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Marcus Wide on fraudsters in the Caribbean

Marcus Wide
Managing Director, Restructuring and Recovery
Grant Thornton (British Virgin Islands) Limited

Marcus Wide was told that he filed the very first proposal under the BIA when it transitioned from the Bankruptcy Act back in the 1970s and enjoyed a successful career on the Canadian insolvency scene before leaving Canada for warmer climes; he now spends his time unraveling sophisticated frauds and chasing criminals and their assets across the Caribbean and beyond. Grab your morning coffee and prepare to be entertained as Marcus tells us what it is like to do insolvency work down in the islands.

1) How did you get your start in the insolvency world?

My insolvency career started way back in 1974 with the very skinny 1967 Bankruptcy Act and demand loans being called literally on demand. My very first case involved Dr. Carl Morawetz as the estate lawyer with hearings in front of Lloyd Houlden on the bench and involved a business selling 33 1/3 LPs by way of TV advertising. The Trustee, my boss, was a long time practitioner and a man of impeccable reputation. At the time he had a massively strained back from a tennis accident and was hobbling around on a cane. During the course of the proposal he was challenged by the company representative as to his integrity and suggested some changes that were seedy to say the least. Rising from his hunched position he stabbed the challenger in the chest with his cane and backed him into a wall, with the words – “How dare you, this proposal is about to die if that is the ethical approach you bring to your business.”

2) How were the changes of the BIA received in your practice?

With time things changed and changes to the profession in the form of the BIA and revival of the CCAA came about with regulation over receiverships as well as improved debt protection. This created a whole new range of tools. I jumped into reorganisations with enthusiasm under both the BIA and CCAA, with the first filings under both statutes in the Atlantic region where I had moved from Toronto. One was a construction company on Cape Breton, the other a chain of hotels, both successful although we learned a lot about the statutes and their limitations which primed the pump for a slew of subsequent filings. While this was the trend through the mid-80s and 90s, during which time I successfully managed a dozen or more reorganisations I am of the view that other than those which were a front for the wind-up or sale of the underlying business, the real business world would have been better served by swift receiverships. The businesses were not fundamentally changed and often failed down the road with additional losses sometimes taking others with it. Put another way, a poorly managed business was able to reduce its cost base and compete with better run businesses to the ultimate detriment of both.

3) How did your practice migrate to the Caribbean?

By the pure accident of sitting next to the chap who became the Managing Partner of the Eastern Caribbean firm in my early days in Canada. He called me up one day asking if I did this insolvency stuff as he had an insolvency situation he didn’t know what to do about. I answered the call, and it did not take long to realise the region had many, many problems with what were quite sophisticated issues, mostly involving multi-jurisdictional complications and fraudsters hiding money globally. Multi-jurisdictional fraud and asset tracing was beyond the experience of local practitioners but had become bread and butter to us. This coincided with external pressure to clean up the offshore world which also included a pressure to use those not connected to local policies and politics. So I ended up overseeing the wind-up of 35 offshore financial institutions in a number of Eastern Caribbean countries as well as a handful of routine receiverships.

4) What is the legal framework like in the Eastern Caribbean?

When I started, the insolvency legal frame work followed the old English Companies Act winding up rules, with some offshore banking statutes adding some additional twists. For example, in Antigua a creditor cannot petition for the winding up of an offshore company. But it was recognised that this was an antiquated process and one by one the jurisdictions have sought to modernise. Luckily for me many of them chose as their model the Canadian BIA. This forms the basic model for insolvency law in Jamaica, Trinidad and Tobago, St Vincent and the Grenadines and is likely to be adopted in Grenada and St Lucia. Sadly they adopted the BIA substantially wholesale, with a few minor locally driven amendments, at different times in the BIA’s evolution in Canada, so there are also variations within the region. It is also interesting to note that within the Eastern Caribbean Court circuit (many of the islands have banded together to run a Court system over the region which has enabled a bigger slate of Judges to be available) they use the Ontario rules of civil procedure.

5) Having managed a Caribbean practice from Canada, you now live in the Caribbean – why?

While living and working from Canada, I had made several attempts to find an appropriate Caribbean base. It was not until retirement that I accomplished this with an invite to move to BVI. This is not only a great place to live (baring hurricanes) but gave me access to my traditional market up and down the Eastern Caribbean and a direct window into the more sophisticated BVI corporate community. This has been immensely rewarding from a professional perspective. Clearly my Canadian BIA background is very useful as the laws change in the region, and with that comes the opportunity for Canadian practitioners and lawyers particularly to provide support to local practitioners for whom the law is new and about to develop with local flavour.

6) Tell us about some of your most memorable files?

Many of them have been fascinating. Some highlights:

  • we once entered a bank to secure the electronic equipment only to have the screens go blank as the server was in the UK (no one knew that) and the crooks shut it off;
  • a fraudster ran away to Uganda and was later seized by local cops who shot his body guard and put him on a plane to the US in his pajamas where he was arrested;
  • the fraudster who campaigned with a blog in which he was both the blogger and a series of “sympathetic victims” who stated that I had run away with billions and paid off my own mortgage;
  • another who said his fraud was legal and he had an opinion saying so;
  • the fraudster who was convinced he had found boxes of illegal US bonds issued in the war which the US Government was secretly buying back at 10c on the dollar provided the boxes were not opened;
  • and I could go on!

But the biggest and best is Sir Alan Stanford who ran a fraudulent banking scheme through which he took in over US$10 billion while living a very high profile, doing things like landing at Lords Cricket ground in a helicopter with $20 million in cash for the winner of a cricket tournament. At the end of the day the 15,000 purchasers of his CD’s, after stripping away the notional interest accrued, were left with a cash loss of US$5.5 billion. Initially he would only take deposits from investors outside the US, but greed overtook him and he started to take funds from US investors. This in the end led the SEC to prosecute him, bringing his empire down, and ultimately garnering him a sentence of 110 years in Federal penitentiary followed by 3 years of supervised release. Not only was this file a complex multi-jurisdictional file but it involved a Liquidation in the home country of the bank, Antigua, and the appointment of a US based equity Receiver with potentially overlapping mandates. While an overarching agreement resolving the potentially competing issues has been reached, it was not easy to get there and there were interesting tussles on the way.

So here I am dealing currently with insolvencies like KFC franchises on small islands, to fraudsters and rogues from the UK, US, Russia, Brazil and Chile, and a conglomerate gone wrong in Trinidad from which I need to squeeze a couple of billion in value. It’s been quite a ride!