The Stanford Files

Independent:

More than 20 years ago, the authorities repeatedly probed Allen Stanford’s alleged links to some of the world’s biggest and most powerful drug lords. Despite no fewer than five investigations into suspected drug money laundering by law enforcers ranging from Scotland Yard to the FBI, no charges were ever brought.

As banking officials in Central and South America and in the Caribbean moved quickly to freeze accounts linked to Stanford, the full extent of suspicions surrounding his business dealings emerged. Last night, the England and Wales Cricket Board was under growing pressure over its decision to enter into a £50m deal for Stanford’s businesses to sponsor Twenty20 tournaments. The ECB refused to say what detailed steps it took to find out whom it was dealing with before agreeing the deal.

The 58-year-old businessman, whose personal fortune was estimated at $2.2bn last year, headed a global financial group which claimed to have $51bn worth of assets under management. But he is now under investigation by a range of US criminal and regulatory authorities, including the FBI, the Securities and Exchange Commission (SEC), the Internal Revenue Service (IRS) and state financial regulators.

The SEC investigation which resulted in civil charges being brought against Stanford and two other employees last week, began as long ago as 2006 but was hampered by the reluctance of the authorities in Antigua, where Stanford’s offshore banking operation is based, to co-operate, according to sources familiar with the investigation. The SEC said this meant it was forced to call in the FBI, which has greater investigative powers, including the power to use wiretaps.

Stanford was already well known to the FBI. He was first investigated 20 years ago when he became a subject of a joint Scotland Yard-FBI investigation into so-called “brass-plate” banks on the Caribbean island of Montserrat. The investigation was set up after the tiny island, with a population of fewer than 13,000 people, had been targeted by criminals who set up more than 300 banks and rapidly found itself at the centre of a worldwide money laundering operation.

Among them was the Guardian International Bank, created by Allen Stanford. The bank was suspected of laundering drug money from the notorious Medellin and Cali drug cartels run by Pablo Escobar and the Orejuela brothers, according to former FBI agent Ross Gaffney, who headed the task force set up to investigate the suspicious explosion of offshore banks on the island.

“We suspected that Stanford’s bank was involved in money laundering, especially as we put people outside it to observe it,” Mr Gaffney said. Before the investigation could develop further, Stanford suddenly voluntarily surrendered his Montserrat banking licence and left the island.

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After Montserrat, Stanford switched his attention to neighbouring Antigua where he set up the Stanford International Bank, which is at the centre of the current investigation. Mr Gaffney said the FBI continued to take an interest in Stanford and set up a second inquiry into that bank after receiving intelligence that it continued to launder money for the Medellin and Cali cartels. “We had hard intelligence about what he was doing and we began to develop it.” Mr Gaffney said.

The FBI was particularly interested in Stanford’s relationship with Lester Bird, Antigua’s former prime minister. “Stanford is a very shrewd businessman. He always took the trouble to build close relations with local people on the islands. When Hurricane Hugo threatened, he flew a lot of his people out of the island to safety. He is affable and has a lot of charm. As a result, he has built up a lot of positive goodwill and personal loyalty to him. There are people who still think their money is safe with him even after the SEC took action.”

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Mr Gaffney said the investigation did not result in Stanford facing charges, because the circuitous route the drug money took before entering Stanford’s bank made the prospect of a successful prosecution unlikely. Despite this Mr Gaffney said Stanford remained “on the FBI’s radar”.

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The media has been able to dig up a lot of questionable activity, but it is still largely hearsay at this point. But the longer there is no response from Stanford, the longer the digging will go on and at some point he will face an SEC interrogation where he will either have to answer or take the Fifth. If he does the latter his business career may be at an end. He may get a government paid retirement home though if the allegations of the media are proven true.