MARBELLA CLUB

A MONTH after Sir Fred Goodwin was stripped of his title for leaving Royal Bank of Scotland shredded, another erstwhile knight of the financial-services realm has been put in his place—this time a jail cell. Allen Stanford faces decades behind bars after being convicted of a $7 billion fraud that snared investors in 113 countries, from Latin America to Libya. When in 2008 the sky fell in on Bernard Madoff, the only fraudster to have taken investors for more, the Texas-born Mr Stanford was still swaggering. He had done so much for Antigua, the Caribbean island where he based his empire, that it made him a Sir. He took to the airwaves to tut-tut rivals who had been felled by subprime mortgages. His star rose further when he sponsored an international cricket tournament. He was said to be worth over $2 billion. He certainly lived like he was. Within a few months, however, the authorities had swooped in, closing his Antigua-based bank and his brokerage operations. Prosecutors accused him of flogging bogus certificates of deposit and raiding the bank, siphoning deposits to a Swiss account used to finance his passion for yachts, jets and islands. His lawyers tried to have him declared incompetent to stand trial, saying a prison beating had led to loss of memory and an addiction to anti-anxiety drugs. When that ruse failed, they argued in court that he had been his group’s visionary, uninvolved in its day-to-day running, even as they claimed the businesses had been viable until they were “disembowelled” upon being seized. Countering this narrative was damning evidence from the prosecution’s star witness, Mr Stanford’s former chief financial officer, who testified that he and his boss had falsified documents and that the firm had presented hypothetical returns as the real thing in client pitches. Others said that, for all his public bravado, he had been aware of a hole in the accounts. When another colleague suggested he raise more money to plug this, he reportedly said: “I’ll go to the Libyans. They love me.” Victims cheered the verdict, but their victory is hollow. Three years on, they are yet to receive a penny from the court-appointed receiver, Ralph Janvey. Of the $216m he had recovered by late last year, more than half had been eaten up by legal and other fees. His team reckons that total recoverable assets may be a mere $500m, or 7% of the account balances shown at the time of Mr Stanford’s arrest (though that could increase if lawsuits seeking $600m from Stanford brokers, customers who extracted more than they paid in and political organisations that received donations from Mr Stanford succeed). Investors also bemoan the hefty cost of litigating jurisdictional issues. Mr Janvey is locked in a fight over how to divide up the estate with a separate receiver in Antigua, who has control over the fraudster’s bank accounts in Switzerland and Britain. America’s Securities and Exchange Commission has backed the victims’ cause, taking the unprecedented step of suing the Securities Investor Protection Corporation after the congressionally-chartered group balked at paying them up to $500,000 each in compensation (on the ground that Stanford’s operations were based offshore). Too little, too late, scream the SEC’s critics. Its district office in Fort Worth, Texas, first concluded that the Caribbean kingpin’s businesses were a Ponzi scheme in 1997, only to be ignored then and several times subsequently by enforcement staff. This story has only one true villain, but many others come out looking bad.

The Partido Popular Mayor of Fuengirola, Esperanza Oña, has denied that the town is bankrupt. The PSOE has claimed that the debt has risen to nearly the size of a year’s income. The PSOE General Secretary in the town, and Socialist Spokesman, Javier García León, said today Esperanza Oña had ‘dismissed’ the idea when questioned in a press conference. García León said the Town Hall owes nearly 100 million € and that, he claimed, meant that the municipal accounts were in a ‘serious situation of financial unsustainability’.

Rainfall has been well down on the last three months and if it does not recover many farmers will suffer  Andalucía is thought to have entered into a drought cycle, and the current 60% fall in rainfall has not been seen since 2004, and we have to go back to 1998 to see a drier time in Sevilla. Some areas of the region have seen very little rain, causing large problems for farmers especially. The Sierra Morena, the Córdoba Campina and parts of Huelva have been particularly dry, while in Santa Elena in Jaén they have seen just 32 litres per square metre, 92% down on the average since 1980. Fortunately this new drought cycle comes after three years of abundant rain; 2009 was the wettest in the last half century, and so reservoir levels are running still at an average of 75.6%. That’s still down from 84.73% a year ago. Regional delegate from AEMET, the State Meteorological Agency, Luis Fernando López Cotin, said the most affected areas are in the north and west of Andalucía, but the Regional Councillor for the Environment has called for prudence when predicting a drought cycle. Young farmers association ASAJA has warned that if it does not rain this Spring 40% of the olive harvest will be lost, and means losses of 400 million € in the province of Jaén alone.