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Stanford investigation sparks fears in Antigua
2009-02-17
ST JOHN'S, Antigua (Reuters) - On the streets of Antigua, Texas billionaire Allen Stanford is a controversial figure. Some embrace him while others deride him as a modern-day colonialist. But nearly all say they fear a U.S. investigation into the tycoon's financial empire and Antigua-based offshore bank could damage the Caribbean island where Stanford is a household name, its biggest private employer and powerful business force. "He's providing jobs. He's good for the economy. If he's in trouble, that's bad for us all," said George Green, manager of Cool Down Cafe, a hole-in-the-wall restaurant on a narrow street in St. John, the island's capital. Green's comment was echoed across the twin-island nation of Antigua and Barbuda on Monday as news spread of a deepening probe into Stanford's $50 billion Houston-based investment operation, Stanford Group Co, and its Antigua-based affiliate, Stanford International Bank. "I'm in shock," said Sylvester Joseph, a construction worker. "Stanford is our biggest investor. His bank is the biggest bank in the country. If it's true, it's a serious concern." Winston Derrick, publisher of The Antigua Observer newspaper, said locals were deeply divided over Stamford with about half viewing him as an arrogant, land-grabbing investor in the mold of the island's former colonial rulers. The other half, he said, were thankful for his business. "He's got a huge ego but he's known to be quite generous," he said in any interview. Antiguan Finance Minister Errol Cort expressed confidence in the island's regulatory system which he said met the highest international standards. "I have no fear in respect of that situation," he said of the Stanford investigation. "We have a very strong regulatory framework and structure. It has been tested not only regionally and internationally." The U.S. Securities and Exchange Commission, the Financial Industry Regulatory Authority and state regulators in Florida and Texas are investigating Stanford International Bank, which has 30,000 clients in 131 countries with $8.5 billion in assets. They are examining the bank's ability to pay high yields on certificates of deposit that it says are invested mainly in stocks, real estate, hedge funds and precious metals, many of which have lost value in recent months. The FBI's Houston office has also joined the investigation, according to the Wall Street Journal. SPORTS CLIENTS Stanford's clients include many sports personalities. The 58-year-old Texan has close marketing ties with pro-golfers Vijay Singh and Camilo Villegas. Another golfer, Henrik Stenson of Sweden, signed a multi-year endorsement deal in July, while English soccer star Michael Owen of Newcastle United signed last April. The investigation comes at a sensitive time for U.S. regulators who were heavily criticized for missing tips about Bernard Madoff's suspected $50 billion fraud. Antigua's Financial Services Regulatory Commission met officials of Stanford's Antiguan bank over the weekend but declined to comment on their findings. Knighted in 2006 by Antigua, Stanford is a formidable presence there. His personal fortune, valued last year by Forbes Magazine at $2.2 billion, dwarfs Antigua's gross domestic product of around $1 billion. His Antiguan business interests range from tourism to land holdings, airlines and publishing. Prime Minister Baldwin Spencer told Reuters on Sunday the investigation could tarnish the country of 70,000, noting that Stanford's local company had already laid off about 175 staff in recent weeks. Employees of Antigua-based Stanford Development Co received letters last month SAYING more than 200 will be dismissed. Stanford, an ardent cricket enthusiast, also dissolved the board of his cricket company, "Stanford 20/20" following a $1 million-per-player tournament. With dual U.S. and Antiguan-Barbudan citizenship, Stanford has homes sprinkled across the region -- from Antigua to St. Croix in the U.S. Virgin Islands to Miami. (Additional reporting by Martha Graybow in New York)
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