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Panamanian government assurances open more questions than they answerOutlook for Stanford depositors, brokerage account holders dims
by Eric Jackson
While the principle of Panama's independent financial services sector is being fought out in the face of the Group of 20's pressure to end banking secrecy, the underlying reality is being put into not very impressive perspective in the Stanford Bank case.
Panama moved to close down Stanford Bank - Panama on February 19, not because this country's Banking Superintendent found anything amiss, but "due to the actions undertaken by financial regulators and judicial authorities in the United States of America against Mr. Robert Allen Stanford...." Panama's National Securities Commission (Comision Nacional de Valores or CNV) quickly followed suit with respect to Stanford Casas de Valores SA (Broker Dealer House) for similar reasons. Both the bank's depositors and the brokerage's clients were assured that the shutdown was for 30 days, but that there was plenty of liquidity here and the problem was elsewhere.
A month later, the interventions by the Banking Superintendent and CNV were extended and those institutions put out communiques admitting the reports that they had met with lawyers for a Dallas US federal court's appointed receiver. The joint Banking Superintendent - CNV communique said that "the greater part of the bank's assets in Panama are in the custody of financial institutions under the jurisdiction of the United States of America, England, Switzerland, Ecuador and Peru, and thus, out of the control of our jurisdiction."
Nevertheless, a few days after that the Banking Superintendent leaked a rumor to La Estrella about local and foreign investors seeking to buy both the bank and the brokerage house. Nothing seems to have come of that.
It had to be especially distressing news to those with brokerage accounts with the Stanford Casas de Valores. There are rules about who has what sort of priority in a Panamanian bank failure, but the usual concept is that someone who owns a brokerage account owns the assets in his or her own portfolio.
Here, though, the statements by the Banking Superintendent and CNV are not mentioning any difference between those who had brokerage accounts with Stanford's brokerage firm and depositors in Stanford's bank.
When a Panamanian bank fails, all the money except that of secured creditors goes into a pool, in the distribution of which Panamanian depositors have first priority. If all of the Panamanian citizens' deposits are paid off in full, foreign depositors then share in what's left.
The brokerage account holders, then, would tend to have an interest in being treated as owners of their accounts rather than bank depositors. However, the contents of many of those brokerage accounts will be heavy with the most toxic assets of all, the Antiguan bank CDs that US authorities claim amounted to an $8 billion Ponzi scheme, of which they say that Stanford and confederates siphoned off at least $1.6 billion.
Even then, if $8 billion was taken in and less than a quarter of that was misappropriated, then people with those Antiguan CDs would stand to get three-quarters of their money back.
But the US court-appointed receiver, Dallas attorney Ralph Janvey, told the federal judge overseeing the case that "evidence is... mounting that the assets of the estate will be only a fraction of the amount needed to satisfy the anticipated claims against the estate." Meanwhile, a number of the jurisdictions in which the Stanford empire operated have moved to prevent US courts from grabbing any assets. Antigua & Barbuda has nationalized Stanford's holdings. Venezuela has been trying to liquidate Stanford operations there, but failed in an attempt to auction them off.
The political complications are also both inside and outside of the USA. Last year the Venezuelan government actually alleged that Stanford's operation in Caracas was being used as a cover for four US intelligence agents. One former member of Stanford's advisory board was veteran Democratic foreign policy apparatchik Peter F. Romero, who was Bill Clinton's Assistant Secretary of State for Western Hemisphere Affairs, a protegé of former Secretary of State Madeleine Albright and one of the principal architects of Plan Colombia. Lee Brown, who served as Clinton's drug czar, also served on that board, as did former Mexican Foreign Minister Jorge Castañeda. Journalist Wayne Madsen alleges that international cabals interested in overthrowing the leftist governments of Venezuela, Ecuador, Bolivia, Argentina and Nicaragua were also heavily invested in Stanford.
Madsen also claims that Russian Jewish mobsters who dominate the rackets in Israel and are major underworld players across Europe also banked in Stanford's Antigua establishment. Then there were surely garden variety money launderers and tax cheats who used these offshore services. The depositors in these cases might well hesitate to come forward to any officer of a US court to claim their money.
Meanwhile, Stanford himself hasn't been charged with any crime, but he's taking advantage of his fifth amendment privilege against self-incrimination and declining to talk to US investigators. Although some of his key people are now cooperating with authorities, the trail of which funds went where is still largely unknown to Janvey. That Stanford hasn't been indicted is an indication of how much US investigators don't know --- if they charge him they have to bring him to trial and their failure to bring charges at a minimum means that they don't fully know what's where. So if Janvey has reason to know for sure where in the USA assets belonging to Stanford Bank - Panama or the clients of Stanford Casas de Valores might be, he'd have a motive to maintain the freeze on these as a tool to pry open the lids of Panamanian financial secrecy laws and discover new parts of the paper trail.
And the supposedly independent Panamanian financial system? They're basically telling people that they'll have to wait to see what the gringos do.
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in Casco Viejo, Panama City
2009 by Eric Jackson
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