Stanford 'was informant for US anti-drug agents'

Authorities accused of turning a blind eye to financier's banking business

Sir Allen Stanford, the Texan billionaire who ploughed millions of pounds into English cricket, may have been working as an informant for American anti-drug agents in return for official protection which gave him free rein to run his banking empire, it emerged yesterday.

An investigation into the financier has found that just $500m (£331m) of the claimed $7.2bn of deposits held by his Stanford International Bank, based in Antigua, has been traced by a UK-based receiver who was called in by authorities when fraud allegations were laid against Stanford in February.

The resulting $6.7bn hole in the bank's balance sheet, which leaves 28,000 depositors – including 200 Britons – with near-worthless investment certificates, raises serious concerns about the extent to which officials in America and Britain were aware of Stanford's personal finance issues and the activities of his banks long before the current economic crisis. A BBC Panorama programme, to be screened tonight, alleges that the 6ft 4in-tall businessman may have been allowed to run his banking business unfettered for up to a decade because he was passing information on to America's Drug Enforcement Administration (DEA) about the money-laundering activities of drug baron clients from Colombia, Mexico and Venezuela.

His status as a confidential informant could have secured Stanford a degree of protection from financial regulators such as the US Securities and Exchange Commission (SEC) and may explain why a SEC investigation into his dealings in 2006 was quietly dropped following a request by another American government agency.

A source close to the DEA told Panorama: "We were convinced that Stanford's bank attracted millions of narco-dollars but it was very difficult to get the evidence to nail him. The word is that Stanford has been a confidential informer for the DEA since at least 1999."

Confidential documents show the British Foreign Office and the American authorities also knew as early as 1990 that Stanford, who was once listed as the 205th most wealthy man in the United States with a personal fortune of $2.2bn, had been made personally bankrupt in 1984 after his first business, a chain of health clubs, went bust.

British authorities ceased their investigation into Stanford after he moved his operations from the volcanic island of Montserrat, a British overseas territory, to Antigua, which has been independent from the UK since 1981.

Stanford, 59, shot to prominence last year when he signed a multimillion-dollar deal to sponsor a Twenty/20 cricket tournament, culminating in a $20m match between England and an all-stars West Indian team. The billionaire was famously allowed to land his helicopter on the hallowed turf of Lords.

He vigorously denied all allegations of wrongdoing when the SEC froze his assets and accused him of orchestrating a "fraudulent, multibillion-dollar investment scheme" which effectively used the money of new investors to pay large dividends to existing depositors. The Texan has vowed to return money to all depositors and ruled out running a pyramid scheme.

The Foreign Office said it was not responsible for the investment decisions of individuals. But a spokesperson said: "The UK Government does take financial malpractice very seriously."

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
health
Sport
A view of today's Spanish papers
football
Arts and Entertainment
Serge Pizzorno of Kasabian and Noel Fielding backstage at the Teenage Cancer Trust concerts
musicKasabian and Noel Fielding attack 'boring' musicians
Arts and Entertainment
Pink Floyd on stage at Live 8 in 2005. From left to right: David Gilmour, Roger Waters, Nick Mason and Rick Wright
music New album The Endless River set to overtake boyband for most pre-ordered of all-time
Arts and Entertainment
The last great picture - Winner 'Black and White' and overall 'Wildlife Photographer of the Year'
art
News
videoWatch Lynda Bellingham's tragic final Loose Women appearance
Arts and Entertainment
Benedict Cumberbatch films his performance as Smaug in The Hobbit: The Desolation of Smaug
film
News
people

Sport
nflAtlanta Falcons can't count and don't know what the UK looks like
News
i100
Arts and Entertainment
High notes, flat performance: Jake Bugg
music

Review: Despite an uphill climb to see Jake Bugg in action, his performance is notably flat

News
The Putin automaton will go on sale next month in Germany
videoMusical Putin toy showing him annexing Crimea could sell for millions
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

PE Teacher, Full Time Role, Gillingham School

Competitive Salary: Randstad Education Group: We are urgently seeking an exper...

Telecoms Engineer - Telecoms Admin - £35,000 - 5 month FTC

£35000 per annum: Ashdown Group: 5 month Fixed Term Contract - Telecommunicati...

Norwegian Speaking Trainee Recruitment Consultant

£18000 per annum + competitive OTE: SThree: Progressive in Manchester is seeki...

IT Systems Business Analyst - Watford - £28k + bonus + benefits

£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

Day In a Page

Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Ed Sheeran hits back after being labelled too boring to headline festivals

'You need me, I don’t need you'

Ed Sheeran hits back after being labelled too boring to headline festivals
How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

How to Get Away with Murder

Shonda Rhimes reinvents the legal drama
A cup of tea is every worker's right

Hard to swallow

Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
Which animals are nearly extinct?

Which animals are nearly extinct?

Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
12 best children's shoes

Perfect for leaf-kicking: 12 best children's shoes

Find footwear perfect to keep kids' feet protected this autumn
Anderlecht vs Arsenal: Gunners' ray of light Aaron Ramsey shines again

Arsenal’s ray of light ready to shine again

Aaron Ramsey’s injury record has prompted a club investigation. For now, the midfielder is just happy to be fit to face Anderlecht in the Champions League
Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

Moyes’ show of sensitivity thrown back in his face... by Ferguson

Manchester United legend tramples on successor who resisted criticising his inheritance
Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

Lonely Planet’s Best in Travel 2015

UK city beats Vienna, Paris and New York to be ranked seventh in world’s best tourist destinations - but it's not London