CARICOM Addresses Fraud Concerns

by Phillip Morton, Investors Offshore.com

18 March 2009

CARICOM has released a statement regarding the effects of the financial crisis on the Caribbean, particularly the subsequent emergence of two financial frauds: Robert Allen Stanford’s certificates of deposit scheme, and the alleged misappropriation of clients funds at CLICO, run by CL Financial Group, which is currently under investigation.

Firstly the heads of government noted that despite recent occurrences, the Caribbean financial sector is generally considered to be sound and well regulated, and that it has been largely insulated from the effects of the financial crisis, with most of the prudential indicators being favourable, including ratios of capital adequacy, liquidity, loan performance, and foreign exchange reserves.

CARICOM did note however that the crisis had brought to light several cases of financial crime, which Caribbean leaders agreed could spark significant problems for policyholders, depositors and investors.

CARICOM stated that:

"With respect to the C L Financial Group, heads of government have determined that this is a regional problem which warrants a regional solution."

“They have therefore agreed to collaborate in the search for a fair and favourable resolution of this issue. In this context, Heads of Government fully endorsed the recent formation of a college of regulators which has been assigned the task of determining the full scope and location of the assets and liabilities of the CL Financial Group.”

CARICOM’s statement added that on completion of this task, heads of government will meet immediately to consider the report of the regulators and to take the necessary action in the interest of all stakeholders.

With respect to the problems posed by the Stanford group of companies, the heads of government acknowledged the swift action taken by OECS members and the strong efforts of the government of Antigua and Barbuda to have the Securities Exchange Commission (SEC) of the USA release part of the assets of the Stanford International Bank (SIB) that had been frozen pending investigations.

"The experiences relating to the CL Financial Group and the Stanford group of companies have demonstrated the need for strengthening the regional regulatory framework, particularly in the non-bank financial sector and more effective cross-border supervision of pan-Caribbean companies,” concluded CARICOM’s statement.

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