Did disgraced financier R. Allen Stanford cut a business deal last fall with the government of Libyan leader Muammar el-Qaddafi?
Last November, Stanford may have met with a representative of the Libyan government to discuss Libya's interest in putting a significant investment into Stanford's offshore bank in Antigua. Soon after the meeting, which took place in Washington, D.C., Stanford boasted to a number of his top executives that the Libyans were sinking more than a $100 million into the bank's now-infamous high-yielding certificates of deposit, say sources close to the brokerage firm.
Now those sources say federal authorities investigating the alleged $8 billion fraud at Stanford's once fast-growing financial empire are trying to determine whether the Libyan government, or a group of investors with ties to the Libyan government, actually invested money with Stanford. And, if the Libyans did make a sizable investment in the CDs peddled by Stanford International Bank, what happened to the money.
Aimed at Liquidity Concerns
Last fall Stanford had told several people that the money from the Libyans was invested in accounts at Stanford Financial Group's former office in Switzerland. Stanford had claimed the Libyans were looking to move money into higher-yielding investments after the U.S. government removed the North African nation from the State Dept.'s list of countries supporting terrorism.
Sources say Stanford portrayed the Libyan investment as a big coup for the Texas-based firm and a move that would shore up any liquidity concerns at its Antigua-based bank. A spokesman for the Libyan Liaison Office in Washington did not return a phone call. When asked about the alleged Libyan investment, StanfordÂs lawyer, Dick DeGuerin, said, "IÂm not into the facts deep enough to discuss something like that."
David Finn, the attorney for Jim Davis, Stanford's chief financial officer, said his client is cooperating with federal investigation and helping to locate "any assets that may be available."
These days there are a lot of people who are angry with Stanford. The alleged fraud involving the sale of CDs has hurt thousands of investors in the U.S., Mexico, Venezuela, Ecuador, and elsewhere in Latin America. Many of Stanford's U.S. investors were wealthy, with more than $1 million in assets. But that wasn't necessarily the case with Stanford's Latin American clients. The minimum investment for offshore investors was $25,000—half the minimum deposit for U.S. customers.
Now it looks like you may be able to add a no less controversial figure than Qaddafi to that list.
Goldstein is a senior writer at BusinessWeek.