The Cantrade Bank Scandal
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Offshore Scams
The Cantrade Bank Scandal |
The story on this web page about Cantrade Bank in Jersey (one of the U.K. Channel Islands) was published in November, 1998. In April, 2002 we received a letter stating that the problems associated with Cantrade Bank have been resolved and that there are new officers. We had originally stated that if anyone had any information contrary to our story we would publish it, so here is the statement we received from J.G. Barlocher, Managing Director, Cantrade Private Bank Switzerland (C.I.) Limited, Jersey -- addressed to John Christensen of the Association for Accountancy and Business Affairs, with a copy to Offshore Press, Inc.
"Dear Mr. Christensen:I am the current managing director of Cantrade Private Bank of Switzerland (CI) Limited. My attention has been drawn to the information on your web site regarding the Bank.
There are numerous inaccuracies in that information, but my main concern is that your web site gives the impression that the matter is still ongoing and, in particular, that investors who suffered losses remain uncompensated. I feel that this should be corrected.
The true position is that certain investors in the Troy Trust Service who suffered losses accepted compensation as early as 1997 from Cantrade in respect of those losses. The remaining investors accepted compensation as early as 1997 (totaling approximately $28 million) from Cantrade and from Touche Ross in October, 2000, following which the civil court action was discontinued.
The criminal proceedings against Cantrade wes concluded almost four years ago, in May, 1998, when the bank was fined £3 million for four counts of recklessly (but not dishonestly) misleading investors, and two individuals, not from the Bank (one was a Touche Ross, UK partner) were imprisoned for making statements which they knew to be misleading.
Since July, 1998, the Bank has been regulated by a new body, the Jersey Financial Services Commission and the Bank's management team has changed completely from that involved in the events which led to the civil and criminal proceedings.
It is not for me to suggest to you whether or not this is still newsworthy, but I trust that you will at least ensure that the information on your web site is accurate.
Yours faithfully,
J.G. Barlocher
Managing Director"
Here is the story as originally published on this web site in 1998.
According to the English public interest group, The Association for Accountancy & Business Affairs,
"In 1988, 90 investors placed their collective money and trust in a bank called Cantrade, a subsidiary of the huge triple-A rated Swiss UBS bank group, in the offshore island of Jersey in the English Channel. They trusted a British currency trader called Robert J. Young, highly recommended and touted by Cantrade bank as being honest, astute and profitable. They trusted the bank to monitor the trades and the 10% downside limit agreement between trader and trustee, and to report to the trustee any breaches or losses. They trusted Certificates issued by a Partner of one of the world’s Big Six auditing firms Touche Ross (UK), now Deloitte & Touche, which confirmed the false multi-year performances of the trader as being consistently profitable from 1990 onwards. They trusted, too, the Jersey Island authorities who projected a mirage of their offshore haven as being a secure, well-regulated financial centre.
"On all counts, the investors’ trust was misplaced.
"The investors lost almost all their money between 1988 and 1993. There were secret charges applied by the bank, shared with the fraudster Young, resulting in massive churning which was covered up by the bank, Young, the Touche partner and the Jersey government. The investors have been fighting to recover their money ever since, against overwhelming odds. The losses, originally over $17 million, have now, after some 10 years, compounded into a claim of approximately $90 million.
Cantrade Bank Pleads Guilty To Criminal Charges
"The civil case has had to wait a long 5 years for the criminal case to be concluded, the handling of which by Jersey’s Attorney General has been roundly criticised as a result of an extraordinary event: most of the criminal charges were unnecessarily time-barred or dropped altogether.
"Cantrade finally pleaded guilty to 4 of 33 criminal charges in a mysterious out-of-court plea-bargain in 1998 which avoided their crimes from being exposed at public trial. The bank was fined a paltry £3 million (about US$5 million), the judge calling the bank’s conduct “deplorable”. Amazingly, only one bank employee was charged, and even those charges were dropped as part of Jersey’s “deal” with the bank. This, in spite of the bank’s own lawyers admitting that another bank officer (Jersey-born) had been involved in “corrupt arrangements” with the convicted fraudster Young (in 1998 Young was convicted of fraud and sentenced to 4.5 years in jail).
The UBS - A Deplorable Bank
"(Holocaust, Illegal Shredding, Fraud and Corruption)
"The UBS has recently been the subject of headline news concerning its 50-year theft of holocaust survivors’ monies and the illegal shredding of important holocaust-related documents.
"For many years this bank proudly owned a series of front-companies called Edsaco, represented in Jersey and other offshore centres. In April 1996, London’s Serious Fraud Squad raided Edsaco’s offices. Late in 1997 Edsaco was sold to unknown investors and provided with the new name of Chiltern under the management of the ex-General Manager of the UBS in London.
"According to Barron’s (August 25th 1997), Edsaco provided camouflage for people engaged in fraud and money-laundering. And that’s just the tip of the iceberg: other newspaper reports (The Independent, Daily Telegraph, The Times, etc.) have painted a picture of Edsaco as a front for members of the Mafia and for people and governments involved in extortion, bribery, corruption, kidnapping and murder. It doesn’t paint a pretty picture of UBS-Cantrade’s activities and associations.
"Against this background, UBS-Cantrade’s fraud in Jersey may appear to be small potatoes: but they’re not small to the defrauded investors. Here is a bank which regularly, over 5 years, helped themselves to $17 million of the investors’ money but never reported any losses, or breaches of the 10% downside limit, to their client the trustee.
"In July 1992, a junior Cantrade bank officer wrote a memo to top management, warning of the losses and raising concerns of the bank’s responsibilities. The management ignored the warning. Instead, they
Cantrade, Jersey Bank Regulators, Attorney General: Thick As Thieves?
"In fact, there are some who believe that Jersey’s bank regulators, Chief Adviser and the Attorney General conspired together with UBS and Cantrade and worked out a scheme in advance whereby most criminal charges against Cantrade would be time-barred and Cantrade officers would be let off completely, while fraudsters Young and the Touche Ross Partner would be the only ones conveniently put in jail.
The Touche Ross Cover-Up - A Disgrace To The Profession
"The auditor in the scandal had a Partner named Alfred G. Williams. Williams was convicted in 1998 to a 1.5 year prison sentence for his role in the fraud. Williams had lied when he claimed Touche Ross had “audited” the false figures of convicted currency trader Young between 1990 and 1993. Williams had also issued signed Touche Ross certificates confirming profitable performances when there had only been huge losses.
"In answer to a question at an investment conference in June 1993 “Does Touche Ross audit the Troy Trust Service ... and if so, how often” the Touche Ross Partner’s blatant lie was tape-recorded as follows:
The Jersey Government
Cover-Up Of Fraud &
Hostility To Defrauded
Investors
"In September 1994, the defrauded investors and the plaintiffs wrote to the Jersey bank regulators, the Jersey Attorney General and other authorities, demanding an investigation into Cantrade bank and its connections with Young. The regulators inexplicably refused.
"The real reasons for the government cover-up became clear when certain facts surfaced. First, the bank regulators were and are responsible for the promotion of Jersey’s finance industry. Second, two of the bank regulators were connected to Cantrade but did not recuse themselves when the regulators flatly refused to investigate the bank: one was a former Director of the bank, and the other the senior partner of the law firm which advised the bank. Third, the bank regulators coincidentally provided Cantrade’s parent, the Union Bank of Switzerland, with a branch licence in October 1994, bringing with it billions of dollars. Fourth, a bank regulator’s File Note dated December 19th, 1994 recording their meeting to discuss the demands to investigate, stated that any such investigation of a “Swiss bank” was a “very serious matter”, that it would “unavoidably become public knowledge”, and that “this could be damaging to the Committee and the finance industry”.
"The Jersey government’s actions, injustices and cover-up of fraud over the last 10 years are unethical, criminal, short-sighted and against the interests of the Jersey people. As one honest Jersey official put it (November 1997): “I find it simply extraordinary that a situation can have developed whereby members of the island’s legislature, its Crown Officers, and civil servants are now seen to be, effectively, on the same side as the alleged criminals.” and “the authorities are seen to be desperately doing all they can to defend a company and individuals who appear to have been engaged in long-term racketeering and large-scale fraud.” and “It does not take a stroke of genius to recognize that certain politicians, civil servants and Crown Officers now have a strong common interest in seeing Cantrade completely exonerated.”
Jersey Government Investigated
"As a result of 5 years of effort by investors and plaintiffs, the
entire Jersey government has now been investigated by the UK
government. However, the UK “Review” of Jersey’s Financial
Regulations completely ignores the lack of separation of powers between
the judiciary, legislature and executive which inevitably lead to the
corruption and conflicts of interest which permeate throughout Jersey.
One ethical Jersey official put his finger on the problem:
Jersey Regulators Still Trying To Whitewash Cantrade’s Crimes
"After the results of the criminal trial, the FSC saw fit to issue a “Review” of Cantrade bank but their “conclusions” are as disappointing as they were predictable. They strenuously defended their position of refusing to investigate the bank in 1994 when requested to do so.
"There was no sign of penitence for the plight of those whose monies had vanished in Jersey. There was no mention of the Cantrade-Young series of crimes or how to prevent them from occurring in the future: the secret charges, the churning, the sponsorship and support of the fraudster-trader, cover-up of the warnings of a fraud-in-process by an honest junior bank officer, or the suspicious antics of the Attorney General. Instead, the Jersey Regulators have attempted to exonerate themselves and whitewash Cantrade’s crimes by claiming that the criminal fine was adequate punishment: to add insult to injury, they even mimicked Cantrade’s deception by claiming that the bank had “offered all investors full recompense” - nothing is further from the truth.
Angry And Determined Investors
The investors, the majority of whom are American, are angry. They have been deprived of their money for some 10 years. They are expressing their anger through the internet and by writing to their Congressmen, Senators, and Financial Officials of US States and cities, notifying them of the unethical, immoral and dishonest treatment they have received at the hands of UBS-Cantrade, Touche Ross and the Jersey “government”.
International TV Networks
And The Press Are Looking Forward To The Civil Trial
"It was bad enough for the plaintiffs and investors to have to take on one of the largest banks, and one of the largest auditing partnerships, in the world. But to be forced as well to take on Jersey’s hostile government and dishonest regulators amounted to having to fight City Hall itself. The odds looked insuperable 5 years’ ago.
"The story is one of massive fraud, cover-up and intrigue at the highest levels. Overwhelming evidence, the free press, and dogged persistence have now turned the tide. The civil trial will finally expose many of the on-going, unhealthy aspects of Jersey’s financial, regulatory, government and judicial structures; and expose the multi-year premeditated fraud perpetrated by a deplorable bank subsidiary of the Swiss UBS. "
END
Additional background information on this story and any recent developments will be at the web site of the Association for Accountancy & Business Affairs (http://visar.csustan.edu/aaba/aaba.htm)
We have received confirmation of the story by a source who is close to one of the investors in this scheme. If anyone can provide any contradictory information that can be confirmed, we will publish it.
Offshore Press, Inc. (Formerly Research Press, Inc.)
Sponsored by Offshore
Press, Inc., . Copyright, 1998, all rights reserved. Research
Press, Inc., Box 8194, Prairie Village, KS 66208. (913) 362-9667.
Date of last revision 11/23/98