were being deposited in a legitimate banking institution in Antigua.
Furthermore, HSBC have refused to divulge the ultimate destination of the funds without a UK Court Order, and the Financial Services Ombudsman is powerless to investigate.
The UK Money Laundering Regulations, introduced throughout the EEA in 2007, and which were passed into British law as Statutory Instrument 2007 number 2157, state:-
1)A credit institution (“the correspondent”) which has or proposes to have a correspondent banking relationship with a respondent institution (“the respondent”) from a non-EEA state must—(a) gather sufficient information about the respondent to understand fully the nature of its business; (b) determine from publicly-available information the reputation of the respondent and the quality of its supervision.
In 1991 HM Treasury requested Allen Stanford surrender the banking licence of his earlier Guardian International Bank, then situated on Montserrat, for alleged money-laundering activities. Later, sanctions were imposed on Antigua following Stanford’s attempt to rewrite the Country’s banking regulatory laws. Stanford was repeatedly fined by FINRA for violations of the US Banking Code, and was made to hand over $3million of laundered Mexican drug money to the DEA. When determining his ‘reputation’ prior to agreeing to act as correspondent, HSBC would have been aware of all of this.
2)A credit institution must not enter into, or continue, a correspondent banking relationship with a shell bank….A “shell bank” means a credit institution, or an institution engaged in equivalent activities, incorporated in a jurisdiction in which it has no physical presence involving meaningful decision-making and management, and which is not part of a financial conglomerate or third-country financial conglomerate.
In the course of their investigation into SIB, the receiver has stated that, in his opinion no meaningful decision making or management was undertaken in Antigua. Hence, as defined in these regulations, SIB is a ‘shell’ bank. It would have been clear to HSBC that the management of SIB was not from Antigua, yet they continued to act as correspondent.
In 2002, The Wolfsberg Group, of which HSBC is a member, published its Principles for Correspondent Banking. In these Principles, ‘Higher Risk; correspondents are defined under; ‘Customer Risk,’ specifically, private offshore banks such as SIB; and ‘Country Risk,’ in particular, Countries such as Antigua, which have a history of sanctions, corruption, and inadequate anti-money laundering regulations. Under the Principles, such correspondents are required to be subject to even higher levels of due diligence, and those correspondents associated with shell banks, or where the results of the due diligence produce significant uncertainties that cannot be resolved, are to be specifically avoided.
The UK and EU Regulations, and the recommendations of the Wolfsburg Group are just a few of the guidelines that HSBC chose to ignore. Had they abided by the Basel II Accords, the Financial Action Task Force (FATF) Recommendations, or even the recognised Know Your Client (KYC) list of advice given to banks, it ought to have been very clear that Allen Stanford was perpetrating a fraud of enormous proportions with a clear aim of defrauding thousands of innocent victims of their money. The red flags are there, yet they went unheeded. HSBC had an obligation to report the Red Flags, and a duty of care that could have safeguarded many depositors from losing their life savings. It is clearly stated in the Basel II report that if a bank fails to deliver funds to the requested account, and account holders consequently lose money, then the bank has to make good those losses.
Whilst many of the subtleties of the Stanford scandal have only recently entered the public domain, HSBC as one of the worlds leading banks, has a wealth of industry knowledge, and considerable resources to undertake detailed due diligence. Their willingness to act as correspondent, not only gave Stanford a veneer of respectability, but enabled him to extend and perpetuate the fraud throughout Europe.
Prior to, and during, their establishment of a correspondent banking relationship with Stanford, HSBC gathered sufficient information concerning Stanford to understand Stanford’s business and, as a result, knew, or should have known, that Stanford was conducting a fraudulent scheme, and that it was both inappropriate, and illegal, for HSBC to continue to act as correspondent Bank.
HSBC must be made to answer why they failed in so many areas to abide by the regulations governing their correspondent relationship with Stanford; why
They chose not to report what was happening to the deposits they so willingly transferred; and must be held accountable that those funds were not delivered to the specified accounts.
Your help and assistance in this matter is requested to help the innocent victims who have suffered as a result of HSBC’s lack of care and due diligence, resulting in the loss of their life savings totalling £150 Million.
Whilst writing this letter, I have today learned that HSBC Chairman, Stephen Green, is to become the UK Minister of Trade. You can imagine my dismay.
I look forward to hearing what action you intend to take and how you can help all of the European victims in this fraud.
Thursday, 26 August 2010
Manx link to Antigua corruption inquiry
• Criminal investigation looks at bank accounts
• HSBC 'accepted £2.3m for ousted PM's chief of staff'
The government of Antigua has begun criminal inquiries into large payments discovered in Isle of Man bank accounts controlled by Antiguan politicians.
Disclosure of these Caribbean corruption inquiries comes at an unwelcome time for the Isle of Man, described by the chancellor, Alastair Darling, as "a tax haven sitting in the Irish Sea". The island is under review by the UK government, which subsidises its low-tax regime.
According to documents seen by the Guardian, HSBC bank, in the Isle of Man, accepted $3.2m (£2.3m) on behalf of Asot Michael, once chief of staff to the former Antigua prime minister Lester Bird.
The Bank of Bermuda refused to handle a similar account and filed a "suspicious activity report" before the further account was opened on the Isle of Man, according to investigators' reports
Another $1.4m in total was paid into HSBC Manx accounts belonging to a former Antiguan high commissioner in London, Sir Ronald Sanders.
The cash under investigation came via an Israeli businessman, Bruce Rappaport, who is alleged to have diverted Antiguan funds into his own pocket while making payments to local politicians.
The Manx role in the Caribbean island's affairs is laid out in a report following a prolonged investigation by a Canadian forensic accountant, Robert Lindquist. He was called in by the new Antiguan prime minister, Spencer Baldwin, in 2004 to investigate "questionable payments" by Bird's regime, ousted in a general election.
A civil lawsuit against Bird and his chief of staff accused them of corruption. A new general election is due tomorrow. Coincidentally or not, the Baldwin government announced that police had now been called in, and that Rappaport had agreed to hand back $12m in settlement of the civil lawsuit against him. There had been a "gigantic conspiracy" to rob local taxpayers, the Antiguan attorney general said last month. He said Antigua had been making inflated payments of $400,000 a month, supposedly to pay off a debt to a firm which built a desalination plant on the island. But paperwork unearthed revealed that only $200,000 a month was actually due. The extra cash was routed through a company controlled by Rappaport, and money was passed on to a Panama offshore entity called Bellwood.
Sanders, the former high commissioner, denied getting kickbacks. "I don't know what kickbacks there could be," he said. "I worked for Rappaport for a long time, and he paid me." His lawyers said: "He firmly denies that there has been any impropriety on his part in this matter."
Bird said that he had committed no crime and was the victim of a "witchhunt". Michael, his former chief of staff, has also denied wrongdoing, saying: "It is a red herring across the campaign trail."
HSBC said yesterday that it would publicly neither confirm nor deny information about individual Manx accounts.
"HSBC has robust anti-money laundering policies and clearly defined policies and procedures concerning politically exposed persons," it said. "Where HSBC identifies any concerns it reports as required to the relevant authorities."
• HSBC 'accepted £2.3m for ousted PM's chief of staff'
The government of Antigua has begun criminal inquiries into large payments discovered in Isle of Man bank accounts controlled by Antiguan politicians.
Disclosure of these Caribbean corruption inquiries comes at an unwelcome time for the Isle of Man, described by the chancellor, Alastair Darling, as "a tax haven sitting in the Irish Sea". The island is under review by the UK government, which subsidises its low-tax regime.
According to documents seen by the Guardian, HSBC bank, in the Isle of Man, accepted $3.2m (£2.3m) on behalf of Asot Michael, once chief of staff to the former Antigua prime minister Lester Bird.
The Bank of Bermuda refused to handle a similar account and filed a "suspicious activity report" before the further account was opened on the Isle of Man, according to investigators' reports
Another $1.4m in total was paid into HSBC Manx accounts belonging to a former Antiguan high commissioner in London, Sir Ronald Sanders.
The cash under investigation came via an Israeli businessman, Bruce Rappaport, who is alleged to have diverted Antiguan funds into his own pocket while making payments to local politicians.
The Manx role in the Caribbean island's affairs is laid out in a report following a prolonged investigation by a Canadian forensic accountant, Robert Lindquist. He was called in by the new Antiguan prime minister, Spencer Baldwin, in 2004 to investigate "questionable payments" by Bird's regime, ousted in a general election.
A civil lawsuit against Bird and his chief of staff accused them of corruption. A new general election is due tomorrow. Coincidentally or not, the Baldwin government announced that police had now been called in, and that Rappaport had agreed to hand back $12m in settlement of the civil lawsuit against him. There had been a "gigantic conspiracy" to rob local taxpayers, the Antiguan attorney general said last month. He said Antigua had been making inflated payments of $400,000 a month, supposedly to pay off a debt to a firm which built a desalination plant on the island. But paperwork unearthed revealed that only $200,000 a month was actually due. The extra cash was routed through a company controlled by Rappaport, and money was passed on to a Panama offshore entity called Bellwood.
Sanders, the former high commissioner, denied getting kickbacks. "I don't know what kickbacks there could be," he said. "I worked for Rappaport for a long time, and he paid me." His lawyers said: "He firmly denies that there has been any impropriety on his part in this matter."
Bird said that he had committed no crime and was the victim of a "witchhunt". Michael, his former chief of staff, has also denied wrongdoing, saying: "It is a red herring across the campaign trail."
HSBC said yesterday that it would publicly neither confirm nor deny information about individual Manx accounts.
"HSBC has robust anti-money laundering policies and clearly defined policies and procedures concerning politically exposed persons," it said. "Where HSBC identifies any concerns it reports as required to the relevant authorities."
Thursday, 19 August 2010
(Sir) R Allen Stanford – The World’s Biggest Bank Robber
By Ian Moncrief-Scott
When Verity (not her real name) retired she had simple dreams of living in the sun, caring for animals and putting something back into society.
R Allen Stanford, with his many active and passive accomplices, true fellow criminals, calculatingly shattered those dreams.
Indeed, Stanford created Verity’s worst nightmare, which has left her destitute, entirely reliant on family support and needing scraps from kind neighbours to feed her dog.
Pretending his innocence, Stanford languishes in an American prison with room TV, entertainment and exercise, hiring and firing attorneys, with three square meals a day, heat and light paid by the taxpayer.
Meanwhile, Verity desperately worries from where the next meal will come.
So who allowed this tragedy unfold?
As long ago as 2007, Verity, simply asked her bank to transfer her personal funds. These were for her retirement.
This was not an investment in Stanford’s fraudulent Certificates of Deposit but a straightforward, routine, everyday bank to bank SWIFT transfer.
Verity’s bank was Barclays Wealth "the UK's leading wealth manager in terms of assets under management and the largest retail multi-manager.”
The pensioner had worked hard all her life and wanted her savings to be conveniently placed in Stanford International Bank in Antigua, the country she had chosen for her retirement.
She trusted and relied upon Barclays Wealth to safely transfer her entire life savings.
Verity gave her clear instructions in writing as provided by Stanford International Bank.
Substantial monies were to be transferred to HSBC, London, using the SWIFT system - code MIDLGB22XXX for further credit to SIB in Antigua (Sort Code 40-05-15) etc.
However, the Sort Code 40-05-15 is not Stanford International Bank’s but HSBC International Bank London.
HSBC acts as an official correspondent bank for SIB, which is now in receivership.
According to Vantis, the Receiver appointed by the Government of Antigua, her money is not at Stanford International Bank in Antigua at all. It has simply disappeared from the SIB account at HSBC in London.
HSBC contends, in its own remarkable blaze of self-publicity, “We aspire to be one of the world's great specialist banking groups, driven by commitment to our core philosophies and values."
Much has been made of Stanford’s Ponzi Scheme but there has been little focus on the missing bank deposits in Antigua.
Antigua does not have a banking deposit protection scheme so any funds held in or associated with the country, are potentially vulnerable.
Antigua is also irrefutably well-known as a most dubious and corrupt place.
In 2001, with the formation of First Caribbean International Bank, Barclays effectively withdrew its own brand from the region.
Antigua has been the subject of two countrywide Treasury Advisories connected to Stanford and a US Senate report highlighting concerns about its links to correspondent banking.
Described at the time by the U.S. Department of Justice as "the largest case of non-drug-related money laundering every brought to justice", the case was significant enough to warrant inclusion in a report dated February 5, 2001, produced by the Minority Staff of the Permanent Subcommittee on Investigations, entitled Correspondent Banking: A Gateway to Money Laundering.
So why did Verity wait until 2009 before alerting Barclays that the funds were missing.
The reason for this was because Verity was told by Stanford International Bank that for cost saving purposes it did not issue written account statements but that a Stanford Financial Adviser would telephone her monthly to confirm her standing.
Each month she was assured by SIB Financial Advisers that her account was in good order, which she properly took to mean, held the expected level of funds following the transfer from Barclays Wealth.
During this time Verity had dealings with Kathy Belaziar and Yecella Mondez, at SIB Antigua.
Thus, using this method, the huge banking fraud at Stanford International Bank, Antigua remained concealed from March 2007 to December 2008, until Verity attempted to withdraw her funds.
Who has allowed this to happen?
Unlike the financial regulators, Verity knew nothing of Stanford’s reckless and criminal Ponzi Scheme.
She just needed a safe and convenient bank to hold her retirement savings and trusted the high profile name of Stanford, much endorsed by celebrities, international politicians and world leaders.
Verity, like any of us, relied upon the financial regulators in the United States of America, UK and Antigua.
Meanwhile, Leroy King, the former head of the financial regulatory authority in Antigua, is the subject of a US extradition warrant. This is is not in Antigua’s or, more correctly, certain Antiguan politicians’ interest, that this should ever be fulfilled.
Karyl Van Tassel, FTI Consulting, a forensic accountancy acting for Ralph Janvey, the Receiver appointed by the Court to unravel Stanford’s crimes has proved that billions of dollars destined for his dubious bank in woefully-regulated Antigua, never arrived.
Instead, on Stanford’s instructions billions of dollars (sterling/euros) were transferred from HSBC International London to Stanford’s corporate accounts at Toronto Dominion Bank in Canada, Trustmark National Bank in Mississippi and, mainly, the Bank of Houston.
The position of the victims of Stanford’s crimes suing HSBC and the other banks involved in a class action is even clearer.
They claim that “Upon information and belief, prior to and during their establishment of a correspondent banking relationship with Stanford, HSBC gathered sufficient information concerning Stanford to understand Stanford’s business and, as a result, knew, or should have known, that Stanford was conducting an illegal and fraudulent scheme.
Stanford provided members of the Class (sic the Stanford crime victims) with deposit instructions indicating that they could make deposits in Antigua-based SIBL by wiring funds to HSBC in London. HSBC was aware of these instructions that were provided to members of the Class, and expressly agreed with Stanford to receive wire deposits from members of the Class for further transfer to SIBL in Antigua.
After the establishment of the HSBC-Stanford correspondent bank relationship, members of the Class transferred funds to HSBC with the intent that such funds would be transferred to SIBL in Antigua for deposit there. Upon information and belief, all or substantially all of the funds that members of the class transferred to HSBC, with the intent that such funds would be transferred to SIBL in Antigua for deposit there, were redirected by HSBC, in concert with and/or at the direction of Stanford, to bank accounts in Houston, Texas, and elsewhere, after which such funds were distributed to other Stanford entities, “invested” in Allen Stanford’s private ventures, used to fund Allen Stanford’s lavish lifestyle, and reinvested in the criminal venture to keep the fraudulent scheme in operation.
Based upon the foregoing, and based upon its longstanding correspondent banking relationship with Stanford, HSBC knew, or should have known, that Stanford was conducting an illegal and fraudulent scheme.”
However, this matter is far from just about Stanford.
The role of HSBC and the competence of the international payment agencies and regulators involved must now be questioned.
The question is a simple one:
How did a single shareholder institution with impossible multi-billion dollar yearly growth, with its base in ineptly regulated Antigua, having its accounts passed by a 73 year old from his a terraced house in Harrigey, satisfy the most basic due diligence tests expected by the Wolfsburg and Basel accords for correspondent banking relationships?
Meanwhile, as Verity and her dog go hungry, bankers, politicians, regulators and ombudsmen enjoy their inflation-proof pensions and well-compensated lifestyles.
Ends.
When Verity (not her real name) retired she had simple dreams of living in the sun, caring for animals and putting something back into society.
R Allen Stanford, with his many active and passive accomplices, true fellow criminals, calculatingly shattered those dreams.
Indeed, Stanford created Verity’s worst nightmare, which has left her destitute, entirely reliant on family support and needing scraps from kind neighbours to feed her dog.
Pretending his innocence, Stanford languishes in an American prison with room TV, entertainment and exercise, hiring and firing attorneys, with three square meals a day, heat and light paid by the taxpayer.
Meanwhile, Verity desperately worries from where the next meal will come.
So who allowed this tragedy unfold?
As long ago as 2007, Verity, simply asked her bank to transfer her personal funds. These were for her retirement.
This was not an investment in Stanford’s fraudulent Certificates of Deposit but a straightforward, routine, everyday bank to bank SWIFT transfer.
Verity’s bank was Barclays Wealth "the UK's leading wealth manager in terms of assets under management and the largest retail multi-manager.”
The pensioner had worked hard all her life and wanted her savings to be conveniently placed in Stanford International Bank in Antigua, the country she had chosen for her retirement.
She trusted and relied upon Barclays Wealth to safely transfer her entire life savings.
Verity gave her clear instructions in writing as provided by Stanford International Bank.
Substantial monies were to be transferred to HSBC, London, using the SWIFT system - code MIDLGB22XXX for further credit to SIB in Antigua (Sort Code 40-05-15) etc.
However, the Sort Code 40-05-15 is not Stanford International Bank’s but HSBC International Bank London.
HSBC acts as an official correspondent bank for SIB, which is now in receivership.
According to Vantis, the Receiver appointed by the Government of Antigua, her money is not at Stanford International Bank in Antigua at all. It has simply disappeared from the SIB account at HSBC in London.
HSBC contends, in its own remarkable blaze of self-publicity, “We aspire to be one of the world's great specialist banking groups, driven by commitment to our core philosophies and values."
Much has been made of Stanford’s Ponzi Scheme but there has been little focus on the missing bank deposits in Antigua.
Antigua does not have a banking deposit protection scheme so any funds held in or associated with the country, are potentially vulnerable.
Antigua is also irrefutably well-known as a most dubious and corrupt place.
In 2001, with the formation of First Caribbean International Bank, Barclays effectively withdrew its own brand from the region.
Antigua has been the subject of two countrywide Treasury Advisories connected to Stanford and a US Senate report highlighting concerns about its links to correspondent banking.
Described at the time by the U.S. Department of Justice as "the largest case of non-drug-related money laundering every brought to justice", the case was significant enough to warrant inclusion in a report dated February 5, 2001, produced by the Minority Staff of the Permanent Subcommittee on Investigations, entitled Correspondent Banking: A Gateway to Money Laundering.
So why did Verity wait until 2009 before alerting Barclays that the funds were missing.
The reason for this was because Verity was told by Stanford International Bank that for cost saving purposes it did not issue written account statements but that a Stanford Financial Adviser would telephone her monthly to confirm her standing.
Each month she was assured by SIB Financial Advisers that her account was in good order, which she properly took to mean, held the expected level of funds following the transfer from Barclays Wealth.
During this time Verity had dealings with Kathy Belaziar and Yecella Mondez, at SIB Antigua.
Thus, using this method, the huge banking fraud at Stanford International Bank, Antigua remained concealed from March 2007 to December 2008, until Verity attempted to withdraw her funds.
Who has allowed this to happen?
Unlike the financial regulators, Verity knew nothing of Stanford’s reckless and criminal Ponzi Scheme.
She just needed a safe and convenient bank to hold her retirement savings and trusted the high profile name of Stanford, much endorsed by celebrities, international politicians and world leaders.
Verity, like any of us, relied upon the financial regulators in the United States of America, UK and Antigua.
Meanwhile, Leroy King, the former head of the financial regulatory authority in Antigua, is the subject of a US extradition warrant. This is is not in Antigua’s or, more correctly, certain Antiguan politicians’ interest, that this should ever be fulfilled.
Karyl Van Tassel, FTI Consulting, a forensic accountancy acting for Ralph Janvey, the Receiver appointed by the Court to unravel Stanford’s crimes has proved that billions of dollars destined for his dubious bank in woefully-regulated Antigua, never arrived.
Instead, on Stanford’s instructions billions of dollars (sterling/euros) were transferred from HSBC International London to Stanford’s corporate accounts at Toronto Dominion Bank in Canada, Trustmark National Bank in Mississippi and, mainly, the Bank of Houston.
The position of the victims of Stanford’s crimes suing HSBC and the other banks involved in a class action is even clearer.
They claim that “Upon information and belief, prior to and during their establishment of a correspondent banking relationship with Stanford, HSBC gathered sufficient information concerning Stanford to understand Stanford’s business and, as a result, knew, or should have known, that Stanford was conducting an illegal and fraudulent scheme.
Stanford provided members of the Class (sic the Stanford crime victims) with deposit instructions indicating that they could make deposits in Antigua-based SIBL by wiring funds to HSBC in London. HSBC was aware of these instructions that were provided to members of the Class, and expressly agreed with Stanford to receive wire deposits from members of the Class for further transfer to SIBL in Antigua.
After the establishment of the HSBC-Stanford correspondent bank relationship, members of the Class transferred funds to HSBC with the intent that such funds would be transferred to SIBL in Antigua for deposit there. Upon information and belief, all or substantially all of the funds that members of the class transferred to HSBC, with the intent that such funds would be transferred to SIBL in Antigua for deposit there, were redirected by HSBC, in concert with and/or at the direction of Stanford, to bank accounts in Houston, Texas, and elsewhere, after which such funds were distributed to other Stanford entities, “invested” in Allen Stanford’s private ventures, used to fund Allen Stanford’s lavish lifestyle, and reinvested in the criminal venture to keep the fraudulent scheme in operation.
Based upon the foregoing, and based upon its longstanding correspondent banking relationship with Stanford, HSBC knew, or should have known, that Stanford was conducting an illegal and fraudulent scheme.”
However, this matter is far from just about Stanford.
The role of HSBC and the competence of the international payment agencies and regulators involved must now be questioned.
The question is a simple one:
How did a single shareholder institution with impossible multi-billion dollar yearly growth, with its base in ineptly regulated Antigua, having its accounts passed by a 73 year old from his a terraced house in Harrigey, satisfy the most basic due diligence tests expected by the Wolfsburg and Basel accords for correspondent banking relationships?
Meanwhile, as Verity and her dog go hungry, bankers, politicians, regulators and ombudsmen enjoy their inflation-proof pensions and well-compensated lifestyles.
Ends.
Friday, 2 July 2010
Antigua and Barbuda: Antigua – White List or White Wash? – Kahnawake Gambles!
Antigua & Barbuda's application for entry onto the UK's extremely valuable White List was rejected in 2007.
In December 2009, the jurisdiction was white-listed after having "substantially implemented the internationally agreed tax standards of the Organisation for Economic Co-operation and Development."
White listing now enables Antiguan licensees to advertise their gaming services within the UK.
This listing has continued despite the huge banking scandal that has adversely affected thousands of investors worldwide as a direct consequence of the criminal activities of Stanford International Bank, Antigua's largest bank, with the complicity of Leroy King, former head of the Financial Services Regulatory Commission.
In the same way, the ponderous lack of extradition of Leroy King has escaped recognition.
Long forgotten, are the two significant Advisories placed on the entire Island of Antigua by both the UK and the US Treasuries, which were lifted after the Antiguan Government was forced to remove Stanford from his position of influence over financial regulation.
Long forgotten is a US Senate report highlighting concerns about Antigua's links to correspondent banking. Described at the time by the U.S. Department of Justice as "the largest case of non-drug-related money laundering every brought to justice," the case was significant enough to warrant inclusion in a report dated February 5, 2001, produced by the Minority Staff of the Permanent Subcommittee on Investigations, entitled Correspondent Banking: A Gateway to Money Laundering.
Meanwhile, one of the world's largest and strongest banks, HSBC, headquartered in London, with intoxicating correspondent banking relationships with Stanford, approved by regulators in London, Antigua, Caymans and the USA, is mired in the criminal activities of R. Allen Stanford's certificate of deposit frauds.
However, more recently, and much more disturbingly, it has been revealed that HSBC is deeply implicated in frauds involving hitherto supposedly secure interbank transfer of funds.
Incredibly, despite this, Kahnawake, a sovereign territory of the Mohawk region located outside Montreal, Quebec, Canada has signed a Memorandum of Understanding, which is to be enacted in three months with the Antigua & Barbuda Financial Services Regulatory Commission.
A press release last week announced that the MOU "is designed to recognise the inter-connectedness of remote gaming regulators – providing operators an unprecedented degree of flexibility for their licensing and hosting needs – while respecting the independence and international obligations of each jurisdiction."
According to Caribarena.com, Director of Gaming Kaye McDonald claimed, "Antigua and Barbuda internet gaming companies that are licensed, supervised and regulated by the Financial Services Regulatory Commission will have access to a wider bandwidth and technical services... to support their global gaming business ... in Kahnawake,"
She said. "They will be authorised, once the amendments in our gaming regulations are completed, to have authorization to be located in the Mohawk internet technology base centre..."
So, as a gambler, a simple question remains, does a jurisdiction where the largest bank in Antigua, the Stanford International Bank, has failed due to the most serious criminality, the head of financial regulation is desperately fighting extradition and the country is happy to expropriate foreign owned property, will you get a fair bet and receive your winnings? You decide!
In December 2009, the jurisdiction was white-listed after having "substantially implemented the internationally agreed tax standards of the Organisation for Economic Co-operation and Development."
White listing now enables Antiguan licensees to advertise their gaming services within the UK.
This listing has continued despite the huge banking scandal that has adversely affected thousands of investors worldwide as a direct consequence of the criminal activities of Stanford International Bank, Antigua's largest bank, with the complicity of Leroy King, former head of the Financial Services Regulatory Commission.
In the same way, the ponderous lack of extradition of Leroy King has escaped recognition.
Long forgotten, are the two significant Advisories placed on the entire Island of Antigua by both the UK and the US Treasuries, which were lifted after the Antiguan Government was forced to remove Stanford from his position of influence over financial regulation.
Long forgotten is a US Senate report highlighting concerns about Antigua's links to correspondent banking. Described at the time by the U.S. Department of Justice as "the largest case of non-drug-related money laundering every brought to justice," the case was significant enough to warrant inclusion in a report dated February 5, 2001, produced by the Minority Staff of the Permanent Subcommittee on Investigations, entitled Correspondent Banking: A Gateway to Money Laundering.
Meanwhile, one of the world's largest and strongest banks, HSBC, headquartered in London, with intoxicating correspondent banking relationships with Stanford, approved by regulators in London, Antigua, Caymans and the USA, is mired in the criminal activities of R. Allen Stanford's certificate of deposit frauds.
However, more recently, and much more disturbingly, it has been revealed that HSBC is deeply implicated in frauds involving hitherto supposedly secure interbank transfer of funds.
Incredibly, despite this, Kahnawake, a sovereign territory of the Mohawk region located outside Montreal, Quebec, Canada has signed a Memorandum of Understanding, which is to be enacted in three months with the Antigua & Barbuda Financial Services Regulatory Commission.
A press release last week announced that the MOU "is designed to recognise the inter-connectedness of remote gaming regulators – providing operators an unprecedented degree of flexibility for their licensing and hosting needs – while respecting the independence and international obligations of each jurisdiction."
According to Caribarena.com, Director of Gaming Kaye McDonald claimed, "Antigua and Barbuda internet gaming companies that are licensed, supervised and regulated by the Financial Services Regulatory Commission will have access to a wider bandwidth and technical services... to support their global gaming business ... in Kahnawake,"
She said. "They will be authorised, once the amendments in our gaming regulations are completed, to have authorization to be located in the Mohawk internet technology base centre..."
So, as a gambler, a simple question remains, does a jurisdiction where the largest bank in Antigua, the Stanford International Bank, has failed due to the most serious criminality, the head of financial regulation is desperately fighting extradition and the country is happy to expropriate foreign owned property, will you get a fair bet and receive your winnings? You decide!
Monday, 14 June 2010
What Does HSBC Have to HIDE?
I have been looking into the actions of HSBC who were instrumental in transferring money from UK and European bank accounts to Stanford International Bank in Antigua. From the information given by the forensic accountant Karyl Van Tassel of FTI Consulting and the wire instructions for transferring my money to Stanford International Bank in Antigua it became clear that something was seriously wrong.
I contacted HSBC and asked for proof that my money was indeed transferred to Stanford International Bank in Antigua, I new they would not be able to provide this because of the report by Karyl Van Tassel. I was immediately told since I did not have a bank account with HSBC they would not talk to me, I then spoke to the Banking Ombudsman who told me I would have to go through my bank where the money was originally transferred from.
After many months of discussions with Barclay's Bank and calling HSBC's bluff by paying the 50 GB pounds that HSBC demanded to provide proof the money was sent to Stanford International Bank in Antigua, I again met with a brick wall. Barclay's were told by HSBC that they refused to release the information without a Court Order. Barclay's were as astounded by the behaviour of HSBC as I was, these are not the actions of a bank that has nothing to hide!
I then consulted a lawyer, one who incidentally had won a case against HSBC recently involving wire transfers. He kindly took a preliminary look at my evidence and said he thought I had a good case against the bank. The bad news is the banking ombudsman will not help since I did not bank with HSBC, and the lawyer said unless I had limitless cash to throw at the case HSBC could draw out the case until I ran out of money. It could cost me tens of thousands of pounds just to get a court order to force them to release details of where the money was transferred to.
This is unbelievably and unjust, that a bank like HSBC can refuse to disclose what it did with a persons money and unless you are rich you will have no recourse for justice. How can I, an old age pensioner who has lost her life savings fight for justice against a Bank like HSBC?
I will outline below my case against HSBC perhaps a politician or an investigative reporter will help me find justice.
Stanford was first investigated 20 years ago when he became a subject of a joint Scotland Yard-FBI investigation into so-called “brass-plate” banks on the Caribbean island of Montserrat. The investigation was set up after the tiny island, with a population of fewer than 13,000 people, had been targeted by criminals who set up more than 300 banks and rapidly found itself at the centre of a worldwide money laundering operation. Among them was the Guardian International Bank, created by Allen Stanford. The bank was suspected of laundering drug money from the notorious Medellin and Cali drug cartels run by Pablo Escobar and the Orejuela brothers, according to former FBI agent Ross Gaffney, who headed the task force set up to investigate the suspicious explosion of offshore banks on the island. Before the investigation could develop further, Stanford was forced to surrender his Montserrat banking license by the British Government and left the island only to open Stanford International Bank in Antigua, who despite Stanford being a declared bankrupt in the United States and warnings from the FBI and Scotland Yard was granted a banking license.
American forensic accountant Karyl Van Tassel of FTI Consulting published a report for the SEC stating that none of the money investors pumped into Stanford International Bank (SIB) actually went to Antigua & Barbuda where the bank was based. Karyl Van Tassel, who was hired by the court-appointed receiver in the Securities Exchange Commission (SEC) civil case against Sir Allen Stanford, said the money went instead to Stanford company accounts at banks in the United States and Canada. Van Tassel found that between January 1, 2008 and February 17 this year, US $2.1 billion in deposits money went to Toronto Dominion Bank in Canada, another US $624 million went to Trustmark National Bank, which is based in Mississippi, and US $801 million went to the Bank of Houston.
Having looked at the money laundering regulations introduced throughout the European Economic Area (EEA) in 2007 which were passed into British law as Statutory Instrument 2007 number 2157, there are a couple of points to be noted:
The regulations state: A credit institution (“the correspondent”) which has or proposes to have a correspondent banking relationship with a respondent institution (“the respondent”) from a non-EEA state must—(a) gather sufficient information about the respondent to understand fully the nature of its business; (b) determine from publicly-available information the reputation of the respondent and the quality of its supervision. As I pointed out earlier Alan Stanford’s Guardian International Bank situated on Montserrat was being investigated by Scotland Yard and the FBI for money laundering which would usually undermine one’s ‘reputation’ in banking. Further SIB was audited by an unknown auditor.
The regulations also state: A credit institution must not enter into, or continue, a correspondent banking relationship with a shell bank….A “shell bank” means a credit institution, or an institution engaged in equivalent activities, incorporated in a jurisdiction in which it has no physical presence involving meaningful decision-making and management, and which is not part of a financial conglomerate or third-country financial conglomerate. As I pointed out earlier a forensic audit proved money was never sent to Antigua but diverted to US and Canadian banks indicating that the mind and management of SIB was not in Antigua. Further SIB was not part of Stanford Financial Group. It was an affiliate.
While there is little doubt that the subtleties of the Stanford situation have only come to light after the US Securities and Exchange Commission’s freeze on all Stanford assets, the UK government were aware that this "bank" was being monitored and were in fact monitoring SIB themselves. Barclays and HSBC are enormous banks with many more resources to hand than individual investors. Further, agreeing to be a correspondent bank for all Euro transactions with a bank outside of the EEA should add an additional responsibility to undertake thorough due diligence given the ability to transfer funds freely within the EU and EEA.
How was it possible for HSBC to have become the correspondent bank for all Sterling and Euro deposits given the exercise of due diligence expected from correspondent banking with offshore entities and the history that Allen Stanford had with the British banking authorities.
The Foreign and Commonwealth Office comments to the recent BBC Panorama programme on Alan Stanford said that the ‘UK government does take financial malpractice very seriously and issues regular advice on countries and jurisdictions where there may be serious deficiencies in regulation. It is for companies and the financial professionals they employ to act on this advice with all due diligence’. Presumably, the last part of this comment would apply Barclays and HSBC.
My instructions for the transfer of money was from Barclays to HSBC Bank in London Swift code MIDLGB22XXX For further credit to Stanford International Bank in Antigua (Sort Code 40-05-15) Account Number 58180160 Swift Code (SIBP AG AG) For final transfer to Mrs XXXXX Account Number 161xxx.
The money never reached Antigua but was transferred by HSBC to their bank in the Cayman Islands. The sort code given of 40-05-15 with the Swift code for SIB in Antigua (SIBP AG AG)is actually nothing to do with Stanford but is HSBC in the Cayman Islands. The misrepresentation of the sort code being part of Stanford International Bank along side the swift code should have raised alarm bells with HSBC had they were practiced “due diligence”. Where the money went from HSBC in the Cayman islands remains a mystery, but from the behaviour of HSBC they clearly know it was not sent as per my instructions to Antigua.
I hope HSBC are proud of their actions, and I would like the world to know how this bank has behaved towards a retired victim and many others who have lost their life savings possibly as a result of the actions of HSBC.
I contacted HSBC and asked for proof that my money was indeed transferred to Stanford International Bank in Antigua, I new they would not be able to provide this because of the report by Karyl Van Tassel. I was immediately told since I did not have a bank account with HSBC they would not talk to me, I then spoke to the Banking Ombudsman who told me I would have to go through my bank where the money was originally transferred from.
After many months of discussions with Barclay's Bank and calling HSBC's bluff by paying the 50 GB pounds that HSBC demanded to provide proof the money was sent to Stanford International Bank in Antigua, I again met with a brick wall. Barclay's were told by HSBC that they refused to release the information without a Court Order. Barclay's were as astounded by the behaviour of HSBC as I was, these are not the actions of a bank that has nothing to hide!
I then consulted a lawyer, one who incidentally had won a case against HSBC recently involving wire transfers. He kindly took a preliminary look at my evidence and said he thought I had a good case against the bank. The bad news is the banking ombudsman will not help since I did not bank with HSBC, and the lawyer said unless I had limitless cash to throw at the case HSBC could draw out the case until I ran out of money. It could cost me tens of thousands of pounds just to get a court order to force them to release details of where the money was transferred to.
This is unbelievably and unjust, that a bank like HSBC can refuse to disclose what it did with a persons money and unless you are rich you will have no recourse for justice. How can I, an old age pensioner who has lost her life savings fight for justice against a Bank like HSBC?
I will outline below my case against HSBC perhaps a politician or an investigative reporter will help me find justice.
Stanford was first investigated 20 years ago when he became a subject of a joint Scotland Yard-FBI investigation into so-called “brass-plate” banks on the Caribbean island of Montserrat. The investigation was set up after the tiny island, with a population of fewer than 13,000 people, had been targeted by criminals who set up more than 300 banks and rapidly found itself at the centre of a worldwide money laundering operation. Among them was the Guardian International Bank, created by Allen Stanford. The bank was suspected of laundering drug money from the notorious Medellin and Cali drug cartels run by Pablo Escobar and the Orejuela brothers, according to former FBI agent Ross Gaffney, who headed the task force set up to investigate the suspicious explosion of offshore banks on the island. Before the investigation could develop further, Stanford was forced to surrender his Montserrat banking license by the British Government and left the island only to open Stanford International Bank in Antigua, who despite Stanford being a declared bankrupt in the United States and warnings from the FBI and Scotland Yard was granted a banking license.
American forensic accountant Karyl Van Tassel of FTI Consulting published a report for the SEC stating that none of the money investors pumped into Stanford International Bank (SIB) actually went to Antigua & Barbuda where the bank was based. Karyl Van Tassel, who was hired by the court-appointed receiver in the Securities Exchange Commission (SEC) civil case against Sir Allen Stanford, said the money went instead to Stanford company accounts at banks in the United States and Canada. Van Tassel found that between January 1, 2008 and February 17 this year, US $2.1 billion in deposits money went to Toronto Dominion Bank in Canada, another US $624 million went to Trustmark National Bank, which is based in Mississippi, and US $801 million went to the Bank of Houston.
Having looked at the money laundering regulations introduced throughout the European Economic Area (EEA) in 2007 which were passed into British law as Statutory Instrument 2007 number 2157, there are a couple of points to be noted:
The regulations state: A credit institution (“the correspondent”) which has or proposes to have a correspondent banking relationship with a respondent institution (“the respondent”) from a non-EEA state must—(a) gather sufficient information about the respondent to understand fully the nature of its business; (b) determine from publicly-available information the reputation of the respondent and the quality of its supervision. As I pointed out earlier Alan Stanford’s Guardian International Bank situated on Montserrat was being investigated by Scotland Yard and the FBI for money laundering which would usually undermine one’s ‘reputation’ in banking. Further SIB was audited by an unknown auditor.
The regulations also state: A credit institution must not enter into, or continue, a correspondent banking relationship with a shell bank….A “shell bank” means a credit institution, or an institution engaged in equivalent activities, incorporated in a jurisdiction in which it has no physical presence involving meaningful decision-making and management, and which is not part of a financial conglomerate or third-country financial conglomerate. As I pointed out earlier a forensic audit proved money was never sent to Antigua but diverted to US and Canadian banks indicating that the mind and management of SIB was not in Antigua. Further SIB was not part of Stanford Financial Group. It was an affiliate.
While there is little doubt that the subtleties of the Stanford situation have only come to light after the US Securities and Exchange Commission’s freeze on all Stanford assets, the UK government were aware that this "bank" was being monitored and were in fact monitoring SIB themselves. Barclays and HSBC are enormous banks with many more resources to hand than individual investors. Further, agreeing to be a correspondent bank for all Euro transactions with a bank outside of the EEA should add an additional responsibility to undertake thorough due diligence given the ability to transfer funds freely within the EU and EEA.
How was it possible for HSBC to have become the correspondent bank for all Sterling and Euro deposits given the exercise of due diligence expected from correspondent banking with offshore entities and the history that Allen Stanford had with the British banking authorities.
The Foreign and Commonwealth Office comments to the recent BBC Panorama programme on Alan Stanford said that the ‘UK government does take financial malpractice very seriously and issues regular advice on countries and jurisdictions where there may be serious deficiencies in regulation. It is for companies and the financial professionals they employ to act on this advice with all due diligence’. Presumably, the last part of this comment would apply Barclays and HSBC.
My instructions for the transfer of money was from Barclays to HSBC Bank in London Swift code MIDLGB22XXX For further credit to Stanford International Bank in Antigua (Sort Code 40-05-15) Account Number 58180160 Swift Code (SIBP AG AG) For final transfer to Mrs XXXXX Account Number 161xxx.
The money never reached Antigua but was transferred by HSBC to their bank in the Cayman Islands. The sort code given of 40-05-15 with the Swift code for SIB in Antigua (SIBP AG AG)is actually nothing to do with Stanford but is HSBC in the Cayman Islands. The misrepresentation of the sort code being part of Stanford International Bank along side the swift code should have raised alarm bells with HSBC had they were practiced “due diligence”. Where the money went from HSBC in the Cayman islands remains a mystery, but from the behaviour of HSBC they clearly know it was not sent as per my instructions to Antigua.
I hope HSBC are proud of their actions, and I would like the world to know how this bank has behaved towards a retired victim and many others who have lost their life savings possibly as a result of the actions of HSBC.
Tuesday, 9 February 2010
Urgently Seeking British HSBC Bank Investors in SIB
We are urgently seeking British investors who have HSBC accounts and bought CD's (Certificates of deposit) in Stanford International bank through HSBC.
We believe there is a strong possibility of being able to make a case for compensation against HSBC, anyone that may be able to help is invited to contact me via catherine.burnell@hotmail.com.
We believe there is a strong possibility of being able to make a case for compensation against HSBC, anyone that may be able to help is invited to contact me via catherine.burnell@hotmail.com.