Glasgow : A significant portion of BAICO’s $35 million ‘vanished into thin air’

One of the men employed by British American Insurance Company (BAICO) to oversee over $35 million dollars was a professional ghost hunter.{{more}}

This disclosure was made by Brian Glasgow, senior partner of auditing firm KPMG, as he gave the feature address at the 6th graduation of a saving and investment course, facilitated by the East Caribbean Central Bank (ECCB) East Caribbean Institute of Banking (ECIB) and the University of the West Indies (UWI).

The Graduation took place last Saturday, July 31, at Frenches House.

Glasgow related the tale of the custodian, under whose watch the millions of dollars disappeared, as he made the call for regulatory measures regarding persons calling themselves investment and financial advisors.

According to Glasgow, the man whom he did not identify by name, in giving testimony at a hearing in the United States Federal Bankruptcy Court, gave his full time occupation as a person who investigates paranormal activities – a ghost hunter.

“When asked for details of the fund and the composition of its investments, his reply in almost every instance was ‘Upon advice of counsel, I decline to answer pursuant to my rights under the Fifth Amendment of the United States Constitution.’”

Glasgow indicated that a significant portion of the $35 million that ‘vanished into thin air’ came from St. Vincent and the Grenadines.

“We still do not know where the money is, or where it has gone to,” Glasgow said.

Glasgow, who is the Judicial Manager of the beleaguered British American said that regulations should be put in place to ensure that financial advisors are certified, and that regulation of insurance companies need to be more intrusive.

He said that regulators need to look behind the figures, even beyond the auditors’ report.

“We must adopt a more robust regional approach to regulation of insurance companies…. Our legislation needs to be dynamic.”

The accountant lamented some of the practices of CL Financial, which included the sale of banking products packaged to resemble insurance products and given elaborate names.

He said the products offered annual rates of return far in excess of what commercial banks could offer and as a result, hundreds of millions were removed from the legitimate and well regulated banking system.

“As a country and as a currency union, we must insist on proper process of certification and licensing for anyone who is presented to the public as an investment advisor. I would even go further and suggest that the ECIB should play a pivotal role in the certification of financial and investment advisors.

“Presently, there is no requirement for certification of Financial Advisors in the East Caribbean Currency Union. This has been exploited by many institutions including insurance companies who recruit inexperienced persons, equip them with impressive titles like Financial Advisor or Investment Advisor and let them loose on an unsuspecting public.

“Very often, potential investors are lured into a false sense of security and place confidence in untrained individuals, who in most cases do not offer advisory services, but are merely marketing high interest bearing, high risk uninsured products.”

Glasgow said that when the inevitable happens, as in the case of the CL Financial collapse, investors are left to count their losses and the only beneficiaries are the “inappropriately titled advisors”.

“The individuals who have been affected by the failures of British American and CLICO are not greedy people as some would have us believe. Most were not sophisticated investors who should have known better. The majority of investors are ordinary persons from the entire cross section of our society.

“As I speak, there are people who are dying of cancer… there are persons who are going blind… there are several students who have studied diligently for years to gain acceptance to colleges and universities, only to be now told by their parents that the money that they meticulously saved for the past years has disappeared.

“There are scores of aged individuals who have now been reduced to the lowest ebb of poverty and distress, and have to suffer the indignity of living off friends and relatives because their savings accounts no longer exist.”