International wires are buzzing today with the news that US Security Exchange Commission (SEC) regulators have charged Antigua based Sir Allen Stanford of ‘massive, ongoing fraud’. The SEC has alleged that Sir Allen has been perpetuating fraudulent transactions through his Antigua based Stanford International Bank.
The Texan billionaire Allen Stanford has become a household name in the Caribbean despite the failure of Caribbean Star. The memory of his failed airline has been replaced in recent times with the very popular Stanford 20/20 cricket series.
Following on the news of the CLICO Affair should we conclude that the tumultuous global financial markets maybe starting to unload on the ‘quiet’ region of the Caribbean region?
Unlike the CLICO Affair which has direct implications for several economies across the Caribbean, the Stanford International Bank probe is restricted to the Antigua market. Some BU family members may challenge the fact that the Caribbean maybe tarred with the same brush given the tendency by outside markets to view the Caribbean region as one area.
Do we see a similarity between the Stanford and CLICO issues?
Financial Analysts suggests that CLICO had adopted a high interest rate regime and with global markets contracting, revenue yields have become negatively affected. At the same time CLICO has had to honour the high rates offered on their large annuity/deposit portfolios. In the case of Stanford the SEC has accused Sir Allen of fraudulent practices in order to guarantee ‘improbable, if not impossible’ rates ranging from 10.3% to 15.15 on Certificate of Deposits since 1995 to 2008.
The possible demise of Sir Allen Stanford’s financial empire will have serious implications for the Antigua economy. Peter Wickham may even suggest that it could affect the outcome of the upcoming general election. It may proved an expensive lesson for the Antiguan authorities to be reminded that one should never build a house on sandy ground.