ETF News

Chavez aids Antigua after Stanford fraud scandal

* Venezuela provides $50 million cash boost to Antigua

* Caribbean state still reeling from Stanford scandal

* Antigua has joined Chavez’s ALBA trade alliance

MIAMI, Aug 13 (Reuters) - The tiny Caribbean state of Antigua and Barbuda, still reeling from the fraud scandal surrounding Texas billionaire Allen Stanford, on Thursday found a new foreign benefactor in Venezuelan President Hugo Chavez.

Prime Minister Baldwin Spencer told the nation in a broadcast that the leftist Venezuelan leader was providing $50 million in urgent financial assistance to the twin-island state, which was at the heart of Stanford’s far-reaching business empire that collapsed in February.

“Today, I am pleased to advise the nation that at one o’clock this morning President Hugo Chavez signed the necessary paperwork to approve the immediate transfer of the full amount of $50 million to the government’s call account at the Eastern Caribbean Central Bank,” Spencer said in his address.

Spencer, who led his Caribbean country to join Chavez’s ALBA alliance of leftist Latin American states just two months ago, said the funds would be used to help Antigua and Barbuda confront the effects of the global financial crisis.

He said the Venezuelan emergency help came “completely without precondition”, but gave no details of the terms.

Antigua and Barbuda Finance Minister Harold Lovell said in a statement the Venezuelan assistance would involve “some grant element and a loan on very concessionary terms”, although he added the terms were being finalized.

Stanford, a flamboyant sports entrepreneur who was granted a knighthood by Antigua and Barbuda and was once its biggest investor, faces U.S. civil and criminal charges related to an alleged $7 billion fraud that prosecutors say was centered on certificates of deposit issued by his Stanford International Bank in Antigua. Venezuelan investors were among those who suffered losses.

U.S. prosecutors have accused Antigua’s former chief financial regulator, Leroy King, with abetting the fraud. Investors from the United States, Mexico, Colombia and Peru are suing the tiny Caribbean state for up to $24 billion in damages, alleging it was a “partner in crime” with Stanford.

Antigua and Barbuda’s government denies this. It says the Stanford scandal badly hurt the economy of the small state of around 85,000 people, causing losses and layoffs and damaging the nation’s image as an offshore finance destination.


Antigua and Barbuda is the third member of the 15-nation mostly English-speaking Caribbean Community (Caricom) to join Chavez’s ALBA, an alliance which critics say the outspoken Venezuelan president uses to try to counter U.S. influence in Latin America.

Some Caricom leaders have expressed concern about its members joining the Venezuelan-led alliance, saying this threatens Caribbean unity at a time when the region faces huge challenges posed by the global economic crisis.

But others say it is precisely these pressures, such as falling revenues from tourism and remittances, which are forcing small Caribbean states to seek beneficial alliances.

Acknowledging Antigua’s financial woes, Finance Minister Lovell said $35 million of the “generous and timely” Venezuelan support would be used for “budgetary support”, $7 million would be employed for “economic stimulus’, while $6.5 million would go toward improving administration of revenues and spending.

The remaining $1.5 million would be used to fund activities and programs that provide social protection for the poor and unemployed, Lovell said.

Antigua and Barbuda is also a member of PetroCaribe, a regional group set up by Chavez that allows poor, oil importing countries in the region to buy Venezuelan oil on credit.

Analysts say the Venezuelan president, an ally of communist-ruled Cuba and fierce critic of U.S. policies, uses this “petrodiplomacy” as a tool to extend his political influence and woo allies and votes in world forums. (Editing by Tom Brown and Philip Barbara)