Published On: Fri, Mar 14th, 2014

The Curaçao problem

WillemstadI am an insolvency practitioner appointed by HM Revenue & Customs in connection with a number of frauds which have been perpetrated using Curaçao's banking system.  The frauds mainly centered around MTIC or 'carousel fraud' although reports suggest that money was laundered for much more than just this. This fraud fundamentally damaged the reputation of the island.

What has made matters considerably worse, however, is the steps taken by the Curaçao authorities to prevent the victims of the fraud getting their money back.  Needless bureaucracy, interminable delays, all seemingly aimed at increasing fees for the lawyers and bankers who administer the process.  It has taken many years for the UK Liquidators to get the funds repaid so that dividends can be paid to the victims, and many millions remain locked up in the 'special measures' process.

It is very difficult in the modern age to move the proceeds of crime. Many of the funds locked in Curaçao were the obvious product of money laundering.  It took some time to negotiate a protocol that both declared the funds as tainted and yet allow their movement back to the UK.  This protocol enabled the UK and Dutch authorities to give permission for the funds to be moved if they remained under the control of licensed insolvency practitioners from the UK who themselves gave undertaking as to what they would do with the funds. It was a great achievement and succeeded in repatriating many millions of pounds for the UK exchequer.

Our problems returned when the criminal proceedings in the Netherlands against the Curaçao bank and its owner was settled.  That caused the Curaçao bank to stop making payments to victims.  Since last summer it has embarked on a different tactic which seems to be aimed at keeping the money for itself.  It has walked away from the internationally agreed protocol and ignored all requests for explanation.  The UK Liquidators are now forced to make applications to court to obtain an explanation about the behavior of the bank.

It is rumored that there is a new twist.  The banks are seeking to "cancel contracts" as if to remove any liability by a unilateral act.  If true, the banks risk sending a message to the world that Curaçao is a rogue state that will change the rules to suit itself.  No nation would invest in a country that disrespects international standards of behavior.

Curaçao has a long way to go to fix its image problems.

By  Stephen Hunt, Partner at Griffins Insolvency Practitioners

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