It was a bad day for the Caribbean. TV channels dramatically flashed Breaking News headlines: ‘Developments in the United States involving the Stanford Group have profound implications for Antigua and Barbuda. This is not a looming crisis. The fallout threatens immediate and catastrophic consequences.’
Rumours were confirmed February 17, 2009, when Sir Allen Stanford was charged by the US Securities and Exchange Commission with fraud and multiple violations of U.S. securities laws, accused of massive ongoing fraud relating to seven billion dollars in certificates of de posit.
For Malcolm Smeaton the effect was certainly immediate and damming. He, who could in a certain sense have been described as an economic refugee, had elected Dominica as his permanent home shortly after the Labour Party came to power in the UK in 1997. He believed his homeland had been sold down the river to foreigners. His prediction that the socialists would bring disaster to the country had come true, albeit tardively, but the satisfaction it had given him faded when the waves stirred up by the crisis suddenly struck the shores of his newly adopted home.
As the news broke, queues were already forming outside of the Anglo-Dutch Commonwealth Bank in Roseau. The rumour was rife that Malcolm Smeaton had disappeared after Stanford’s bank had been seized by the authorities in nearby Antigua. The FBI warned that fifty billion dollars of assets were in peril across the Caribbean and in Latin America following the Texan cricket impresario’s suspected banking fraud.
Fears that the Anglo-Dutch Commonwealth Bank could be contaminated spread like wildfire and Smeaton’s absence was like oil to the flames. Stanford, who was believed to have fled the USA in one of his many planes, held dual nationality with an Antigua and Barbuda passport and the FBI suspected he had almost certainly headed the Caribbean islands where he had many influential friends.
The billionaire banker had even donated money to Barrack Obama’s election campaign and had sponsored charity polo matches in the UK, hosted by the Prince of Wales. It was a field day for the press and there would be many red faces, especially those who had fallen for his charm. In the long tradition of British tabloids the sensational story was seized upon and Stanford’s face splashed across front pages with reports of his numerous links to the world of sport that went well beyond cricket; amongst them his sponsorship of football, tennis, golf and basketball events. The scandal would leave sports supporters, a great many of whom were the salt of Britain’s working classes, with a sour taste in their mouths as they realized they had been taken for a ride by another thieving American banker.
The news worsened when the FBI announced that the Stanford International Bank was just the tip of the iceberg. It was evident that the collapse of Allen Stanford’s bank would have far reaching implications given the Texan’s many connections with clients and investors in the USA, Latin America and Europe. Fears grew in Dominica as the suspicion that Smeaton’s Anglo-Dutch Commonwealth Bank had, wittingly or unwittingly, been used as a conduit to fleece investors. Only two weeks earlier Smeaton had hinted at losses related to the Madoff scandal.
Stanford, along with his associates in the Stanford Financial Group, was accused of swindling thousands of investors of eight billion dollars by issuing supposedly safe certificates of deposit from his Antigua and Barbuda based bank with promises of attractive interest rates. The FBI declared that more than a quarter of that money had disappeared in undisclosed personal loans to Stanford himself.
Barely five months had passed since Fitzwilliams with Smeaton, the latter overflowing with Caribbean pride, had watched Stanford’s helicopter touch on the grass of the Nursery Ground just behind the Lord’s cricket ground pavilion, home to the Marylebone Cricket Club. The venerable club founded in 1787, was the cradle of world cricket, with a thirty year waiting list for new members. The billionaire, emerged apò mēchanēs theós, arms raised, wearing the smile of a victorious hero returning home, greeted by the cries of his delirious fans. It was a moment of incredible fervour as the officials of the English Cricket Board, delirious with joy, hailed a new God.
A twenty million dollar agreement was signed for five matches between the England cricket team and a Stanford All-Stars eleven over a five year period. The winning team would pocket eleven million dollars, one million for each player, with a further million distributed amongst the other members of the squad, one million for the management team, and seven million to be shared between the English Cricket Board and the West Indies Cricket Board.
The two bankers, VIP guests, had been invited to the showbiz style press conference. They watched the great names of cricket fawning over the tall beaming Texan, their heads nodding in agreement as Stanford exposed his grand plans. The crowning moment came when a transparent Perspex chest containing twenty million dollars in fifty dollar bills was rolled onto the stage. Officials, sportsmen and guests, gawked in amazement, it was if the Holy Grail had materialized. A tabloid journalist reported that the venerable game of English cricket had been transformed into a whole new ball game by the bronzed Texan.
Stanford flashed his now familiar smile, exposing an array of large whitened teeth that set-off his ecstatic moustachioed face. He was bursting with childish bliss, glowing in the boundless pleasure of his success, bathing in the glory of his deification on the hallowed ground of English cricket. Cameras flashed and television channels relayed the event live across the nation. Endless back slapping, hugging and shaking hands followed. Champagne corks popped. Smeaton introduced the hero to Fitzwilliams, and Stanford, who never missed an opportunity, eagerly accepted Fitzwilliams’ invitation, as one successful banker to another, to lunch with him in the spectacular dome of his headquarters overlooking the City of London.
That grim Monday morning, in the capital of the Commonwealth of Dominica, those euphoric moments were forgotten as a queue of anxious savers, desperate for information, degenerated into an angry mob clamouring at the doors of the Anglo-Dutch Commonwealth Bank. The island’s prime minister convened an emergency meeting of the cabinet. The future of the tiny island hung by a thread, there was no one who would come to their aid, no guarantees, and no Gordon Brown style bailout.
In London, many were those who regretted ever having met the man, amongst them Fitzwilliams, who anxiously awaited news from Smeaton.
In 2004, a Memorandum of Understanding was signed by the Commonwealth of Dominica and the People’s Republic of China after diplomatic relations were established between the two countries. The signing ceremony took place beneath the familiar starred red Chinese flag and that of Dominica which figured a brightly coloured parrot as its centre piece. It was a strange event to say the least, incongruous in that the largest nation on earth with its population of over one and a quarter billion was courting the tiny Caribbean nation with just seventy thousand souls.
There was definitely something fishy as China promised an aid package of three hundred million dollars, nearly four hundred dollars for each Dominican. A casual observer could have asked why China was ladling out such largesse. It was sure and certain that very many Chinese had never heard of the Caribbean, not to mind that tiny sun drenched speck named Dominica. Why were Dominican officials and experts being trained and sent to seminars in China? Was it because the island was strategically situated between French Guadeloupe and Martinique? Or was it because of its relative proximity to the USA?
The French government in Paris was blissfully unaware of China cosying up to their neighbour. The Chinese ambassador spoke of the China and Dominica in equal terms, it was as though a buffalo and an ant had joined forces to exploit the resources of the Caribbean. But competition in the international economic environment, the struggle for resources and the acceleration of global warming, was threatening small nations. It was strange to see China comparing the tiny island nation with itself. The ambassador went on to say, ‘Closer relationship and all-dimension cooperation are imperative to our two nations should we seek more effective measures to better cope with such said challenges and others in kind, or even to con
vert them into opportunities for the development of economy and the improvement of people's livelihood.’
Would China help Dominica? And with what strings attached? Perhaps China wanted to set up its own discrete offshore tax haven, far away from the preying eyes of Hong Kong bankers, to hide the money creamed off by its corrupt politicians and their fellow travellers? Or perhaps set up a casino to launder money stolen from the people. Then there was the question of votes needed at the UN on thorny subjects such as Taiwan and disputed islands in the South China Sea?
As Hubert, Arrowsmith’s garagiste jokingly remarked, mixing in his Creole, ‘Before china we was alive, some of allu do want to do nothiny for allu selfs, all i hearing i hope that the chineese will do this and that but what is dominicans problemb people don’t do things for nothiny, u must pay back some way or the other.’
On second thoughts it would seem that China and the small Caribbean island nation had something to offer each other. Since 2008, many small similar nations had suffered as a result of the crisis. The sudden appearance of China ladling out aid was naturally very tempting, but how many Caribbean leaders had read Sophocles tragedy Ajax?
Nought from the Greeks towards me hath sped well.
So now I find that ancient proverb true,
Foes’ gifts are no gifts: profit bring they none.
But China was not alone in courting the island’s leaders, there was also Venezuela. Hugo Chavez had first visited Dominica at the beginning of 2007, arriving in a surreal show of helicopters and greeted by a rapturous crowd waving Venezuelan, Cuban and Dominican flags. ‘Papa’ Chavez returned in June 2009, much to the consternation of Smeaton, and during his visit signed a series of agreements relating to tourism, housing and economic development. However, the principal object of his visit was the inauguration of a thirty five million dollar oil storage facility, situated near the capital of Roseau, established with the Waitukubuli Oil Trading Corporation, Waitukubuli being the Carib Indian name for Dominica. Venezuela had agreed to supply Dominica with oil at preferential tariffs over a twenty five years period, and in return it was proposed that Dominica cede its claim to Bird Island, or Isla Aves, in favour of Venezuela. The small, but strategic rock, 375 metres long by 50 wide, lay some two hundred kilometres directly west of Dominica in the Caribbean Sea.
The United Nations Convention defined territorial waters as twenty two kilometres offshore, in addition to this was an exclusive economic zone extending two hundred nautical miles over which a nation has control of all resources including oil and gas with the right to exploit these for its own benefit. Thus the implications of ceding its claims to Bird Island were enormous given the possible existence of oil and gas in the 140,000 square kilometre exclusive economic zone surrounding the island.
Dominica’s potential loss was colossal and many Islanders feared a Faustian pact.
Chapter 11 ROSEAU