Legal endgame looms over remains of Stanford empire

Click to follow
The Independent Online

A monumental legal battle over the liquidation of the business empire of alleged fraudster Sir Allen Stanford will come to a head in the Caribbean courts this month.

Liquidators at Grant Thornton, PricewaterhouseCoopers and Zolfo Cooper have been lined up to replace UK-based insolvency firm FRP Advisory to unravel the remaining assets of Stanford International Bank. This was the Antigua-based bank that is at the centre of an alleged Ponzi-style fraud scheme that could have lost investors up to $7bn.

This also earned Sir Allen, who was best known in the UK for his outlandish $20m winner-takes-all cricket tournament, a criminal trial in the US. However, this has been delayed due to the Texan's medical condition.

Nigel Hamilton-Smith and Peter Wastell of Vantis were appointed joint liquidators by the Antiguan courts, but were stripped of the role last June. Alexander Fundora, a Stanford investor – and alleged victim who lost $2.7m – challenged the appointments. His team successfully argued that the liquidators' destruction of valuable computer data in Canada warranted their removal, although most creditors continued to support the appointments.

Later that month, Vantis went into administration and the business recovery unit was bought out by management. Mr Wastell and Mr Hamilton-Smith transferred to the renamed FRP. Since then, FRP has tried to get permission to appeal, with the case moving back-and-forth between the Antigua High Court and the more senior East Caribbean Court of Appeal.

Last month, FRP was granted that right of appeal, but Mr Fundora's legal counsel are counter-challenging that ruling later this month. If FRP loses, Mr Fundora's team has lined up Marcus Wide of PwC in Canada, Hugh Dixon of Grant Thornton in the Cayman Islands and William Tacon of Zolfo Cooper in the British Virgin Islands as potential replacements. Mr Fundora, based in Miami, has previously endorsed Mr Wide's appointment, but was told by the courts that three options would need to be submitted so a fair choice could be made.

Further complicating matters is a jurisdictional battle over the unwinding of assets with the receiver in the US, Ralph Janvey. FRP has come to an agreement over who can recover what from which territory, but the other three parties seem likely to want to retain seniority over creditor claims.

Despite the legal machinations, FRP has continued to try to rescue the remaining assets. Mr Hamilton-Smith said: "Regrettably, given the worldwide nature of SIB and Allen Stanford's personal affairs, the liquidation was always going to be a complex and time consuming affair."