Banco Intercontinental
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Banco Intercontinental, S. A.
BANINTER logo.png
Type Private
Industry Banking
Founded 1986
Headquarters Santo Domingo, Dominican Republic
Key people Ramon B?ez Figueroa
Banco Intercontinental (or BANINTER) was the second largest privately held commercial bank in the Dominican Republic before collapsing in 2003 in a spectacular fraud tied to political corruption. The resulting deficit of more than US$2.2 billion was equal to 12% to 15% of the Dominican national gross domestic product.[1]
Contents [hide]
1 Ram?n B?ez Figueroa and expansion of BANINTER
2 Bank crisis
3 Aftermath and trial
3.1 Sentence and criticism
3.2 Court of Appeals and Supreme Court decisions
4 See also
5 References
6 External links
Ram?n B?ez Figueroa and expansion of BANINTER[edit source | editbeta]
Banco Intercontinental was created in 1986 by Ram?n B?ez Romano, a businessman and former Industry Minister. His oldest son, Ram?n B?ez Figueroa, took over the small bank and helped build it into the country's number two private commercial bank. BANINTER grew quickly into a typical family-run conglomerate, buying up companies or controlling interests in firms that touched on nearly every aspect of Dominican life.
In the process, B?ez Figueroa amassed an empire of varied businesses. Through BANINTER Group, he managed to control the country's largest media group, including List?n Diario, the oldest and leading newspaper; four television stations, a cable television company, and more than 70 radio stations.
B?ez Figueroa became a man of great influence and power. At his lavish wedding, former Presidents Joaqu?n Balaguer and Leonel Fernandez signed the marriage document as witnesses. In late 2000, B?ez even proposed a "national economic program", which earned him much praise from President Mej?a.
"Risk, and I'm talking about calculated risk, is proper of all business and of any human activity. "Whoever doesn't understand this can't triumph" B?ez said in a 2001 interview in a Dominican business magazine Mercado.[2]
His more than generous gifts to friends, business partners, journalists, commentators, models, beauty queens, military personnel, judges, and politicians over the years became legendary, as were his patronage for many events.[citation needed] former president Mej?a got a bulletproof Lexus sports utility vehicle; so did his successor, Leonel Fern?ndez. Colonel Pedro Julio Goico Guerrero (a.k.a. Pepe Goico), who served as Mej?a's Head of Security and who guarded former U.S. president Bill Clinton on visits to the United States, got ten solid-gold President Rolex watches worth US$15,000 each and use of a credit card that the bank would pay off.[citation needed]
Later on, B?ez himself would denounce that he called a US$2.4 million credit-card fraud on the part of Colonel Pepe Goico. Although the credit card was issued in Goico's name, it was meant solely to finance presidential trips. Instead, B?ez charged, Goico and his cronies used the card for personal purchases, including planes and helicopters, luxury housing and jewelry. The "Pepe-Gate" may have been the spark, but a mountain of kindling had been piling up for years around BANINTER.
Bank crisis[edit source | editbeta]
BANINTER's octopus-like acquisitiveness raised some eyebrows, as did B?ez's luxurious tastes. In 2002 he bought a US$14,600,000 yacht, the Patricia.[3][4] Moreover, B?ez had personal expenses of more than US$1,000,000 monthly.[citation needed].
Speculation about the source of B?ez's fortune ran wild, but nobody considered the explanation being given nowadays by the Dominican authority, that B?ez was robbing his own bank.
Rumors that BANINTER might've been in trouble began circulating during the fall of 2002, and depositors started to withdraw their savings. The Dominican Central Bank stepped in to support the bank by providing new lines of credit. Anxious for a permanent solution, the government announced in early 2003 that Banco del Progreso, run by Pedro Castillo Lefeld, the brother of Mej?a's son-in-law, would acquire BANINTER. But Banco del Progreso abruptly withdrew from the deal. Government officials and Castillo said that two-thirds of the money that customers had deposited in BANINTER was kept off its official books by a custom-designed software system.
On April 7, 2003, the government took control of BANINTER. B?ez Figueroa's family owned more than the 80% of the bank, and soon after, a deeper examination supported by the International Monetary Fund and the Inter-American Development Bank, revealed the scale of the meltdown.
B?ez Figueroa was arrested on May 15, 2003 along with BANINTER vice presidents Marcos B?ez Cocco and Vivian Lubrano de Castillo, the secretary of the Board of Directors, Jes?s M. Troncoso, and wealthy financier Luis Alvarez Renta, on charges of bank fraud, money laundering and concealing information from the government as part of a massive fraud scheme of more than RD$ 55 billion (USD $2.23 billion). This sum would be big anywhere, but it was overwhelming for the Dominican economy, equivalent to two-thirds of its national budget.
The resulting central bank bailout spurred a 30% annual inflation and a large increase in poverty. The government was forced to devalue the peso, triggering the collapse of two other banks, and prompting a US$600 million (euro$420 million) loan package from the International Monetary Fund.[5]
Though required by the country's Monetary Laws to only guarantee individual deposits of up to RD$500,000 Dominican Pesos (about US$21,000 at the time) placed within the country, the Dominican Central Bank (Banco Central Dominicano) opted to guarantee all $2.2B in unbacked BANINTER deposits, regardless of the amount, or whether deposits were in Dominican Pesos or American Dollars and without apparent knowledge whether the deposits were held in the Dominican Republic or in BANINTER's branches in the Cayman Islands and Panama. The subsequent fiscal shortfall resulted in massive inflation (42%) and the devaluation of the DOP by over 100%.
Former president Mej?a and the Central Bank (Banco Central) stated that the unlimited payouts to depositors were to protect the Dominican banking system from a crisis of confidence and potential chain reaction. However, the overall consequence of the bailout was to reimburse the wealthiest of Dominican depositors, some of whom had received rates of interest as high as 27% annually, at the expense of the majority of poor Dominicans?the latter of whom would be required to pay the cost of the bailout through inflation, currency devaluation, government austerity plans and higher taxes over the coming years.
Aftermath and trial[edit source | editbeta]
The banking crisis ignited harsh fights over BANINTER group's media outlets, including the prominent newspaper List?n Diario, which was temporarily seized and run by the Mej?a administration following the bank collapse.[5] In 2003, TV commentator Rafael Acevedo, president of the opinion polling firm Gallup Dominicana, had said that in the BANINTER scandal "there has been much complicity at every level of society: the government, the media, the church, the military.".[2]
In November 2005, Alvarez Renta was found liable by a federal jury in Miami of civil racketeering and illegal money transfers in a conspiracy to loot BANINTER during its final months of existence. Alvarez Renta was ordered to pay $177 Million to the Dominican state. To this date, he still hasn't paid that sum.
The main executives of BANINTER, B?ez Figueroa, his cousin Marcos B?ez Cocco, Vivian Lubrano, Jes?s Troncoso Ferr?a, as well as the aforementioned Alvarez Renta, were prosecuted by the Dominican state for fraud and money laundering, among other criminal charges. B?ez Figueroa's main attorney is Marino Vinicio Castillo, who at the present time holds the position of President Fernandez's Drugs Consultant.
With 350 prosecutions and defense witnesses slated to testify, ex- president Hip?lito Mej?a among them, the criminal proceedings against B?ez Figueroa began on April 2, 2006. However, the Court decided to postpone the first hearing for May 19, 2006, accepting a motion by the defense lawyers.[6] It was prompted, as detailed at length in the trial by a scandal involving debt writeoffs and sweetheart loans or other financial deals suspected of having favored leading politicians and others.[7]
What remains most curious was that the fraud went undetected for 14 years by the country's supposed financial gatekeepers?the Central Bank, the Superintendent of Banks and U. S. accounting company PricewaterhouseCoopers. How B?ez Figueroa and his cronies were accused and some convicted of pulling it off provided a glimpse into the gift-giving and favor-swapping common between private business and top government officials in the Dominican Republic.
The first trial ended in September 2007.
Sentence and criticism[edit source | editbeta]
On October 21, 2007, B?ez Figueroa was sentenced by a three-judge panel to 10 years in prison. Additionally, he was ordered to pay restitution and damages totalling RD$63 billion. The laundering charges were excluded, but the other suspected mastermind of the fraud, Luis Alvarez Renta, was convicted and sentenced to 10 years in prison for money laundering.[8] Marcos B?ez Cocco, ex-vicepresident of the Bank, was also found guilty, and sentenced to 8 years.
The accusations against two other defendants, former BANINTER executive Vivian Lubrano, as well as the secretary of BANINTER Board of Directors Jes?s M. Troncoso, were dismissed for lack of evidence.
The sentence has been widely criticized for its severe contradictions, but more specially because it's been alleged that the judges were pressed by "the powers that be". Noted journalist Miguel Guerrero wrote in his column of the daily El Caribe that the defrauders of BANINTER have been protected "by a dark combination of political, economic, mediatic and ecclesiastical powers" and that the sentence was a mamotreto".[9] In fact, Guerrero went to the extent of saying that everything was fixed beforehand, and the defendants and their lawyers knew it, as did those representing the Central Bank.
Court of Appeals and Supreme Court decisions[edit source | editbeta]
In February 2008, the case went to the Court of Appeals of Santo Domingo and the Court upheld the sentence against B?ez Figueroa, B?ez Cocco and Alvarez Renta. The decision that had favored Vivian Lubrano was reverted, and she was sentenced to five years in prison and RD$18 billion in damages. Charges against Troncoso Ferrua were definitely dropped.
In July 2008, the Dominican Supreme Court confirmed the decision against the defendants.[10]
Nevertheless, Lubrano allegedly fell into a "deep depression" and suffered from "panic attacks", and she never went to prison. After much debate, President Leonel Fern?ndez gave her full pardon, on December 22, 2008.[11]
See also[edit source | editbeta]
List of notable business failures
References[edit source | editbeta]
^ DOMINICAN REPUBLIC ECONOMY THREATENED BY MASSIVE BANK FRAUD. | Company Activities & Management > Company Structures & Ownership from AllBusiness.com
^ a b Hurricane Ramoncito: how Ramon Baez and his cronies broke the Dominican Republic's largest bank?and almost brought down the country - Top 100 Banks | Latin Trade | Find Articles at BNET.com
^ Dominican Government seeks failed bank?s assets in Grand Cayman - DominicanToday.com
^
http://powerandmotoryacht.com/megayachts/0902patricia/index.aspx Yacht Patricia
^ a b
Yahoo!
^ Dominicant Today, April 3, 2006
^
Yahoo!
^ Business finance news - currency market news - online UK currency markets - financial news - Interactive Investor
^
http://www.elcaribecdn.com/articulo...=EF04DB20333D4739BC301542550DEA80&Seccion=134 El Caribe, October 23, 2007.
^ Hoy
^ Diario Libre
