Built in 1971 on what The Travel Channel was later to call the best beach in the world, the Half Moon Bay Hotel was for many years one of the finest destinations in the Caribbean, and very much the jewel in Antigua’s crown. The owners, Half Moon Bay Holdings Limited, added a 9 hole golf course in 1973 and before long names like Audrey Hepburn and Elton John graced the guest list.
But it wasn’t all plain sailing. In 1993 HMB Holdings ran into difficulties with their management company, a local outfit called Caribbean Hotel Management Services. When hurricane Luis devastated the property two years later it emerged that CHMS had failed to adequately insure the hotel, leaving the owners with a 108 acre wreck and some serious redevelopment costs.
Let’s leave that one there for a moment and introduce a Mr. R. Allen Stanford, Texan financier and self-proclaimed relative of Leland Stanford, the founder of Stanford university. The more you read about Allen Stanford the more you realise what a shrewd and somewhat slippery character he was – slippery enough for Stanford University to file a trademark infringement lawsuit against him and deny any and all relationship.
Stanford’s business love affair with the Caribbean began in the 1980s with a private bank based on Montserrat, but he was forced to abandon operations there after the Crown tightened up offshore banking regulations in an effort to discourage money laundering. Stanford moved to Antigua, and ran a successful
investment business Ponzi scheme, encouraging investors to part with their money by presenting hypothetical returns as historical data. At it’s peak, the Stanford Financial Group had over 21,000 investors and managed US$14 billion, making Stanford one of the richest American citizens with an estimated personal value of over US$2 billion.
So what does one do with all that money? Buy things. Starting with – naturally – a bank, an airline, a newspaper, a cricket stadium. How about your own sporting event? 2006 saw the inaugural round of the imaginatively titled Stanford Twenty20 series, culminating in a match between the England cricket team and Stanford’s own West Indies All Stars. A prize fund of £12.27 million – the highest ever offered in a single tournament – was scooped when Stanford’s team won by 10 wickets. But no matter how many private jets and island retreats you own, you’re not a proper Caribbean billionaire until you have …
Your own government. Stanford gave Antigua’s governing body huge piles of money, estimated at around US$65M, presumably to lubricate the process of buying and developing large chunks of the island. Some of these “loans” would in the course of time be written off or repaid from dubious sources, as is the case concerning a new US$30M hospital, the construction of which was funded in part by a loan given through Stanford’s bank and then repaid from Antigua’s social security kitty. Amazingly, local residents were more angered by the fact that the Chinese contractor supplied their own workforce, depriving the local economy of much needed jobs.
Meanwhile back in Half Moon Bay, HMB Holdings are doing all they can to raise finance and restore the damage caused by Hurricane Luis in 1995, but are blocked at every attempt by the prime minister Lester Bird, who suggests what a nice idea it would be for them to sell the property to Stanford. HMB Holdings refuses to sell, and as years pass the government’s efforts take their toll, until the British firm which originally agreed to finance the redevelopment gets cold feet and pulls out. It’s at this point that the government simply takes the property by force, citing eminent domain, a form of compulsory purchase entitling the governing body of a state to claim any property as long as it’s in the public interest, and as long as the owners are fairly compensated.
HMB Holdings however are not compensated, fairly or otherwise, and take the matter to the Privy Council in London for appeal. Election time looms, and the up-and-coming United Progressive Party (UPP) under Baldwin Spencer not only condemns the expropriation of Half Moon Bay, but promises under oath to reverse the forced acquisition should his party win the elections. The UPP do win, but Spencer surrounds himself by ministers who have their own agendas and fails to make good his promise.
In 2005 the Attorney General authorises the title of the property to be transferred to the Crown while an answer is awaited from the Privy Council, but somehow the land registry shows the legal owners now to be the government of Antigua and Barbuda. The same government at this point owes Stanford around EC$230M. Being the great philanthropist he is, Stanford agrees to write off EC$50M and channel EC$36M into projects which ultimately are never completed. In return Stanford is given the green light for “a number of developments” as well as a new moniker: Knight Commander of the Order of the Nation (KCN) of Antigua and Barbuda, and starts calling himself Sir Allen in public.
By 2006 the government is well and truly mired (Antigua and Barbuda has one of the largest per-capita debts of any nation), so the Attorney General proposes a settlement with HMB Holdings: you can have the title back, but we’ll retain a lien on the property. Sign here. Only they didn’t, so in an effort to raise money the government goes to Tony Blair in order to ask the British premier for Foreign Direct Investment. Government officials are entitled to substantial, personal “finders fees” for securing investment.
A decision is reached by the Privy Council in 2007: The Half Moon Bay resort is a property of substantial value and the government is within their rights to acquire, as long as “fair compensation within a reasonable time” is provided. The government take physical possession of the property in 2008 but the owners have to file court action in order to even begin the dialogue over compensation, and events take a turn for the worse before a deal can be brokered with Stanford.
In 2009, R. Allen Stanford is arrested and jailed by the US government for his part in running a US$9B Ponzi scheme. Never one to quit, he issues a counter-claim of US$7.2B against the FBI and SBC for damages to his business, while local investors form queues outside his bank and the government hastily claws back the land which it sold him at cut-price rates before US receivers can step in. It also seizes Stanford’s Bank of Antigua and gives it to a newly created financial authority, of which it is the biggest shareholder. Then, in a rare moment of PR clarity, they revoke his knighthood and insignia.
Stanford is convicted on 13 out of 14 fraud charges in March 2012 and sentenced to 110 years in June 2012. US$330M remain frozen in accounts in Canada, England and Switzerland, while politicians including Barack Obama decline to return contributions made to them.
While it’s easy to feel sympathy for Stanford’s many victims you have to bear in mind that they’re at least partially to blame for their own predicament. If somebody offers you an offshore investment opportunity with fantastic gains that looks too good to be true, then it probably is. Instead my undivided sympathy lies with Natalie Querand and the other executives of HMB Holdings Limited, whose property representing decades of hard work was effectively stolen by the government of a Crown protectorate while the world stood by and watched.
At time of writing, the government of Antigua and Barbuda owes HMB Holdings a total of US$66 million, while interest continues to accrue at a rate of US$388,000 per month.
And Stanford? I’m unsure of my feelings for him. It’s easy to jump on the bandwagon and start baying for the guy’s blood, but at the back of my head there’s a small voice telling me that’s exactly what “they” want me to think. What he did was dishonest, cunning, and just plain wrong on a monumental scale – I accept that – but it must also have involved tremendous amounts of intelligence and hard work. Think about it, in roughly 20 years he built an empire of 800 staff and 14 billion US dollars. That can’t have been easy. There are probably drug cartels and international crime syndicates that would find it hard to match those figures, I don’t know, but ultimately I suppose people like Stanford deserve the same kind of wary respect as the Ebola virus or Irukandji jellyfish. He worked hard, but was also cunning, deceitful, corrupt, and took vast sums of money from ordinary, decent people. Much like the Antiguan government.