Last week, Bloomberg reported that Refco may have held offshore accounts with as much as $525 million in fake bonds at its Bermuda-based unit. The bonds appear to have been owned by six companies incorporated in Anguilla, which were in turn owned by a fund called Liquid Opportunity and Bawag. The six companies, named for islands in the South Pacific and regions of Argentina, were incorporated on July 26, 2004, by a local agent, and were initially listed as Refco creditors with a combined claim of $543 million.

However, none of the companies filed any papers as creditors, and Refco has since dropped four of the six from its list of creditors, says Bloomberg. Neither Liquid Opportunity nor Bawag has been accused of any impropriety in the Refco affair. Indeed, the bank, owned by Austrian trade unions, is suing Refco in a Manhattan court, saying that Bennett had fraudulently asked for extension of its $421m loan.

The US federal prosecutor in Manhattan and the Securities and Exchange Commission are said to be trying to find out where the bonds originated and how they were valued. The precise roles of the bonds and the various players in the affair are very unclear at this stage. Bawag itself has strongly denied that it is financially vulnerable; but after Refco's collapse last year it appointed a new chief executive, Ewald Nowotny, with a mandate to 'clean up' the bank's image.

Refco filed for Chapter 11 protection from creditors on October 17th, one week after the firm said former chief executive Phillip Bennett had hidden $430 million of bad debt. The company is now selling assets to pay creditors that claim they are owed up to $16.8 billion. Bennett has pleaded not guilty to eight counts of conspiracy, fraud, and other charges.