Anguilla Private Bank Struggles for Answers on Funds
June 24 2016 - 3:01PM
Dow Jones News
By Peg Brickley
A bankruptcy judge in New York balked Friday at authorizing the
questioning of Caribbean banking officials about $175 million
deposited in the accounts of a private offshore bank in
Anguilla.
At a court hearing in the newly filed chapter 11 bankruptcy of
National Bank of Anguilla (Private Banking & Trust) Ltd., Judge
Martin Glenn called for legal arguments on whether he has the power
to order Eastern Caribbean Central Bank, National Bank of Anguilla
and the new National Commercial Bank to answer questions put by
William Tacon, the court appointed administrator of the private
banking operation.
Officials with the banks couldn't be reached for comment
Friday.
Mr. Tacon is in charge of returning money to some 819 depositors
with the private bank, an offshore institution that catered to
wealthy Americans, including some that "have or had" vacation homes
on the tiny island.
The private bank's largest customer has $2 million to $3 million
on deposit, the private bank's representatives told Judge
Glenn.
Mr. Tacon is fighting to keep the names of depositors under seal
in court papers but said Friday most of the funds deposited in the
bank were in U.S. dollars and about half the depositors were U.S.
citizens.
The affairs of the private bank became entangled in the
slow-motion collapse of its parent, the National Bank of Anguilla
Ltd.
Eastern Caribbean Central Bank authorities took over the
National Bank in August 2013, a move designed to stabilize the
operation, according to a statement from Victor Banks, chief
minister of Anguilla. Officials got rid of the officials
responsible for the private bank and directed that funds deposited
with it should go to an account at Bank of America in New York.
"That's where our paper trail ends," James McCarroll, a lawyer
for Mr. Tacon, told Judge Glenn at a hearing in the U.S. Bankruptcy
Court in Manhattan. Mr. Tacon, who was appointed to oversee the
private bank earlier this year, hasn't been able to get answers
about what happened to the money once it got to the New York bank,
Mr. McCarroll said.
National Bank of Anguilla was put in the hands of a receiver and
shut down April 22. Its business was taken over by a new bank owned
by the government of Anguilla, the National Commercial Bank of
Anguilla Ltd.
The private bank has also shut down operations and is
liquidating.
Mr. Tacon wants to question all concerned about the handling of
the private bank's funds during the years when, he believes, both
banks operated under the oversight of regulators, but were
insolvent.
Friday, Judge Glenn said he isn't certain he has the authority
to order Caribbean banking regulators to submit to a U.S.
bankruptcy investigation. Mr. Tacon has already initiated legal
action in Anguilla in his effort to follow the money, the judge
noted.
"You're seeking to jump-start and bypass whatever discovery
restrictions may apply in Anguilla by taking 2004 discovery in the
case before me and I have concern about that," Judge Glenn said. By
2004 discovery, the judge referred to a powerful tool in U.S.
bankruptcy law that allows those involved in a case to conduct
investigations.
"We're hitting stone walls...left and right," Mr. McCarroll
said, explaining the trouble Mr. Tacon has faced getting
information in Anguilla.
Mr. Tacon, however, did win an order authorizing him to get the
records from Bank of America that relate to transfers of deposited
funds from the private bank. Some of that money may still remain in
the New York account, he said.
Write to Peg Brickley at peg.brickley@wsj.com
(END) Dow Jones Newswires
June 24, 2016 14:46 ET (18:46 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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