Untouchables?
Posted: 29/08/2008 - 09:31 AM
Author: Adele Ramos
This week a 49-year-old man was fined $650 for stealing 4 watermelons valued at about 10 bucks each. It’s what some would call petty thieving, but the law did not spare him the penalty, and he must come up with the fine by next month or spend seven months in jail.
If the law can be enforced against a petty thief, why can’t it be enforced against a big-time corporation? And if big corporations in the great United States can be made to face stiff penalties under the law, why can’t enforcers in Belize similarly apply the law with equal force?
The Government and the Financial Intelligence Unit of Belize (FIU) announced on Friday that charges had been dropped against two of Belize’s most prominent banks, Michael Ashcroft’s Belize Bank and First Caribbean International Bank – a Canadian-controlled bank. They were facing charges related to several millions in “suspicious transactions” they were accused of failing to report – suspicious, says the FIU, because of the size and frequency of the transactions.
The official reason for dropping the charges: because foreign corresponding banks were discussing severing ties with the local banks, threatening to cause a possible collapse and a destabilization of the country’s financial sector. The set-off: the banks are to fund an electronic reporting system for the country, and fund refurbishment of two parks – between them, a penalty of roughly $300,000 total.
The rationale, of course, raises a lot of questions—and not to mention doubts over why the charges were really dropped—since it is public knowledge that several cases have been widely reported in the foreign press of US banks facing penalties stemming from money laundering-related investigations. The banks did not collapse there, but continued business as usual while settling their fines and complying with other federal obligations. We note that the circumstances for the US banks—two of them corresponding banks for those in Belize—are very much similar to those surrounding the charges levied against the banks in Belize.
For example, in late 2005 the Bank of New York, one of the country’s oldest banks, agreed with federal regulators to pay $38 million in penalties and victim compensation, in relation to investigations surrounding questionable inland and Russian transactions.
According to a New York Times report, prosecutors accused the bank of not adequately monitoring and reporting suspect accounts at the bank – much the same charge as was levied against the two Belize banks.
Notably, in addition to paying the multi-million-dollar penalty, the bank was also forced to invest in internal anti-fraud and anti-money laundering controls. The bank also agreed to an independent examiner to monitor its operations, US news reports say. It was on these terms that prosecutors dropped criminal charges.
Press reports say that Bank of America, another major US bank, similarly entered a settlement with the New York District Attorney’s office. The New York Sun reported in 2006 that the bank agreed to pay a $7.5 million fine, reimburse the city and state governments, as well as pay for the investigation. Additionally, the bank agreed to step up its anti-money laundering operations.
Even before First Caribbean International Bank was formally charged by the FIU, Prime Minister Dean Barrow had told Amandala that the Government was trying to negotiate a plea. FIU sources told Amandala that the bank resisted Government’s urgings for a plea. We do not know if any such discussions were held with the Belize Bank.
Under Section 13 of the Money Laundering (Prevention) Act, addressing failure to report suspicious transactions, provision is made for a $50,000 fine for each charge and the possible suspension or revocation of a bank’s license. No jail time is included under this part of the law, even though the bank and its employees can be made to stand trial on these criminal charges.
For the 79 charges levied against the Belize Bank, the bank could have, if convicted, faced a fine of close to $4 million. First Caribbean, for its 113 charges, could have faced a fine of up to $5.65 million. Total penalties are 32 times what the Prime Minister estimates would be required to fund the electronic reporting system the banks are expected to finance as a settlement of sorts for the laundering charges being dropped against them.
Does it mean now that the FIU’s power to enforce the Money Laundering Prevention Act against important banks and corporations is compromised?
The charges that had been levied against the two banks had indicated that they were in relation to transactions with British billionaire Michael Ashcroft’s other company, Belize Telecommunications Limited, now Belize Telemedia Limited. However, to date, no charges have been brought against BTL under the money laundering act.
Under the act, penalties for engaging in money laundering range from $25,000 to $100,000, with possible prison terms of 3 to 6 years.
The Belize Bank and First Caribbean were the first financial institutions to face criminal charges under the act since its introduction in 1996.
The BTL-related transactions were first reported in September 2005, when over $7 million of BTL’s money was swindled in parallel market transactions. The then chairman of the FIU, Keith Arnold, was also a director (and former chairman) of BTL – a clear conflict of interest allowed by the Said Musa administration.
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