By Calvin Palmer
Venezuela seized a local bank owned by R. Allen Stanford today to stem massive online deposit withdrawals as the impact of the $8 billion fraud case against the Texan billionaire spread through Latin America.
The Venezuelan government said it would quickly sell the bank — Stanford Bank Venezuela, one of the country’s smallest commercial banks — and that it had already been approached by potential buyers.
In recent days, depositors at the bank had worried over the fraud case targeting a sister company, Stanford International Bank, even though the companies’ assets are separate.
Depositors withdrew cash using Internet banking services. The bank takes deposits and makes loans only in Venezuelan currency.
“Most depositors of Stanford Bank Venezuela are from the highest income classes,” Finance Minister Ali Rodriguez said. “They move their funds on the Internet, and this allowed for a massive withdrawal that pushed the bank into a precarious state.”
“The authorities were forced to take the decision to intervene and there will be an immediate sale,” he added.
Industry officials have said the fall of a bank, whose deposits represent only 0.2 percent of Venezuela’s banking system, is unlikely to cause much disturbance in the rest of the sector.
Two days after the US Securities and Exchange Commission (SEC) accused Stanford, 58, of perpetrating “a fraud of shocking magnitude,” SEC officials were still in the dark about his whereabouts — as were close members of his family.
In an interview with the Houston Chronicle, Stanford’s 81-year-old father James said he understood that authorities were searching for his son, but insisted he had no idea where his son could be.
“I’d spoken to him a week or so ago — he’d called — about problems with the business climate in general, but nothing of this magnitude,” he said. “I cannot imagine, I cannot believe, I will not believe what is being alleged actually happened.”
“I cannot believe that my son would run,” he added.
Reports also emerged yesterday that the Federal Bureau of Investigation is investigating whether Stanford was involved in laundering drug money for Mexico’s powerful Gulf cartel.
ABC News, citing unnamed federal officials, said Mexican police detained one of Stanford’s private planes and found checks inside believed to be linked to the ultra-violent cartel.
Stanford and his company Stanford Financial Group invested heavily in politics, spending about $2.4 million in campaign contributions to lawmakers and political committees since 1989, according the Washington-based watchdog group Center for Responsive Politics.
Stanford donated $4,600 to the Obama campaign. The value of Stanford’s campaign contribution has been donated to Chicago Coalition for the Homeless.
The $28,150 that McCain collected since 2000 placed him third among recipients of donation from Stanford and his firm. Sen.McCain (R-Ariz.) also promised yesterday to return the funds or donate them to charity.
The other top recipients of donations include Sen. Bill Nelson (D-Fla.)($45,900) and Republican Rep. Pete Sessions of Texas ($41,375). Nelson received $45,900 and promised yesterday to give his donations to charity. Sessions received $41,375
The center also noted that Stanford Financial Group contributed the most during the 2002 election cycle, when federal lawmakers were debating a bill aimed at curbing financial fraud by better connecting information gathered by state and federal regulators. It passed the House but not the Senate.
[Based on reports by Reuters, AFP, Orlando Sentinel and Chicago Tribune.]
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