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HomeNewsArchivesAnalysis: Stanford's Riches Didn't Bring Legislative Changes

Analysis: Stanford's Riches Didn't Bring Legislative Changes

March 10, 2009 — Allen Stanford publicly pushed to change federal law to let him funnel Caribbean money through St. Croix into Texas tax-free, spent freely to cultivate and influence politicians, had the red carpet rolled out for him here and in Washington, yet seemingly had no success at lobbying.
For decades, campaign finance and lobbying reform advocates have pointed to the sums spent by corporate interests for campaign contributions and lobbying, raising the specter of politicians serving the interests of those spending the money rather than the public interest. Elected officials respond that they take information and contributions from all sources and are able to make their own decisions based on the facts.
To get a glimpse into the real interplay of money and power, one need look no farther than Stanford's soaring plutocratic star, his grand design for an ever-expanding global financial empire, his veritable phone book full of campaign contributions, his extensive, successful efforts to hobnob with the world's decision makers, along with the intense scrutiny of his actions in the aftermath of his empire's abrupt collapse amid allegations of running an $8 billion fraud out of his eponymous Antiguan bank.
That Stanford had a legislative agenda was no secret whispered in smoky back rooms. He announced publicly more than once he wanted to have federal tax laws changed to let him use the island of St. Croix to funnel money from Stanford International Bank, along with his other operations throughout the Caribbean, into the United States essentially tax-free. Now that bank is at the center of a fraud investigation.
Stanford developed personal relationships with members of Congress, government officials on St. Croix and throughout the Caribbean through his sponsorship of legitimate regional economic conferences, many put on by the Inter-American Economic Council with Stanford's help and participation. He also contributed massively to numerous federal political election campaigns. Once he'd established relationships with V.I. officials, he — very publicly — prodded local officials to lobby Congress for the changes he wanted.
According to the watchdog group Legistorm, the Inter-American Economic Council has sponsored 85 congressional trips since 2003. Delegate Donna M. Christensen went on a mere three of those, by Legistorm's tally: one in 2004 and two in 2005. All three were "business roundtable" and "investment roundtable" discussions with congressmen and businessmen.
In January 2007, the Inter-American Council brought in health ministers and politicians from throughout the Caribbean for a summit on HIV/AIDS at St. Croix's Buccaneer Resort. Gov. John deJongh Jr. and Christensen were among the speakers on the first day of the summit.
After the first day's ceremonies, conference participants went to what the official schedule called "an evening reception at the estate of Sir R. Allen Stanford."
Christensen said having someone pay for the conferences and for transportation to them is very helpful. Without their help, she said, there are fewer opportunities for her and others in Congress to meet with regional heads of state.
The council insists it simply holds conferences and does not lobby or let its sponsors lobby. And Stanford Financial Group issued a statement in 2006 saying Stanford has never lobbied anyone traveling to or from any council-sponsored conferences.
Yet the Inter-American Economic Council and Stanford are closely tied. The council's president, Barry Featherman, recently told the Dallas Morning News that the council has no source of funding other than that which comes from the sponsors of individual events. In 2005, Stanford provided 85 percent of all the council's funding, Featherman said. Stanford also donated the use of his personal jet to the council to fly members of Congress to and from conferences, according to a 2006 Bloomberg News article, thus giving him hours of access with members of Congress as captive audiences on a plane.
After the St. Croix AIDS conference, in 2007, Stanford sponsored the St. Croix Economic Summit and, in his keynote address, said federal law letting territories give massive tax breaks to new financial companies was outdated.
"You cannot take something like that, first enacted in 1954, patch it together and make it work," he said.
In its stead, Stanford proposed "a new law — one expanded to allow investment throughout the Caribbean, as long as the company is headquartered in the Virgin Islands." He predicted, "If that were to happen, the Caribbean Basin as a whole, and the Virgin Islands in particular, would see serious investment begin to flow in almost overnight." (See "United States Would Help Itself by Helping the Caribbean, Billionaire Says.") Stanford's own press release for the conference proclaimed this goal, too.
During questions after Stanford spoke, Sen. James Weber III asked Stanford if he had had any conversations about his ideas for EDC changes with the U.S. Treasury. Stanford said he had, and hoped to have draft legislation ready to present by Oct. 15, 2008. He said plainly that he wanted government officials to push for his changes.
"Ultimately it has to be the government presenting the legislation, though," Stanford said. "It can't be a private person doing that."
Had he succeeded, money would have flowed through St. Croix into the U.S. nearly tax-free from Stanford Group (Aruba), Stanford Group (Antigua), Bank of Antigua, Stanford Trust Company of Antigua, Stanford Development Company and the Stanford International Bank on Antigua, which government investigators claim was an $8 billion fraud operation.
Four months later, Stanford held a groundbreaking ceremony for the Stanford Financial Group's global management complex by Henry E. Rohlsen Airport on St. Croix and again made his case.
"The law must include all Caribbean-created revenues, as long as the company is headquartered in the Virgin Islands," he told a crowd of dignitaries, including deJongh and many senators and commissioners.
Showing the breadth of Stanford's personal connections, the glossy commemorative ceremony program clutched in most hands had a note from President George W. Bush.
"I send greetings to those gathered in St. Croix, Virgin Islands, to celebrate the expansion of Stanford Financial Group," the letter opens, above Bush's signature.
Stanford was given a U.S. flag, which Speaker of the House Nancy Pelosi had ordered flown over the capital in his honor.
"We look forward to this flag flying over your corporate headquarters," Pelosi wrote.
While she knew from his public statements what Stanford wanted, Christensen said she was never approached and never considered any bill or amendment to help Stanford.
"Yes, that was his desire, but I can't even say it was shared with the same kind of fervor by other EDC companies who were already here," Christensen said. Finance companies seeking EDC benefits, she said, "want something extremely simple and straightforward." She continued, "What Stanford wanted was slightly different and I'm not sure everybody was on board. But I've been working with EDC for years, and that issue was not on our agenda."
Nor, apparently, was it on the agenda of anyone in Congress. A search of the Library of Congress' Thomas bill tracking system found none that were in any way similar to Stanford's agenda introduced since at least 2005 and possibly longer.
Like dozens of members of Congress, Christensen got cam
paign contributions from Stanford this past fall, though the $5,000 she received is paltry compared with the $45,900 Stanford gave to Sen. Bill Nelson (D-Fla.) or the $41,375 he gave to Sen. Pete Sessions (R-Texas). Like her congressional colleagues, Christensen has donated the Stanford money to charity.
While deJongh appeared at the Stanford Economic Conference and wished him well at the groundbreaking ceremony for Stanford's planned office complex, the governor got no campaign contribution and his staff says he did not know or promote Stanford's agenda.
"The Virgin Islands government's position on federal regulations affecting the EDC program has remained unchanged since the 2004 JOBS Act," said Government House Spokesman Jean Greaux. "We are unaware of Stanford Financial pursuing any changes to local laws affecting the EDC program or any specific legislative proposals ever being offered by Stanford Financial. In fact, there has been no coordination between the government of the Virgin Islands and Stanford Financial on any federal legislative matters at all."
So, while Stanford had a plan to change the law, went to great lengths to get close to elected officials, contributed generously to political campaigns and repeatedly, publicly announced the changes he wanted, he appears to have spent his time, effort and money in vain.
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