Accused Antigua regulator gave Stanford clean bill

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.”