PM Mitchell named
in St Vincent bank scandal

Following the Attorney General's resignation and an unsuccessful investigation which critics refer to as "Government's damage control," PM Mitchell's job is on the line.

On the surface it seems to be a tale of simple mis-management and corruption, but when the state owned bank is consistently treated as Government's "cash cow," easily falling prey to money losing projects endorsed by high level public officials, the discussion begins to take on a new twist.
The easy access of Eastern Caribbean government officials to the corridors of high corporate finance has prompted local financiers and depositors to call for a review of Government's role in the Eastern Caribbean's banking system.

Dr Ralph Gonsalves, Deputy Leader of the St Vincent Opposition United Labour Party (ULP), says the deal which ended with the resignation of a Cabinet Minister, was a "million dollar rip-off from the bank," and he called for the resignation of Prime Minister, James Mitchell as well.
Attorney General and Minister of Justice in the Government of St Vincent and the Grenadines, Carlyle Dougan, Q.C, last month submitted his resignation to Prime Minister Sir James Mitchell after a recent scandal involving the honouring of a forged certified cheque by the state-owned National Commercial Bank (NCB). According to bank sources, a foreign businessman was able to present the cheque and receive payment, before the mandatory clearing period for foreign cheques because of the influence of "a highly placed government official."

The two incidents involving Government Ministers cost the bank several million US dollars and local business and finance executives have raised the question of just how much influence, if any, should politicians have on the policies governing banks. Gonzalves says there are many unanswered questions about the deal and despite the bank being able to identify the conspirator it was still unable to reclaim the money. While accusing the Mitchell administration of covering up the facts about the transaction, he said a satisfactory answer about the role of the former Attorney General in the deal has not been put forward. He especially highlighted the question of whether Dougan's recommendation of the foreigner to the Bank, influenced NCB's decision to go against standard banking policy of waiting six weeks before clearing transactions involving foreign currency cheques.

On May 17, 1996 the businessman, identified as Bienvenido Bencosome-Adames, opened an account with a cheque for US$431,950.68. On May 24, 1996 Nations Bank in Florida, USA confirmed that the cheque issued by Chemical Bank in New York was cleared on May 21. NCB received information in this clearance of the cheque by tested telex on 24 May and reconfirmation was also made on 28 May. After receiving such confirmation, NCB went ahead and made payments from the account, ignoring its normal six week waiting period for foreign cheque payments. Bencosome-Adames, given clearance by NCB, wrote cheques to two US companies through the European American Bank, which has a similar name to an off-shore company registered in St Vincent which listing him as a director (The European American Trust Co Ltd.) He also sent US$198,000.00 to Moonlit Consultants Incorporated and US$99,550.00 to Granite Management Incorporated. After completing these transactions, he subsequently left the country.

Several days later, on June 10, however, NCB received an urgent letter from Nations Bank informing them that the endorsement was fraudulent. Despite Gonzalves strong accusations to the ruling party, he was careful not to name the "highly placed government official" referred to by bank sources.

However, in responding to Gonzalves claims that a "highly placed government official" introduced the "con-man" to the bank, the Attorney General demanded a national apology from the Opposition member.
"The public might have seen and heard Ralph Gonsalves say that sometime ago an Italian was sent by the Prime Minister's office to me, and using my influence, as Attorney General, I forced the National Commercial Bank to open an account in the Italian's name," stated Dougan, "that simply is not true."
Dougan, who has since returned to private law practice, said that Gonsalves' conduct suggests that he would rather rely upon scanty and inaccurate information instead of investigating matters thoroughly.

In denying the allegations, Dougan explained that he was visited by a businessman from the Dominican Republic who lived in New York. He said that the man was referred to him because he was interested in investing in government projects in the country. He was also interested in purchasing land and some boats to get into tourism.
Dougan said he had the identity of the businessman checked and was assured that he was from the Dominican Republic. He however did not reveal the man's identity in his public statement. He then referred the foreigner to two reputable banks in the State and to the Law Firm of Dougan and Delves. "I'm astounded by Gonzalves' statement that I forced a bank to open an account. Gonsalves should apologize to the people of this country and to me, because if he doesn't respect himself he ought to respect me and the office that I hold," says the AG. But Gonsalves stood by his word and instead, three days later, Dougan offered his resignation to the Prime Minister.

According to Gonsalves the disbursements also included US$5,000.00 to the Law Firm of Dougan and Delves; US$30,000 to the NCB account of Mrs Elma Dougan - the wife of Carlyle Dougan; and US$40,000 to Irvin Findlay. Bank sources were still bewildered, because after accepting Dougan's resignation, Prime Minister Mitchell came down heavily on bank officials for leaking information about the transaction. The PM said he was concerned about confidentiality in the banking institution and he blasted NCB for allowing a bank transaction to be leaked to persons outside the bank. "As Minister of Finance, Mitchell said that some re-examination would have to be made as to how the leak was made. As long as I am Minister of Finance, I would insist that the business of citizens remains confidential." He acknowledged that in order to ensure that such procedures are honoured, proper institutional arrangements would need to be enforced.
"All this tells me is that institutional arrangements for the bank will have to be strengthened," says Mitchell. "Anyone working in a bank at any level who divulges the bank's business should themselves, in their own conscience, question their own right to be employed. He told the country to take note of any politician who, for the purpose of advancing his own political agenda, ignores bank confidentiality in an attempt to destroy another's character." But before concluding his statement, Mitchell declared that he is deeply concerned with the image of the country as a place to do business.

"As Minister of Finance I have the national responsibility to ensure that the banking system of this country maintains its integrity, confidentiality and principally, level of service to the small people of this country."
"Any member of cabinet who attracts criticism to his office and the cabinet as a result of his action has only one proper course - and that is to step aside." According to Mitchell, the explanation given to him and his New Democratic Party colleagues by Dougan for his "perceived" involvement in the NCB controversy is that he and his wife owned lands at Ribishi which are up for sale and he offered to sell these at EC$10.00 per square foot; but was advised by his surveyor to sell instead at EC$8.00 per square foot. He claimed that the money deposited into the Dougan's Bank account, referred to by Gonsalves, was part payment and deposit for purchase.

"The businessman expressing interest in the land is the person Dougan took to the National Commercial Bank (Bencosome-Adames,)" he said. The PM also defended his former AG against the Opposition Party's allegations that he forced the bank to open the account for Bencosome-Adames. "The NCB accepted the US dollar cheque quite freely. It is not proper to say that the Attorney General forced anyone to accept the cheque," he stated. He also said that he was satisfied that Dougan did not use any improper influences as AG nor set out to mislead NCB. "My acceptance of his resignation is not an indication that the Minister has been guilty of any wrong doing. It is unfortunate that in Carlyle's public statement earlier, he did not explain the proper reasons for accepting the money," Mitchell added. "The transfers that were made by the NCB overseas were done with the full knowledge of those at the highest level in the NCB," Mitchell said.

"What deeply concerns me is that the procedures used by the National Commercial Bank were not triggered by someone using a US cheque to pay transaction when trade was involved. This will have to be addressed when an investigation is carried out." The PM said he was concerned about confidentiality in the banking institution. He blasted the NCB saying that a bank transaction should not be leaked to persons outside the bank. "As Minister of Finance, Mitchell said that some re-examination would have to be made as to how the leak was made. As long as I am Minister of Finance I would insist that the business of citizens remains confidential." He acknowledged that in order to ensure that such procedure is honoured, proper institutional arrangements would need to be enforced. The Prime Minister said steps have already been taken to investigate how the cheque was given clearance so fast and to identify weaknesses in the system for institutional reform to improve confidence in the system.
"Clearly the leaking of confidential information in this case took place at a very high level and I intend to deal with that!"

But the Opposition isn't buying into Mitchell's explanations, Leader of the ULP, Vincent Ian Beache is also demanding Mitchell's resignation, for his role in this transaction, as well as in the financing of another Government project which has cost the bank even more money.
In a public address in August, Beache said, "The political and financial crisis situation in which the James Mitchell administration is leading the country, worsens each day, and he must take the ultimate blame for these disasters!" The Opposition leader challenged Mitchell's statement on Dougan's resignation, urging him to do the honourable thing and resign as well. He alleged that the PM's conduct in dealing with the Ottley Hall crisis was even worse than what Dougan has done and displays poor judgement as a Government leader.

"Should the Prime Minister not be subjected to the same consequences as his AG, for the way he persuaded the bank to advance a loan of some EC$8 Million to Valdetarro to throw away in the Ottley Hall Project?" As Beache went on to recap the events of the Ottley Hall Project, he stated that Mitchell knew that the project was a failure, "yet he used his enormous power as Prime Minister to force the National Commercial Bank to loan one of the companies an additional EC$6.9 million." According to Beache's statement, all these facts, including the EC$17 million invested in the Union Island Project, prove that Mitchell displayed poor judgement. "In my opinion Prime Minister Mitchell's conduct is worse than Carlyle Dougan's, but at least Dougan had the decency to resign from office.

"Prime Minister Mitchell is not prepared to give us information about what is happening at Ottley Hall, but he is still saying that Mr Dougan resigned in the best parliamentary tradition as he brought criticism to his office to government and cabinet, didn't Prime Minister Mitchell bring even more criticism to his office? "We're asking that he should do the same thing in the best parliamentary tradition and resign. The Vincentian public should expect nothing less!"

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