CALL THEM CONTRASTING profiles of a modern Caribbean country. With a plethora of economic and social problems of its own making – potholed roads, a problematic sewerage system, water shortages and a mountain of debt – Barbados is still seen in the United Kingdom (UK) and Ireland as a playground of the rich and famous.
Multi millionaire business owners, top corporate executives and prominent professionals – bankers, financial consultants, attorneys, sports stars and media darlings – flock there, often via private jets, luxury yachts or in the airlines’ first or business class accommodation.
Many of them want to be photographed in the blue waters of Barbados and to be written up in many of Britain’s and Ireland’s leading newspapers, magazines and periodicals.
But what many of them often come to abhor later are the titillating and dramatic tales of fraud, sex, lavish spending or high living that cost North American or European firms and individuals tens of millions of dollars.
One such story that attracted headlines in England, Ireland and elsewhere involved several British business executives and a spouse who were found guilty of committing one of UK’s largest bank scams in recent years.
Two former managers of the Halifax Bank of Scotland (HBOS), and their alleged accomplices were found guilty of engaging in an elaborate scam that cost the bank and others as much as $500 million.
Some of the money, according to evidence in Southwark Crown Court in England, was spent in Barbados. It was clear that Barbados had been unwittingly dragged into the affair but no Bajans were involved.
After a trial that lasted several weeks, Mark Dobson, a manager of the HBOS and David Mills and Michael Bancroft, two consultants, were found guilty of orchestrating the massive scheme of fraud, bribery and money laundering.
At the same time, John Cartwright and Allison Mills, wife of David Mills were found guilty of participating in the scheme, while another defendant, Jonathan Cohen was acquitted.
Last year, Lyndon Scourfield, a former HBOS manager, pleaded guilty at an earlier trial.
“It involved millions of documents, a lot of material we had to look at was electronic and, of course, in this day and age, the capacity for electronic media is huge,” said Stephen Rowland, a prosecutor.
“So we had a very large amount of material to work through and to consider.”
Rowland and his team told the court of the sex parties that were arranged as part of the conspiracy, the trips to Barbados, the expensive Cartier watch that was bought for the equivalent of $10 000 in the Caribbean country and given to a participant.
In one case, the schemers flew to Barbados to celebrate the 40th birthday of the wife of a convicted ring leader. The court was told of the lavish meals and accommodation in Barbados. Most of the crimes were committed between 2003 and 2007, but were only recently discovered.
The crux of the case was the elaborate scheme which the bankers and their consultants used to secure financing to rescue troubled businesses in the UK.
For instance, Mills, a 58-year-old consultant was accused of bribing Scourfield, a Halifax bank manager in Reading, Berkshire, by giving him expensive clothes, a designer watch and trips for himself and his wife to Barbados, Ascot and other places in exchange for bank loans to firms which had reportedly hired Mills as a consultant.
Time and again, the court heard, HBOS bank executives provided large loans to private firms in England, supposedly to put them on a firm financial foundation, but the money was siphoned off into the pockets of the consultants who paid for prostitutes, expensive trips to Europe, Barbados and the Mediterranean; hired high-end prostitutes for sex parties in a west London apartment; and put up the corrupt bankers and their wives at luxury hotels in expensive destinations.
“There was a very seedy side to this case and that was indicative of the kind of mindset and the kind of sleazy elements of these kinds of crimes,” said Rowland.
The tragic side of the story is that some of the private firms which sought HBOS financing and used the services of the turn-around consulting firms ended up in bankruptcy anyway.
In one case, a firm’s owner not only lost his enterprise but his private home as well.
In order to get the loan financing, the firms agreed to hire the bank manager’s favoured financial consultant which received hefty fees, but kicked back much of the money to the bank executives.
Many of the internal controls in the bank to prevent fraud and bad lending decisions were apparently ignored.
The convicted felons are set to be sentenced to jail in a few days.
“The Halifax Bank of Scotland fraud trial is highly unusual in that senior bankers are convicted of crimes, including fraud and hiding the proceeds of crime in the boom of irresponsible lending ahead of the 2008 (financial) crash,” stated the BBC.
“The victims were the taxpayers, small businesses customers of the bank and HBOS shareholders.”
The scheme could have been detected years earlier.
The trouble was that the bank’s board, its successor Lloyds Banking Group, the Serious Fraud office and the UK Treasury were all told of the allegation about what was happening in 2007, but apparently failed to investigate the charges.
The matter reached the floor of the British House of Commons where the allegations were debated and the parliamentarians heard allegations of prostitutes being paid from the consultant’s funds.
Just goes to show how small firms faced with the prospect of bankruptcy can make poor and desperate decisions to keep the doors open but end up going under any way.