Banking scandal hits Panama

On Tuesday the Superintendency was notified that the only shareholder of the Texas Bank, Robert Allen Stanford was being investigated by the US Security Commission after he allegedly managed to fraudulently obtain $8 billion from 50,000 investors, the majority of them from the Houston area.

Once the news was released in the media, bank’s customers panic and started to withdraw funds from the bank.

Panama was no exception and the two branches of Stanford Bank in Obarrio and Punta Pacifica were besieged by worried customers who tried to empty their accounts going to cashiers and ATM machines.

As a way to save the financial institution and stop the panic, The Bank Superintendent decided to stop operations on Tuesday and appointed as interim administrator, Ramon Martinez Stagg, who was the Executive President of Stanford Bank, in Panama on Wednesday.

The decision was taken after the management of the bank explained the delicate situation they were in after its only shareholder was accused of fraud.

Currently federal authorities are searching for R. Allen Stanford and went to his house in Houston, but it was dark and the entrepreneur could not be located at his office.

U.S. Marshals seized control of the offices yesterday, and SEC investigators are claiming Stanford and his close associates defrauded tens of thousands of investors out of billions of dollars, persuading them to invest in seemingly safe CDs -- certificates of deposits -- but faking double-digit returns.

In December, two former employees of the Houston-based firm left Stanford and filed a lawsuit, saying they were forced to resign once they discovered the financial impropriety.

Meanwhile in Panama the banking sector has been shaken by the Stanford Bank news and is trying to analyze the decision of the Banks Superintendent. however the administration insists that the Stanford Bank situation is an isolated case and was a product of decisions made by a foreign government and not because of a deterioration of the financial situation of the bank in Panama.

The Banking and Economic Business Consultant, Ricardo M. Alba said that the measure taken by the Banks Superintendent was justifiable, because it had a legal base, especially when the main shareholder of Stanford Bank has been accused in the United States of banking fraud.

“It was necessary to take preventive measures to stop massive withdrawal in Panama,” said the consultant.

The Banks Superintendent has refused to give any further explanations about the fate of Stanford Bank in the near future.

The measures in place will continue for the time being.

See “Wrong Horse” page 3.