Billionaire Stanford Accused Of $9.2 Billion Fraud.

By: Ainsley Brown

The very colorful Texan billionaire, dual citizen and Knight from Antigua, and oh yeah cricket enthusiast, has been charged in the US with fraud allegedly amounting to $9.2 billion.

Just like Bernard Madoff, Stanford – sorry, I should say Sir Allen – stands accused of operating a Ponzi Scheme. According to the US Securities and Exchange Commission (SEC) the fraud was carried out through Stanford International Bank (SIB) and its parent company Stanford Financial Group. SIB, allegedly conducted an $8 billion programme offering certificates of deposits paying above average interest. It claims it was able to do so through a unique investment strategy, allowing it to consistently achieve double digit returns on its investments over the past 15 years. These results were achieved even when global stock markets went in to free fall.

If these allegations prove to be true it is highly unlike that Sir Allen will be able to  use a due diligence defence. Part of the SEC complaint alleges personal knowledge on the part if Sir Allen and his chief financial officer, James Davis. The $8 billion fund, which amounts to approximately 90% of SIB’s investment portfolio, was under the personal control of the two men and was shielded from any independent oversight.

The knock-on effects of these allegations will be felt far and wide by more so in the Caribbean, particularly Antigua. SIB and other Stanford ventures are very large employers on the island of 70, 00. Beyond the issue of employment, Antigua is also worried about getting a tarnished reputation, a concern expressed by its Prime Minster Baldwin Spencer.

This coupled with increasing pressure for more transparency in the financial sector coming from European and US authorities has given great impetus for individual islands and the CARICOM trade block to get their financial houses in order.

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