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Funny business:Grenada regulators step in
By DAVID MARCHANT,
Special to UPI
MIAMI, (UPI) -- Regulators on the tiny Caribbean island of Grenadahave seized control of three offshore banks in an attempt to cometo grips with rampant crime in its offshore banking sector.
It seems to be a case of too little toolate, however, for clients of at least one of them -- ImperiumBank, which is part of the United Kingdom-based Imperial ConsolidatedGroup.
Imperium and the mutual funds it controlshave estimated liabilities of approximately $170 million but representativesare unable or unwilling to tell regulators where its assets areor even produce its books.
Grenada's Ministry of Finance, which tookcontrol of the bank on April 25 through its agent, PriceWaterhouseCoopers,has given the group until May 25 to cooperate or be forced intoliquidation.
The bank is shaping up to be the island'sbiggest offshore scandal since the First International Bank ofGrenada went into liquidation last year with liabilities of $473million and negligible assets.
Imperium's mutual funds offered investorsfixed annual returns of up to 18 percent, which it claimed weregenerated by the group's underlying business, which included issuingshort-term, high-interest loans to United Kingdom nationals withpoor credit history.
Creditors include individual investors fromall over the world and also some of the world's leading life insurancecompanies, who provided coverage for Imperial's financial products.
Allied Dunbar International has complainedto the Financial Services Authority in the U.K. about being unableto redeem investments. Complaints also have been made to regulatorsin the Isle of Man and Ireland by other creditors, including ScottishMutual International, Scottish Provident International, ScottishLife International, Royal & SunAlliance, Generali International,Eagle Star International, Hansard International and Irish LifeInternational.
Some of them allege they have been unableto make withdrawals since January, which, if true, calls intoquestion the veracity of promotional literature distributed byImperial on March 22.
In what now seems like a desperate attemptto raise funds to ease its cash-flow problems, Imperial issueda letter to fund shareholders entitled "Interim Profit Announcement."
Imperial said that because of profitability,it was offering an extra annual yield of 1 percent and other incentivesfor investors who invested additional funds within the ensuing39 days.
In the letter, Imperial described its productsas "secure" and "safe" and said the bonusincentives were being offered "as a result of the performanceof our funds exceeding our expectations".
However, on May 7, Imperial sent out anotherletter stating all subscriptions and redemptions had been suspendeddue to "liquidity" problems and "unprecedentedlibelous media abuse."
The "media abuse" relates to journalistsreporting on Imperial's various legal and regulatory problemsover the past few years.
In 1999, the New Zealand Securities Commission banned the firmfrom promoting its schemes and issued a warning under the heading"Scam Watch."
In 2001, the Department of Trade and Industryin the U.K. disqualified Imperial's co-founders, Lincoln Fraserand Jared Brook, from serving as company directors for four yearsbecause of misconduct relating to a hotel firm they once managed.
Also last year, a New Zealand judge determinedthey had fabricated documents that they submitted as evidencein a failed libel case brought against one of their former brokers.
On March 8, 2002, a court in Marbella, Spainissued an $8.5 million asset freeze order against the group afteran application by Syrian-born international arms dealer Monzeral Kassar over a failed business deal.
Al Kassar's past includes a drug smugglingconviction in the U.K., acting as a bagman for Oliver North inthe Iran-Contra arms-for-cash scandal and being tried for the1985 Achille Lauro hijacking, of which he was acquitted.
At one time in his dispute with ImperialConsolidated, al Kassar accused Imperial of being involved withsuspected terrorist Osama bin Laden, although he has not providedany proof to support his allegation and Imperial's managementvehemently has denied the accusation.
Imperium Bank's subsidiaries are believedto include I. C. Consultants SL (Spain), IC Mutual (Australasia)Inc. of Australia, Imperial Consolidated (Australia) Pty Ltd.,IC Mutual Funds (Grenada) Ltd., IC Mutual (Grenada) Ltd., ImperialConsolidated (Grenada), Imperium Accredited Investor Funds Ltd.of Grenada, Imperium Qualified Investor Funds Ltd. of Grenada,United International Administrators Inc. of Grenada, Alpha Leewardand Windward Ltd. of Grenada, IC Mutual (Greece) Ltd., ImperialConsolidated of Canada, Imperial Consolidated (Hong Kong) Ltd.,Imperial Consolidated Investment Advisory Co. Ltd. of Japan, ImperialConsolidated (Japan), Imperial Consolidated (New Zealand) Ltd.,Imperial Funds (BVI) Ltd. and Imperial Marketing (Dubai) Ltd.
The financial condition of the other twooffshore banks that were taken over by Grenada's Ministry of Financeon April 25, 2002 remains unclear.
AvantGuard Bank and Trust, which is partof a United States-based multi-level marketing group known asProsper International League Ltd., may be solvent, a source toldUnited Press International.
The third bank, Cornerstone InternationalBank and Trust, was operated by religious zealots and appearsto have disappeared from the island before regulators took action.