Stanford a drug informant?

BBC:

Evidence has emerged that the Texan who bankrolled English cricket may have been a US government informer.

Sir Allen Stanford, who is accused of bank fraud, is the subject of an investigation by the BBC's Panorama.

Sources told Panorama that if he was a paid anti-drug agency informer, that could explain why a 2006 probe into his financial dealings was quietly dropped.

Sir Allen vigorously denies allegations of financial wrongdoing, despite a massive shortfall in his bank's assets.

But the British receiver of his failed Stanford International Bank - based in Antigua - told Panorama that the books clearly show the deficit.

Of the $7.2bn (£4.8bn) in deposits claimed by the bank, only $500m (£331m) has been traced.

The $6.7bn (£4.4bn) black hole in Sir Allen's off-shore bank affects 28,000 depositors - 200 of whom are British, who have collectively lost $80m (£53m) - and raises serious questions for the British Foreign Office and the American authorities.

Secret documents seen by Panorama show both governments knew in 1990 that the Texan was a former bankrupt and his first bank was suspected of involvement with Latin American money-launderers.

In 1999, both the British and the Americans were aware of the facts surrounding a cheque for $3.1m (£2.05m) that Sir Allen paid to the Drug Enforcement Administration (DEA).

It was drug money originally paid in to Stanford International Bank by agents acting for a feared Mexican drug lord known as the 'Lord of the Heavens'.

The cheque was proof that Stanford International Bank had been used to launder Mexican drug money - whether or not Sir Allen knew it at the time.

On 17 February of this year, the US Securities and Exchange Commission (SEC) accused Sir Allen of running a multi-billion dollar Ponzi fraud - when cash from new depositors is used to pay dividends to old depositors - civil charges he has denied.

Two and a half months after the SEC filing, the Texan has not yet faced criminal charges.

He was initially investigated by the SEC for running a possible Ponzi fraud in the summer of 2006, but by the winter of that year the inquiry was stopped.

Panorama understands that the decision was taken because of a request by another government agency.

Panorama is aware of strong evidence that Sir Allen was a confidential agent of the DEA as far back as 1999 - the year he made out the $3.1m cheque to the DEA.

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Stanford denies the drug connections. The DEA connection does sound like a plausible reason why the initial investigations were dropped. Of course, incompetence at the SEC also seems plausible at this point. I think his eventual trial on the civil charges will answer most of these questions. He has a good lawyer for that case.