Laundering charges dropped against Belize banks!
Posted: 26/08/2008 - 12:36 PM
Author: Adele Ramos
“That is holding us at ransom, because we are a poor country. They [the foreign banks] are pressuring this government [and]…government now needs to take a stand.” - COLA’s Bernard Adolphus
The Belize Bank and First Caribbean will not stand trial for a string of charges under the Money Laundering (Prevention) Act, following a Government-sanctioned decision by the Financial Intelligence Unit (FIU) for the charges to be abruptly dropped, allegedly under pressure from banks abroad.
Moves by the FIU over the last three months to lay unprecedented charges against two of Belize’s prominent financial institutions attracted much public attention, and so likewise, there is public debate as to why the charges are so unexpectedly being dropped, even before the FIU makes disclosure of evidence in the Belize Magistrate’s Court, where the banks had been arraigned on the charges.
Prime Minister and Minister of Finance, Dean Barrow, told Amandala today that he is sure there are a fair amount of people who won’t agree with the decision, but he said he acted in “absolute good faith” in response to concerns raised by corresponding banks abroad.
“I have owned up to the fact that it leaves me squarely on the horns of a dilemma,” Barrow told Amandala.
According to Barrow, Bank of America in the USA was “discussing” severing ties with the Belize Bank in light of the money laundering related charges.
Bernard Adolphus, president of Citizens Organized for Liberty through Action (COLA), shared his personal views on the developments, saying that the Government is “too soft”, and should not have buckled to pressure from abroad.
“I believe they should have gone much more in depth and keep the pressure up,” said Adolphus. “It’s Belizean people losing again. Everyone comes and takes advantage of our people... That is holding us at ransom, because we are a poor country. They [the foreign banks] are pressuring this government [and]…government now needs to take a stand.”
The Prime Minister/Minister of Finance first made the announcement (without an explanation) in the House of Representatives on Friday morning, and we immediately contacted the FIU for clarification.
The main reason for dropping the charges is that “…protracted court proceedings could have severe implications for the banking industry, internationally, and how it is perceived, and create difficulties for local banks with corresponding banks abroad,” said Mrs. Geraldine Davis-Young, FIU director.
She claimed they acted “…in the best interest of the entire economy of Belize…the country as a whole.”
There appears to be a quid pro quo for the FIU’s dropping the charges against the banks: The banks agreed to fund the implementation of an electronic reporting system for suspicious transactions, said Davis-Young. Prime Minister Barrow also said that the banks would be funding rehabilitation projects for Battlefield and Memorial Parks.
We asked Davis: How much money is involved? But the FIU director told us she could not say how much, and that the parties were still in negotiations. Barrow’s ballpark estimate of funds required for the electronic reporting system is $300,000.
“If we take things to their normal conclusion, and they are convicted of being negligent, it would also bring other banks in Belize under suspicion,” claimed Davis-Young.
We asked her why this was just now coming to light – months after the FIU initiated charges. She replied that a United States bank, which has dealings with several banks in Belize, had recently raised the concern. When we probed further, she declined to say exactly when the bank approached the FIU.
We note that even though the FIU has agreed to drop charges, there is still no final, formal agreement with the bank, according to the FIU.
Davis-Young added that even though the negotiations to establish an electronic reporting system are ongoing only with First Caribbean and the Belize Bank, it is a system that would benefit the wider banking sector in Belize.
We asked Davis-Young about unofficial reports that the banks had threatened to pull their investments and funds from Belize, because of the charges against them under the Money Laundering (Prevention) Act, but Davis said she knew of no such threat.
Barrow told us that at the time the charges were levied against the banks, he did not consider the serious repercussions to the banking system.
So what will happen in the event that FIU attempts to levy new charges under the Act?
Barrow said that a plan would have to be in place to secure customers’ deposits, and alternate arrangements would have to be considered for corresponding bank relations in the event that existing banking partners try to sever ties with banks in Belize and destabilize the banking sector.
According to Barrow, local banks have increased their reporting of suspicious transactions, because while last year the FIU only received 37 suspicious transaction reports, the frequency of reports this year has increased sharply since First Caribbean and Belize Bank had been charged for failure to report.
The Prime Minister also denies allegations that the withdrawal of charges comes as a consequence of pressure from Belize Bank’s premier shareholder, Michael Ashcroft, with whom the P.M. met the day before he made the public announcement in the House.
Barrow told Amandala that the concerns of the Bank of America were relayed to the Central Bank the previous Thursday, and by Monday the decision had already been taken to have the charges withdrawn against First Caribbean and the Belize Bank. The meeting with Ashcroft, said Barrow, came afterwards.
Barrow furthermore told our newspaper that he is in “discussions” with Ashcroft over the disputed accommodation agreement signed by former Prime Minister Said Musa for Belize Telemedia Limited – a source of drawn-out legal warfare between the Government and Ashcroft. The agreement purports to guarantee Ashcroft’s BTL a 15% rate of return, even if it means that the company has to withhold taxes to realize those returns. BTL is a sister company of the Belize Bank.
Initially, in May of this year, 79 charges were drawn up by the FIU for the Belize Bank and its president, Phil Johnson, of “failure to report suspicious transactions,” surrounding multi-million-dollar transactions with BTL. Without providing an explanation, the FIU soon afterwards dropped the charges against Johnson, but had maintained them against the bank.
In July, First Caribbean was formally arraigned on 113 charges for the same alleged violation – failure to report suspicious transactions.
The charges stemmed from a series of parallel market US dollar transactions made by BTL, in which the company reportedly acquired about US$100 million outside the formal banking sector, as far back as 2001, with Belize dollar funds obtained from one bank and US dollars deposited in the other.
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