MIAMI, (Reuters) – Days before Allen Stanford’s business empire came crashing down in February, the top regulator in the Texas billionaire’s Caribbean banking base of Antigua and Barbuda blithely declared that his flagship bank there had passed a “satisfactory” test.
Leroy King, head of the Antigua and Barbuda Financial Services Regulatory Commission (FSRC), now finds himself accused by U.S. authorities of being a key inside collaborator of the “massive Ponzi scheme” Stanford is charged with.
Stanford, several associates and King were indicted on fraud, conspiracy and obstruction charges over the $7 billion fraud, U.S. Justice Department officials said yesterday.
Asked about the charges, an employee at the Antiguan regulator’s headquarters in the capital St. John’s said King was “out of the office and on leave.” Calls for comment to the Antiguan government were not immediately answered.
The sleepy twin-island state was at the heart of Stanford’s business empire stretching from the Caribbean to the United States, Latin America and Europe. Antigua’s biggest bank, Stanford International Bank Ltd (SIB), sold the certificates of deposit (CDs) which U.S. investigators say bilked thousands of investors out of billions of dollars.
The scandal surrounding Stanford, a flamboyant sports entrepreneur who was known as “Sir Allen” in Antigua after he was granted a knighthood by the government, has delivered another black eye to the image of the Caribbean offshore finance sector, which critics say lacks control and oversight.
In an amended complaint yesterday, the U.S. Securities and Exchange Commission alleged that Antigua regulator King got “thousands of dollars in bribes” from Stanford to ensure the FSRC “looked the other way” and conducted sham audits.
The SEC alleges that Stanford’s “corrupt payments” to King totaled more than $100,000, and said King, acting as gamekeeper turned poacher, helped Stanford and his associates evade and obstruct U.S. probes into the Stanford business empire for several years.
As a reward, the SEC says, King received cash bribes, and other inducements, such as the use of Stanford’s fleet of private jets, the use of a corporate car from Stanford’s bank, and tickets to the 2004 Super Bowl.
Yet in an interview with Reuters on Friday, Feb. 13, when media reports were swirling that Stanford’s financial network was tottering and investigators were closing in, King insisted he had “no credible information” that SIB was not sound.
He said the last check on the bank had been “satisfactory.”
“I’m sure we’ve asked the right questions … It would break my heart to know it happened on my watch,” he said.
Reacting to the growing reports of alleged fraud, King earnestly promised in February to step up his checks: “No holds barred, that sort of thing. It’s not a Friday afternoon cocktail any more. It’s taking off the gloves. We have a job to do to protect our jurisdiction.”
Only days later, angry and anxious investors were besieging Stanford banks and companies in Antigua, in Venezuela and in other Latin American capitals, desperately trying to recover funds from accounts which were quickly frozen by authorities.
The SEC indictment alleges that from at least February, 2005, King, “in exchange for the bribes … facilitated SIB’s fraud by obstructing the SEC’s investigation into SIB and abdicating the FSRC’s oversight responsibilities.”