Our examination of the US Dollar bank reconciliation revealed that there were numerous reconciling items totalling $2,198,181.72 for which management was unable to obtain the supporting information from American International Bank to substantiate their entries on the bank statement Management is of the view that although the balance is in its favour, it arose as a result of errors on the path of American International Bank. The amount receivable from American International Bank (In Receivership) represents various amounts transferred on behalf of American International Bank to clients during the period January to April 1998 when the Bank entered into an agreement to take over the assets and liabilities of American International Bank and also managed its operations. We have not received third party confirmations of the balances and as a results we are uncertain as to the collectability of this balance. In addition, no provision has been made for possible bad and doubtful debts. Court judgments against Overseas Development Bank & Trust March 31, 1999 Court judgments against Overseas Development Bank & Trust Page 1 of 2 Dominica-registered Overseas Development Bank & Trust Ltd, which is run by John E. Greaves in Antigua, appears to be in financial trouble. Three separate judgments for a total of US$1.24 million were entered against the bank on January 29, 1999 by the High Court of Justice in Dominica. All judgments were made after ODBT failed to provide any defence, according to documents obtained from the court. IOA Enterprise Trust, which is registered in Belize, obtained a judgment for US$487,040; Western Union Financial Services Inc., which is registered in New Jersey in the United States, was awarded US$400,000; and R. P. Developmen: Ltd., which is an IBC registered in Dominica, obtained a judgment for US$350,726. Despite the judgments, Greaves told Offshore Alert that he was confident the disputes would be settled amicably and that the bank would pull through its financial difficulty. An interview with Greaves appears alongside this article. The statement of claim for IOA Enterprise Trust, which has been a client of ODBT since March 13, 1998, alleged the Trust unsuccessfully attempted to withdraw its funds on November 13, 1998. "The defendant has refused to return the funds to the Plaintiff, despite several demands," read the complaint. "On or about the 1 day of December, 1998, the Defendant, by a statement in writing, informed the Plaintiff that it was holding the Plaintiff's money on a fixed deposit maturing on March 1, 1999 at an interest rate of 7.5 per cent per amum. "The Plaintiff neither applied for, nor did the Plaintiff authorize the Defendant to hold the Plaintiff's funds on a fixed deposit. "On or about the 16th day of December, 1998, the Defendant informed the Supervisor of Financial Institutions of Dominica that the Defendant was selling securities in Europe in order to satisfy the Plaintiff's request for the return of the Plaintiff's money. "The Plaintiff therefore has reason to believe that the Plaintiff's money has been used by the Defendant for the purchase of securities in Europe. "The Plaintiff did not authorize the Defendant to transfer to London the Plaintiff's monies or to trade the said money in securities. "In the premises, the Defendant has converted the Plaintiff's money to its own use and wrongfully deprived the Plaintiff of the same whereby the Plaintiff has suffered damage." R. P. Development was unable to withdraw its funds on November 9, 1998, only two months after depositing Like IOA Enterprise Trust, R. P. Development alleged that, when it asked to withdraw funds, it was told that part of its money was in a 7.5 per cent fixed-term deposit account maturing at March 1, 1999. R. P. Development denies ever applying for, or giving the bank authorization to open, a fixed-term deposit account. Both IOA Enterprise Trust and R. P. Development were represented by attorney Michael E. Bruney, of Roseau, In both lawsuits, Overseas Development Bank & Trust Ltd. entered an initial appearance shortly after the cases were filed but did not subsequently enter a defence. The matter involving Western Union Finance appears to have followed an unorthodox path. The lawsuit was filed on 73-779 D-01--16 Court judgments against Overseas Development Bank & Trust Page 2 of 2 January 13, 1999; the Plaintiff filed a notice of discontinuance five days later, a judgment in default of appearance by the Defendant was entered in favour of the Plaintiff on January 29 and the Defendant belatedly entered an appearance on February 4. Despite the late appearance by the Defendant, there is nothing to indicate the judgment does not stand. In all three lawsuits, Overseas Development Bank & Trust was represented by the law firm of Prevost and Williams, of Hillsborough Street, Roseau, Dominica. The financial problems of ODBT came 12 months after its aborted attempt to buy another bank run by Greaves, Antiguaregistered American International Bank. This purchase, which took place on January 2, 1998, was reversed a few month later on the grounds that AIB was insolvent and AIB was put into receivership at the behest of Antigua's regulators. As you will see from his interview with this newsletter, Greaves is blaming ODBT's current liquidity problems largely on its unsuccessful buy-out of AIB. AIB was owned by American businessman William W. Cooper, who is also rumoured to be secretly behind ODBT, although this has been denied by Greaves and others who have been involved with ODBT. John Greaves answers questions about Overseas Development Bank & Trust March 31, 1999 John Greaves answers questions about Overseas Development Bank & Trust Offshore Alert carried out the following Question and Answer exercise with Overseas Development Bank & Trust CEO John E. Greaves to obtain his views on the financial state of his bank. Offshore Alert: What has caused the financial problems of the bank? John Greaves: As you are aware from previous investigations on your behalf, a bank known as American International Bank Ltd. was subject to a run by its depositors starting in December, 1997 as a result of various factors outside of their control but mostly due to their banking the entity known as the Forum and their multitude of partners. The banking community in Antigua was concerned by the impact this would have on the Antigua offshore banking industry and although Overseas Development Bank & Trust Company is not part of that community, nevertheless, we were prepared to be of assistance and this assistance took the form of lending to AIB, over a period of three months, a total in excess of US$4.5 million which was subsequently paid back in the form of taking over equivalent value loans in their books. You may also recall that other banks in Antigua, notably Antigua Overseas Bank, also attempted a rescue operation in excess of US$3.7 million but ultimately to no avail and AIB was put into receivership at the beginning of July, 1998. In retrospect, the action to try to save AIB was ill-advised even though instigating it with the best intentions and undoubtedly the association and the drain on our own liquidity has caused short-term problems for us for the last few months. Overseas Development Bank & Trust Company is solvent as can be attested by the auditors who are just completing the 1998 audit and we have fully explained the situation to our various customers and depositors - most of whom have been prepared to work with us until we resolve this short-term problem. OA: Has there been any application to place the bank into liquidation or receivership because of its debts? JG: There has been no application for either liquidation or receivership as the bank is solvent and plans that we have been able to show to our creditors have convinced them that this matter will be resolved, certainly by the second week in April of this year. OA: Why did the bank not defend any of these lawsuits? JG: The specific lawsuits are not quite as straightforward as they may appear. IOA Enterprises and R. P. Development were two clients of the bank who wished to place their money in what could only be considered as an extremely high-risk investment scheme. You have no doubt seen some of these where returns of as much as 100 per cent per month are offered and we knew as a matter of certainty that other people had placed their money with the same broker in Europe and the money had been lost. Therefore, initially, we were endeavouring to persuade our clients not to transfer money for this reason. Subsequently, the suits were instigated and because of our frequent meetings with the clients both here and in the USA, we felt it was best to just let the suits ride and we would settle them when liquidity became available which, as I said, is expected to be around the second week in April. The lawyer in Dominica acting for them is fully aware of the situation and has agreed to take no further action at this stage. With regard to Western Union Financial Services, the money owed is, in fact, from AIB but was placed through their terminal lodged in our office. We have been in lengthy discussions with Western Union regarding this and they have accepted that we will pay them back on behalf of AIB over a period of two years matching the income we derive from loans taken over from AIB. Again, their lawyer in Dominica is aware of this and again no further action will be taken. OA: How do you see the future of the bank? JG: The bank is not a lending institution and does not intend to be one. Our expertise is assisting clients with investments and project finance and our main area of client base is in Europe. We are appointing new directors to the board and have opened a rep's office in London and are anticipating that the bank will grow steadily once these problems created by our assistance to AIB are resolved. Footnote: Greaves concluded his letter by stating: "Clearly you have to make your own decision but it would be of assistance to us if the article proposed is delayed for a further month by which time the problems will be resolved and I undertake to keep you informed regarding the situation with these various lawsuits and the bank's progress so that perhaps by the end of April, your article can be a positive endorsement of what we are doing rather than a criticism which will, unquestionably, hurt the bank's image at this stage." RE: Letter of September 3, 1999 and telephone conversation of December 6, 1999 regarding Overseas Development Bank (ODB). It would appear from the information furnished in the above referenced letter that ODB has no liquid assets and no liabilities. The only asset it would have, would be the assignment of $4,500,000.00 to the Overseas Development Bank and Trust Company. From the information furnished by you on September 3, 1999, ODB is not conducting any banking business as defined by the IBC Act, 1982. It is the intent of this office to revoke the tentative licence issued to ODB. Section 236 (1) provides that the Appropriate Official may revoke the licence of a licenccc. if he (d) ceases to carry on the international trade or business for which the licence was issued. Accordingly, Section 236 (2) of the IBC Act requires the appropriate official to give a notice in writing of the intent to revoke a licence. This letter shall serve as the required notice in writing that on January 14, 2000, the Appropriate Official intends to revoke the licence issued to Overseas Development Bank. The IBC Act makes no provisions for a rescission of a licence. If you have any questions regarding this action, please feel free to call me for further discussion on the matter. Yours sincerely, Lloyd Harrell Supervisor of International Banks |