The Antigua and Barbuda cabinet met in emergency session over the weekend and decided to recall parliament on Thursday to deal with a financial crisis created by the fall of billionaire investor Sir Allen Stanford, owner of the Bank of Antigua (BoA).The parliament was dissolved on February 9th to prepare for general elections on March 12th but the cabinet is acting on the basis of a constitutional provision that allows the legislature to be reconvened in an emergency such as the one the country now faces.
In an official statement the government called the decision a necessary one "in order to safeguard the jobs of the thousands of Antiguans and Barbudans employed by the company and stem the negative effects that the action of the U.S. Courts might have on the economy of Antigua and Barbuda."
The Federal Bureau of Investigation (FBI) served Sir Allen with legal papers last week outlining fraud allegations. The agency had been asked to track down Sir Allen after officials of the Securities and Exchange Commission (SEC) said they could not locate the billionaire Texan investor.
He remains out of custody since the charges he faces are civil matters and not criminal at this stage.
The SEC has alleged that the Texan masterminded "a fraud of shocking magnitude that has spread its tentacles throughout the world". It claimed that he sold US$8 billion in certificates of deposit (CDs) to clients all over the world, using false promises of high interest rates. Investors in Sir Allen's businesses are waiting to see when they will have access to their funds.
In the Caribbean, a consortium of Eastern Caribbean Central Banks is taking control of The Bank of Antigua, which is part of Sir Allen's empire, following the takeover of the financial institution by the Eastern Caribbean Central Bank (ECCB).
The ECCB said it took the decision based on a discussions at a weekend meeting involving representatives of the Central Bank, the Antigua and Barbuda government, the government of St Vincent and Grenadines, Antigua Commercial Bank Ltd, St Kitts-Nevis-Anguilla National Bank Ltd, Eastern Caribbean Financial Holdings Company Ltd, National Commercial Bank (SVG) Ltd and National Bank of Dominica Ltd.
"The parties came to a successful conclusion on the formation of an entity to carry on the operations of the Bank of Antigua Ltd. This will come into effect on Monday, 23 February 2009," the ECCB said in a release issued late Sunday.
On Friday, the ECCB announced that after a request for help from the BoA, it used its emergency powers to take control of the local bank.
It said the intervention was necessary because the fraud complaint filed last Tuesday by the SEC against Sir Allen and his Financial Group had led to "hundreds of customers rushing the bank to take their funds, even though it had not been named in the U.S. action".
The Central Bank said the "unusual and substantial" withdrawals created the potential for severe liquidity problems for the financial institution.
"In response to this situation, the ECCB sent in two teams of Bank Supervisors on Wednesday, 18 February 2009 and Thursday, 19 February 2009 and has been supplying liquidity to the bank which has ensured that the depositors' demands have been met," the ECCB said in a release on Friday evening.
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