MIAMI, Feb. 5 -- When portly, balding 50-year-old American businessman Van Arthur Brink married a svelte, pretty local woman half his age in a lavish ceremony Jan. 20 in Uganda, thousands of people around the world could have been forgiven for not wishing the happy couple a long and prosperous marriage.
Only eight days earlier, the offshore bank that Brink founded on the Caribbean island of Grenada in 1997 was put into compulsory liquidation with approximately $472 million of debt, owed mostly to depositors who were promised "guaranteed" annual interest of up to 250 percent.
The size of the insolvency of the First International Bank of Grenada and the apparent complicity of Grenada's government, which, inter alia, allowed FIBG to form with initial capital comprising nothing more than a photocopy of a ruby it did not own, makes it one of the biggest offshore banking scandals.
More cynical creditors of FIBG might be wondering whether Brink's marriage to Annet Asiimwe has less to do with true love and more to do with an attempt to obtain Ugandan citizenship in order to avoid possible extradition to the United States.
While Brink has not been charged with any criminal offense, FIBG is being investigated by the Department of Justice in the United States, where most of its victims live.
One of the questions being asked by investigators is how Brink can afford his current luxurious life-style, particularly when, a few years before forming FIBG, he had declared bankruptcy in Oregon under his previous name of Gilbert Allen Ziegler, with liabilities of $1.14 million and assets of $28,440, including just $20 in cash, according to his bankruptcy records.
Brink left Grenada to live in Uganda shortly before FIBG started reneging on its obligations in early 2000 and is reported to own many luxury properties in and around Kampala, including a mansion once owned by former Ugandan dictator Idi Amin.
While FIBG's creditors, including many elderly people, start readjusting their lives after losing their life savings, Brink is apparently spending money like it's going out of fashion and his wedding reception at the Sheraton Kampala Hotel was a no-expense-spared affair, according to a report in the Jan. 21 edition of the New Vision daily newspaper in Uganda.
"The entrance to the reception hall room was patrolled by private and Sheraton hotel security personnel," reported the newspaper. "A New Vision photographer and a reporter who were spotted by the security personnel were held and their cameras searched and a film the security thought contained Van Brink's photos was impounded."
There were about 200 guests, many of whom were invited by e-mail, including local dignitaries such as the Chairman of the Uganda National Chamber of Commerce, Bonny Katatumba, and local mayoral candidate Waswa Birigwa, reported the newspaper.
FIBG creditors will be alarmed to learn that Brink's best man was none other than Douglas Ferguson, a fellow North American who ran a so-called insurer in the Caribbean called IDIC, which claimed to be an arm's length entity that fully insured FIBG's deposits against loss of principal and "a reasonable rate of interest," according to promotional literature.
That coverage turned out to be hogwash, however. Not long after FIBG started reneging on its financial obligations, IDIC disconnected its telephone and fax lines on the Caribbean island of Dominica and issued an announcement on its Web site stating that it had been taken over by a Ugandan entity led byVan Arthur Brink. To date, not a dime in claims has been paid out and few people expect that it ever will be.
Uganda is likely to be the first place that FIBG's newly appointed liquidator, accounting firm PricewaterhouseCoopers, looks at as it starts searching for the bank's missing assets.
When Grenada's government appointed Garvey Louison as FIBG's receiver last summer, he wrote a scathing letter to FIBG's principals, including Brink, accusing them of diverting "many millions of dollars" to Uganda and unsuccessfully asking for the money to be returned.
The collapse of FIBG has severely embarrassed the island of Grenada, whose government has been heavily implicated in the scandal.
Apart from allowing the bank to form with no real capital, the government also allowed it to get away with not filing a single bona fide audit in its almost three years in business and to breach various aspects of Grenada's Offshore Banking Act 1996.
When FIBG was exposed by Miami-based OffshoreAlert newsletter in January 1999, the bank filed a failed libel lawsuit against the publication in the United States and, in support of its position, attached a glowing affidavit from Grenada's then chief offshore regulator Michael Creft.
Creft and Grenada Prime Minister Keith Mitchell also publicly defended the bank after its first auditor, local accountant Lauriston Wilson, was so alarmed by what he found during his examination that he wrote a letter to Mitchell on March 26, 1999, demanding that immediate action be taken to close down the bank in the "public interest".
His letter to Mitchell, which is on file at Grenada Supreme Court, openly questioned the competence and integrity of Creft, going so far as to state that Creft should be placed "immediately on leave to permit a thorough investigation and cleansing of the Offshore Financial Services Sector".
Wilson's letter had no effect, however, and Creft continued to write glowing endorsements of FIBG to anyone who wanted them, including a letter to the Ugandan Parliament on July 27, 1999, describing FIBG as "Grenada's leading offshore bank".
There was another letter to the bank itself in October 1999, stating that the FBI in the United States had cleared of it wrongdoing following an investigation. The accuracy of Creft's claim, however, was questioned when, only a month later, U.S. Assistant Attorney Claire Fay wrote to Grenada's authorities stating that the FBI had uncovered evidence of "fraud and money laundering" involving FIBG and offering U.S. assistance in carrying out a raid on the bank's premises in Grenada.
That raid never took place and FIBG was allowed to continue in business until, at the time of its liquidation, more than $206 million in clients' principal had gone into the bank, which owed another $266 million in unpaid interest, according to a winding-up petition presented to Grenada Supreme Court.
Michael Creft, meanwhile, has resigned his position as the Executive Director of the Grenada International Financial Services Authority.
Prior to being appointed as overseer of Grenada's offshore sector, he worked for 15 years as an economic research analyst in the Department of Highways with the Manitoba provincial government in Canada. As many FIBG creditors are openly stating: "If only he had stayed there!"
(Marchant is the editor/owner of the Offshore Business News & Research newsletter and Web site:http://www.offshorebusiness.com/NEWLN:
