BASSETERRE, St. Kitts – His name once resonated throughout the Eastern Caribbean Currency Untion (ECCU) as a lord of cricket and a master financier and investor. His influence grew rapidly and with his knighthood in 2007, the name Robert Allen Stanford was believed by many to be an honorary Caribbean stalwart.
Today, his name is still floating around the region, but without the same ring that it used to have. It is hardly recognized for the significant contributions he made. Rather, it sends a troubling shiver through almost every sphere of life in the currency union.
Count it good or bad, Stanford left his mark in the Caribbean – a mark that has left regional authorities, particularly in the ECCU, panting to find quick and appropriate solutions to avoid further risk exposure in the region.
It is an irrefutable fact that the Texas-born, multi-billionaire mogul did much to develop the islands of the ECCU from his first settling in Montserrat in the 1980’s to a string of high-end investments in Antigua and Barbuda. His fingerprints were left on almost every sector in that country and the region by extension, ranging from air travel, to media and publishing, to banking and finance, to hotel and fine dining, even trickling into Caribbean culture through cricket.
The introduction of Stanford Twenty20 cricket pulled the region together and brought new life and glitz to the game. Stanford’s name was then commercialized as the face of futuristic, high-stakes cricket in the West Indies, gaining fame and government favour across the little isles.
At the pinnacle of his success, the region came to learn that there was something in the mortar beside the pestle. On February 17, 2009, the U.S. authorities charged Stanford with “massive ongoing fraud” related to US$ 8 billion in investment deals. The charges were largely based on the sale of high-yield certificates of deposit under false pretences, alleging that 90% of the Antigua-based Stanford International Bank’s investment portfolio was being “shielded from independent oversight”.
News of his arrest sent a shockwave through the Caribbean, particularly in Antigua where Stanford had based a number of his key regional operations. Within hours, locals rushed to the financial institutions in panic, seeking to immediately withdraw their savings.
Consumer confidence in the sub-region was shattered and the Eastern Caribbean Central Bank (ECCB) was forced to intervene, calling upon a number of the region’s indigenous banks to stabilize the Bank of Antigua (BoA) and protect the interests of depositors. However, this did not protect Antigua and Barbuda from further international scrutiny.
Serious fallout from Stanford’s collapse
The fall of Stanford’s empire sent Antigua and Barbuda into a catastrophic spiral. In fact, though the charges were levelled more than a year ago, the country still finds itself in a negative international spotlight. As recent as this month, the U.S. State Department listed that nation on its Major Money Laundering List 2010, noting that though it has legislation to regulate its financial sector, “it remains susceptible to money laundering due to its offshore financial sector”. To add insult to injury, the country had already been grey-listed as a “secretive tax haven” by the Organization for Economic Cooperation and Development.
Finance Minister Harold Lovell has cried foul on what he describes as an unwarranted attack on Antigua and Barbuda. He explained that the two-island nation has been covered by an “unfortunate shadow” affecting not only the country’s economy, but also its reputation in the international community.
“We believe that the efforts to isolate and to condemn Antigua and Barbuda have been totally disproportionate given the fact that Stanford also operated out of the United States of America and that he travelled and operated in many other countries. We reject this label totally!” Lovell asserted in response to the label of money laundering nation.
Thousands of jobs once held by Antiguans were affected and some who kept theirs had little or no knowledge of the future of their companies. All this occurred against a backdrop of one of the deepest global recessions faced in the last 60 years – a catastrophic story for little Antigua and Barbuda.
The adverse spinoffs however were not limited to that country, as even the ECCB and five Eastern Caribbean commercial banks were sued by the Stanford Victims Coalition (SVC). The base of the lawsuit stated that the ECCB’s intervention in the Bank of Antigua was unlawful because the bank was of significant value to the victims.
While Antigua and Barbuda’s Attorney-General Justin Simon referred to the lawsuit as “preposterous and ludicrous”, the SVC did not stop at challenging the institutions and launched a campaign for a boycott of Antigua and Barbuda as a tourist destination, dubbed ‘Anti-Crime, Anti-Antigua’.
The campaign calls on international travel professionals and investors to boycott hotels and resorts in the island, cruises to Antigua, investments in Antiguan financial institutions or in companies or ventures based in Antigua.
Back to the economic drawing board
It has become necessary since the collapse of the Stanford Empire and the ensuing fallout to tighten up government operations, especially in the financial and monetary sector. Immediately following Stanford’s arrest, the Government of Antigua with help from the Caribbean Financial Action Task Force carried out a full investigation into the Financial Services Regulatory Commission and is currently assessing the report, with a view to implement the recommendations therein.
Lovell told SKNVibes that his government has also moved to amend pieces of legislation to ensure that the legislative framework under which Antigua and Barbuda operates is in keeping with best international standards.
“At this time, we can only ensure that our regulatory framework is at the highest level... to allow it to withstand the most rigorous forms of scrutiny and also to implement the recommendations of the reports that have been produced to us, and to continue to fight to maintain and enhance the good name and image of Antigua and Barbuda,” the Finance Minister said.
Since the BoA fallout, amendments have been made to the country’s Money Laundering Prevention Act, the International Business Corporations Act, the Professional Services and Trust Providers Act and others concerning the offshore sector. This is a critical step in ensuring that that nation’s administrative and legislative framework meet international requirements.
A post-Stanford era begins
The way forward for Antigua and Barbuda is a challenging one that is exacerbated by the economic crisis and consumer confidence being at very low levels.
The good that can come from Stanford’s presence in the region is the lesson that Antigua and Barbuda and the wider Caribbean can learn that due diligence must be paid of investors and tightening regulation of financial institutions, particularly non-banking institutions, is critical.
The ECCB’s Eight-Point Stabilization Programme sets a regional approach for the way forward, and emphasizes the need to reform regulatory frameworks within the financial sector. Lovell supports the stabilization programme, noting that it is critical for the islands to work together and untangle themselves from the current economic webs.
“If we do not stand together, we will be picked off individually, and so it is very important for the islands of the OECS to speak with one voice. These are matters that affect all of us. And so, if we are to effectively advance our individual interests, we must do so collectively. I am firmly of the view that we cannot treat these matters as isolated to the respective islands,” the Antiguan finance minister said.
Regardless of the route taken to return to a place of economic stability and to restore the good name of the ECCU member countries, one thing is certain: the region must be guided by present challenges in order to rebuild a more resilient and internationally-respected financial sector.
