The government of Antigua has begun criminal inquiries into large payments discovered in Isle of Man bank accounts controlled by Antiguan politicians.
Disclosure of these Caribbean corruption inquiries comes at an unwelcome time for the Isle of Man, described by the chancellor, Alastair Darling, as "a tax haven sitting in the Irish Sea". The island is under review by the UK government, which subsidises its low-tax regime.
The Bank of Bermuda refused to handle a similar account and filed a "suspicious activity report" before the further account was opened on the Isle of Man, according to investigators' reports.
Another $1.4m in total was paid into HSBC Manx accounts belonging to a former Antiguan high commissioner in London, Sir Ronald Sanders.
SIR RON SANDERS FORMER ANTIGUA HIGH COMMISSIONER
The cash under investigation came via an Israeli businessman, Bruce Rappaport, who is alleged to have diverted Antiguan funds into his own pocket while making payments to local politicians.
The Manx role in the Caribbean island's affairs is laid out in a report following a prolonged investigation by a Canadian forensic accountant, Robert Lindquist. He was called in by the new Antiguan prime minister, Spencer Baldwin, in 2004 to investigate "questionable payments" by Bird's regime, ousted in a general election.
A civil lawsuit against Bird and his chief of staff accused them of corruption. A new general election is due tomorrow. Coincidentally or not, the Baldwin government announced that police had now been called in, and that Rappaport had agreed to hand back $12m in settlement of the civil lawsuit against him. There had been a "gigantic conspiracy" to rob local taxpayers, the Antiguan attorney general said last month. He said Antigua had been making inflated payments of $400,000 a month, supposedly to pay off a debt to a firm which built a desalination plant on the island. But paperwork unearthed revealed that only $200,000 a month was actually due. The extra cash was routed through a company controlled by Rappaport, and money was passed on to a Panama offshore entity called Bellwood.
Sanders, the former high commissioner, denied getting kickbacks. "I don't know what kickbacks there could be," he said. "I worked for Rappaport for a long time, and he paid me." His lawyers said: "He firmly denies that there has been any impropriety on his part in this matter."
Bird said that he had committed no crime and was the victim of a "witchhunt". Michael, his former chief of staff, has also denied wrongdoing, saying: "It is a red herring across the campaign trail."
HSBC said yesterday that it would publicly neither confirm nor deny information about individual Manx accounts.
Chronicles of Monte Friesner - Financial Crime Analyst
Courtesy of The Guardian