A Nation for Sale - Corruption in the Bahamas
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Transcript of A Nation for Sale - Corruption in the Bahamas
October 10, 1984
For more than a decade, international drug traffickers have used the
Bahamas as a vital gateway for U.S.-bound cocaine and marijuana. Sparsely
populated and strewn over 100,000 square miles, the country’s 700 islands
are a smuggler’s dream and a law-enforcement nightmare. Only an hour
by air from the Florida coast, dozens of unguarded beachfront runways
and scores of secluded harbors make the Bahamas an ideal spot for storage,
refueling and escape. U.S. officials estimate as much as 33 to 40 percent
of all illegal drugs entering Florida pass first through these islands.
Smuggling on such a scale could not flourish without corruption,
and drug traffickers say they often find a warm
welcome in the Bahamas. In the glib assessment of one smuggler, it
is “a payable situation” — but a tragedy for honest citizens of the
developing island country.
Earlier this year, as a commission of inquiry in Nassau gathered
testimony about payoffs, protection and narcotics, The Miami Herald began
a concurrent investigation of corruption in the Bahamas and its shattering
impact. In five months, reporters followed a trail of drug-related graft from
the police to the Parliament. They interviewed numerous smug glers,
crooked cops, dishonest lawyers, de≠spairing civic leaders and the most
tragic recipient of the smugglers’ windfall, young Bahamian cocaine
addicts.
The six-part series, published Sept. 23-28, was reported by staff
writers Jim McGee and Carl Hiaasen, and supervised by Investigations
Editor James Savage. Research assistance was provided by Gay Nemeti
and Nicki Kelly. The major photographs were taken by Tim Chapman, and
the art work was composed by Rick Brownlee. Graphics Editor Don Kent
designed the project.
A NATION
FOR SALECorruption in The Bahamas
By Carl Hiaasen and Jim McGee
The disclosures have left no layer of Bahamian government
untainted. Some of Prime Minister Lynden O. Pindling’s closest and most
powerful associates have been implicated in payoffs, money-laundering
and drug shakedowns, while Pindling himself was the subject of a serious
bribery accusation. The Herald also reported that the prime minister
received millions of dollars in undisclosed gifts and loans from foreign
businessmen - money that went to build a new $3 million mansion.
Pindling and his men have denied any wrongdoing, but today the
government shulders in political turmoil. The portrait of the Bahamas that
emerged in recent months is a sinister contrast to its image as a sun-
drenched tourist resort. It is a portrait of a nation on the take, and a
generation in peril.
As long as cocaine and marijuana smugglers consider South Florida
a prime destination, the Bahamas will be a key link in the South American
drug pipeline. High-level corruption in the Bahamas directly affects the
flow of drugs to American shores; more importantly, it endangers the future
of 223,000 Bahamians.
For most of them,who have worked hard and rejoiced in their country’s
independence, drug corruption has brought shame, misery and an
unprecedented crisis of leadership.
RICK BROWNLEE / Miami Herald Staff
Excerpts taken from a Miami Herald Special Reprint
September 23rd - October 10th, 1984
The money came from those who
depended on the goodwill of the
government or contemplated
investments in the Bahamas.
During the past 12 years, foreign investors in the Bahamas
channeled nearly $17 million to Bahamas Prime Minister
Lynden O. Pindling or to companies in which he had a secret
interest, records show.
The money took various forms: gifts, unorthodox bank
loans, direct payments to Pindling creditors, unusual stock
deals or generous home mortgages.
It came from businessmen who depended on the goodwill
of the Pindling government, sought approval of government-
regulated ventures or contemplated investments in the
Bahamas.
The largest chunk, $14 million, came from a Bahamian
bank controlled by fugitive financier Robert Vesco. The bank
fin =laced companies in which Pindling had an undisclosed
one-third interest.
Despite this steady flow of funds, which allowed him to
enjoy a millionaire’s lifestyle, Pindling sank deeper into debt.
Since 1977 Pindling spent $4 million - eight times his
reported total earnings during that period, according to a
Bahamas Commission of Inquiry.
“I owe plenty money,” Pindling testified, slipping into a
Bahamian dialect.
Hundreds of thousands of dollars contributed by foreign
businessmen went for the construction of Pindling’s new
house, a lavish lakefront home east of Nassau that his attorney
says is worth $3 million.
The commission’s estimate is almost certainly on the low
side because thousands of dollars were paid by unidentified
donors directly to the contractor building the new house.
Bailey said it is misleading to combine the money Pindling
received personally with the money his companies received
from Vesco’s bank.
“You are completely wrong to lump together loans from
(Vesco’s bank) and loans to the prime minister,” Bailey said.
“. . .It’s an apple and an orange, and when you put them in
the same bowl you are trying to create an impression which I
think is false and misleading.”
Pindling, who has repeatedly denied any wrong-doing,
declined to be interviewed.
Pindling’s financial records were provided to commission
investigators during the inquiry because of allegations he
received bribes from drug dealers.
The disclosures were meant to allay suspicions of drug
involvement. Instead, they raised questions about a series of
unusual transactions that secretly benefited the prime
minister.
None of the money has been linked to drug smug-
By Jim McGee And Carl Hiaasen
Pindling Received Millions
From Foreign Businessmen
Prime Minister Lynden O. Pindling’s mansion west of Nassau has been partly financed with hundreds of
thousands of dollars from foreign businessmen.
TIM CHAPMAN / Miami Herld Staff
.glers. But the prime minister could not
explain the source of $238,000 in bank
deposits. Nor could he explain who paid
$60,000 on his behalf to the building
contractor.
“I am more concerned, quite frankly,
about what I do not see in the bank account
than what I do see,” said Frank Richter, a
f inancial invest igator with the Royal
Canadian Mounted Police.
Rich te r, who i s ass igned to the
commiss ion , re fer red spec i f ica l ly to
payments that were made to Pindling’s
creditors “without going through the prime
minister’s accounts.”
This is the first detailed account of the
source and circumstances of money that
flowed to the prime minister.
I t is based on Pindling’s f inancial
records and other information obtained by
Commission of Inquiry and The Herald. It
shows that the hero of the Bahamian
independence movement has received huge
sums from rich foreigners.
The records show:
• Boca Raton developer George
Barbar gave Pindling $250,000 in
personal loans in 1983 that were
secured by a second mortgage on
which no monthly payments have
been made.
“The Bahamas needs a prime minister’s
residence,” Barbar said. “The country
needs a p lace where he can rece ive
dignitaries.”
After a Commission audit found that
Pindling had not made monthly interest
payments on a bank loan of nearly $1
mi l l ion , Barbar guaran teed another
$500,000 to reduce those charges.
A friend in need
“I believe a sincere friend will stand by
his friend when he needs help,” Barbar
said.
This money, which Barbar said has not
yet been delivered, was provided under a
generous financing arrangement in which
the Pindlings transferred ownership of the
mansion to their son Obie.
The house served as collateral for the
no-interest $500,000 loan, which was
actually made to Obie. To repay the debt,
Obie agreed to work for Barbar in a
“business relationship.”
Barbar said he plans to support Obie in
a building project in Nassau. “When I help
Obie , I he lp the count ry a l so ,” the
developer said. “... He will pay back that
money.”
Barbar, who is part owner of a seven-
acre estate on Cat Cay, said he has no
business interests in the Bahamas. A year
ago, he said he was “very much interested”
in constructing office buildings in Nassau
- a venture that could require government
approval.
Bailey said Barbar once considered
going into business with Pindling after the
prime minister left public office. “If he had
not run for another term... they [Pindling
and his son] were going to go into the
development business with the guidance of
Barbar.”
During the Commission investigation,
Bailey was asked about large deposits to
the bank account of Pindling’s political
party during the 1982 election. Bailey said
that
Barbar ar ranged for $500,000 in
campaign contributions -roughly $5 for
every registered voter in the Bahamas.
But Barbar told The Herald he had
nothing to do with those deposits: “I have
never made a contribution to the (political
party).”
• The major stockholders of the
Bahama Development Company,
Ltd., in Freeport gave Pindling
a total of $750,000 in 1983 at a
time when the Prime
Minister needed money to
complete work on his
mansion.
The arrangements were handled by
Edward St. George, a major partner in the
Freeport-based development company, who
said during the Commission that he does
not expect the money to be repaid.
Loan Forgiven
“If necessary it (the St. George loan)
would be forgiven,” Bailey explained. “...It
is a personal loan.”
An initial $250,000 went through an
account in the law firm of attorney Kendal
Not tage , a cab ine t min is te r. Not tage
himself is being investigated on unrelated
charges that his law firm laundered drug
money for a Boston Mafia figure.
“The original approach to St. George
was from Kendal Nottage,” Bailey said.
The Nottage law firm paid some of the
Freeport money direct ly to the pr ime
minister ’s credi tors . The rest went to
Pindling’s bank account. Later, St. George
arranged another infusion of $500,000 to
Pindling. It took the form of a loan which
St. George told the Commission Pindling
would not have to repay.
“I’m not the least bit interested in what
you publish,” St. George said. “.. . It sounds
to me like you are making some appalling
mistakes.”
The Grand Bahama Deve lopment
Company, Ltd., which is controlled by
foreign investors, manages the deep water
port, public utilities and airport in Freeport
under a joint operating agreement with the
government.
“It is certainly accurate to say they have
to look to the government for some things,”
Bailey said. “(But) . . . the Grand Bahama
Development Company does not get any
favors.”
He added: “You are dealing with what
we would call (in the U. S.) the appearance
of impropriety, versus impropriety itself.”
Questions about money from Freeport have
a special irony for Pindling, who came to
power in 1967 on the heels of the “Bay
Street Boys” scandal.
At that t ime, disclosures of i l l ic i t
payments from Freeport casino interests to
government o ff ic ia l s d i sc red i ted the
previous Bahamian administration.
• Resorts International casino
company in 1981 gave a Nassau
law firm $91,000 that was
promptly passed along to a
building contractor working
on Pindling’s new mansion.
The money went through the Nassau
law firm of Rolle, Knowles, which passed
it along to Yasmar Investments, a firm
controlled by Everette Bannister, Pindling’s
friend and confidante.
Two days af ter Yasmar received a
slightly larger sum from the Resorts’ law
firm, Bannister bought a $91,000 bank draft
payable to genera l cont rac tor Arnold
Cargill.
“It wasn’t done at my request,” Pindling
insisted.
Initially, the lawyer involved in the
transaction, Jack Duffus, told investigators
he was specifically instructed by Resorts
to pass the money to Bannis te r ’s
corporation.
But Resorts officials insisted the money
was an advance for future legal fees - not
to pay Pindling’s construction debts. Duffus
later changed his statement. The lawyer
said he’d re≠freshed his memory and that
his firm’s records showed the money was
meant for legal fees.
He dec l ined to comment fu r ther
Sunday.
“Everette Bannister had asked him
[Duffus] to loan him 90 grand for a very
urgent matter,” Bailey said. “Duffus went
[to Resorts] and got an advance on the legal
fees. He said nothing to anybody about
Bannister ... Bannister did not tell Duffus
why he needed the money.”
At the time of the payment, a Resorts
subsidiary was seeking a contract from the
government’s Hotel Corporation to manage
a cas ino in Freepor t . P ind l ings i t s as
chairman of that regulatory board.
“Resorts International has done nothing
ei ther i l legal or wrong,” sa id Rober t
Peloquin, a senior official with the casino
firm.
Aside from the money originating with
Resorts, the Commission identified three
more payments totalling $60,000 to Cargill
on behalf of the prime minister. Pindling
said he could not recall who supplied the
money.
• Everette Bannister, a Bahamian
businessman now under
investigation for taking an
undercover payoff from U.S.
agents, gave Pindling
$533,000 that originated with
foreign investors.
The funds were delivered in 1980 and
1981, and were never reported on the prime
minister’s financial disclosure forms.
“He needed the money, ” Bannister
explained. “He was building his house.”
The to ta l inc luded $333,000 of a
“finder’s fee” that Bannister said he earned
from the 1980 sale of the Paradise Island
bridge. The seller was Resorts president
James Crosby, who cont ro l led the
corporation that owned the bridge.
We were shocked when we found out
... this guy Bannister had an interest in it,”
said attorney Charles Murphy, Crosby’s
lawyer in the bridge sale. He said Crosby
thought the law firm that handled the sale
got the f inder ’s fee . “We’re innocent
victims,” he said. “But it looks horrible.”
Bannis te r i s a $50 ,000-a-year
consu l tan t fo r Resor t s In te rna t iona l .
Pindl ing said he never knew that the
Bannister money came from the bridge sale.
He said he thought it stemmed from a real
estate deal. Resorts International, one of the
la rges t inves tors in the Bahamas , i s
periodically subject to a wide range of
decisions by the Pindling government.
Bannister also gave Pindling $200,000
in 1981 obtained during a business deal that
involved two would-be casino investors,
Sorkis J. Webbe Sr. and Victor Sayyah, both
U. S. citizens.
Bannis te r sa id the money was an
investment in Bahamas World Airways ’74
Ltd., an ailing airline Bannister operated.
Instead of using the Webbe-Sayyah money
to fly airplanes, Bannister gave most of it
to Pindling.
Casino Application
At the time, Sayyah had applied for
permission to operate a casino in Freeport.
Bannister said he didn’t know Webbe was
the source of the money.
Last year, Webbe was described by a
federal prosecutor as “a working associate
member of La Cosa Nostra” in St. Louis -
an allegation he vigorously denies. Webbe
was also general counsel of the Aladdin
Casino in Las Vegas at a time when federal
officials said it was controlled by organized
crime.
Sayyah couldnot be reached for
comment. Webbe acknowledged loaning
money to a Sayyah corporation that was
la te r g iven’ s, , to Bahamas Wor ld in
exchange for a stock interest. But Webbe
said he had no idea the bulk of the money
would be passed a long to P ind l ing .
“Absolutely not,” Webbe said.
To expla in these payments ,
Bannistersaid he had an “obligation” to the
prime minister. Bannister said he felt bad
because of the failure of another airline in
in which Pindling had a secret interest.
Bannister said it was a handshake deal.
“Nothing was written down,” the prime
minister agreed.
The $533,000, Bannister said, was
meant to compensate Pindling for his stock
in the airline and another company - a
successful airport catering service.
Commission investigators questioned
whether Pindling deserved anything for the
airline stock. One testified that the stock
was worthless, and Pindling hadn’t paid a
dime for it anyway.
Commission Chief Counsel Robert
Ellicott said the commission must consider
whether the Bannister-Pindling stock deal
was just an “excuse” to cover up “certain
illicit payments” to the prime minister.
• A bank controlled by fugitive
conman Robert Vesco loaned $14
million to two corporations in
which Pindling had a secret
interest. Only $3.6 million was
ever repaid.
Vesco’s Bahamas Commonwealth Bank
was the principal backer of both Bahamas
Wor ld Ai r l ines (BWA) and Bahamas
Catering, Ltd., during the early 1970s.
More than most foreign investors,
Vesco depended heavily on the goodwill of
the P ind l ing Adminis t ra t ion . He was
wanted in the U. S. for his alleged role in a
$224 million mutual fund swindle. He
needed a safe hideout in the Bahamas
Except for a three-year sojourn in Costa
Rica, Vesco was allowed to remain in the
Bahamas from 1972 until 1981.
“I didn’t go to bat for him one way or
the other,” said Pindling.
The Vesco bank loaned BWA $3.6.
million to purchase two jets and allowed
the airline another $7 million in unsecured
bank loans. The bank also provided $3.6
mi l l ion for the purchase of Bahamas
Catering, which provides food service at
the government -owned Nassau
International Airport.
“In 1970 and 1971, we all looked at Mr.
Vesco as something of a financial wizard,”
Pindling said.
Vesco’s bank collapsed in 1974, partly
because of the huge, unsecured loans to the
Pindling-Bannister airline that were never
repaid. The catering firm repaid its loan.
When it came to BWA, the Vesco bank
was a “continuous tap that somebody forgot
to turn off,” according to liquidator David
Jones.
Even after it was obvious the money
would never be repaid, the bank kept
loaning millions to the airline, eventually
allowing the total debt to swell to $10.5
million.
Pindl ing’s Attorney General , Paul
Adderley, recently described Vesco as the
“single most criminal, corrupting factor in
the Bahamas in the last 10 years.”
• The Whitfield Corp. bought
Pindling’s previous residence, known
as “Long Bay,” for $650,000 in April
1979 under a generous lease-back
arrangement that allowed him to
continue living in the home.
Whitfield Corp. was controlled by Texas entrepreneur
Abe Lieber, who opened the Nassau-based Amford Bank
and Trust Company in 1978. He was involved with
Bannister in several transactions and once considered
financing the government-owned casino at Cable Beach.
Helping Pindling
“I did it to help the prime minister,” Lieber said of the
Long Bay sale. “There is no question about that, I don’t
see anything wrong with it. I didn’t pay more than the value
of the house.”
Documents obtained by the House of Assembly
indicate that Lieber’s purchase of Long Bay was part of a
package that included other business ventures in the
Bahamas - projects which would have required government
approval. Lieber says those documents are forgeries.
“Show me one favor I go t f rom the Bahamian
government,” Lieber says.
After the sale, the Prime Minister continued living in
the Long Bay house for four years. Pindling’s monthly
payments were charged off against the balance he was
still owed by Lieber.
After Pindling finally moved out of Long Bay this year,
Lieber put the house on the market.
Pindling did not disclose the income from the 1979
house sale until three years later, when a Select Committee
of the Parliament was empaneled to investigate the
Bannister-Lieber transactions.
Similarly, the prime minister did not reveal the interest
he says he had in Bahamas Catering and BWA until
Commission investigators acquired his bank records.
Both firms had government contracts. The Bahamas
Code of Ethics forbids cabinet ministers from holding an
active interest in companies with government contracts.
“If you want to apply U.S. standards you can do a
hatchet job on the Bahamas very easily,” Bailey said.
The one man who was involved in all these transactions
was Pindling’s busnness attorney, Jack Duffus.
It was Duffus who was hired to form BahamasWorld
Airways and BahamasCatering, Ltd.
More recently, it was Duffus who handled the Resorts
International money that subsequently went into Pindling’s
new house.
During the final week of public testimony of the
Commission of Inquiry, Duffus was asked to appear to tell
thestory of the money. He didn’t. When investigators tried
tofind him, Duffus’ secretary said her boss had left the
country.
Duffus to ld The Hera ld he was no t o ff ic ia l ly
summoned to the commission. The lawyer said he went on
vacation instead.
Pindl ing’s adminis t ra t ion has been f rac tured by
accusations of bribe-taking, money-laundering and other
corruption involving international narcotics smugglers.
By JIM McGEE And CARL HIAASEN
Herald Staff Writers.
Nicki Kelly also Contributed to this report.
Bahamas Prime Minis ter Lyn-den O. Pindl ing
acknowledged Tuesday night that his government is caught
in “the eye of a storm,” and that a lengthy investigation of
drug-related corruption has caused “severe political and
economic damage” to the country.
“I know that as the country’s leader, I must take
responsibility for that,” the prime minister said in a
national radio and television broadcast. “Where there is a
storm, it is the duty of the captain to step up ...and take
control.”
Pindling’s administration has been fractured by
accusations of bribe-taking, money-laundering and other
corruption involving international narcotics smugglers.
The prime minister, who has ruled the Bahamas for
17 years, conceded that his administration has made
“serious errors in judgment.”
“Where I have been too trusting, I must now be more
vigilant,” he declared. “Where I have been too lenient, I
must now be more exacting.”
The 15-minute speech came one day after three top
Cabinet ministers resigned and two others were fired in
the lingering wake of the Bahamas’ drug scandal.
Under pressure
The prime minister recently has been under pressure
to resign or call new elections, but he gave no indication
Tuesday night that he was ready to do either.
“The government will not be swayed by the noise in the
marketplace,” Pindling said.
Meanwhile , another key member of Pindl ing’s
government res igned Tuesday amid a l lega t ions of
corruption.
Senator Edward A. “Dud” Maynard, former chairman
of Pindling’s Progressive Liberal Party (PLP) and a vocal
supporter of the prime minister, announced that he was
quitting the Senate “in the best interest of the country and
our party.”
In a Miami Herald article published Sept. 28, Charles
Hilliard, a convicted robber and confessed cocaine was
arrested on U.S cocaine conspiracy charges last month in
Atlanta.
Tuesday n igh t , P ind l ing announced a major
reorganization of his Cabinet, shifting several Cabinet
members to posts left vacant by Monday’s resignations
and firings. Edward Maynard’s brother Clement was named
both foreign affairs minister and minister of tourism; A.
Loftus Roker was appointed to the newly created post of
mMinister Of National Security, and Darrell Rolle was
named Minister Of Works, Housing and Insurance.
In addition, Economic Affairs.
Minister Alfred Maycock takes over the duties of ex-
Agriculture Minister George A. Smith, who resigned
Monday, and Livingstone Coakley assumed the duties of
former Youth Minister Kendal W. Nottage, who also quit.
Both Smith and Nottage were implicated in drug-
Prime Minister Concedes Big ‘Errors In Judgement’
Pindling’s administration has been fractured by accusations of bribe-taking, money laundering and other corruption involving internationalnarcotics smugglers.
related corruption in testimony before a Commission of
Inquiry. Both deny any wrongdoing.
Pindling also announced that Transport Minister Philip
Bethel would be put in charge of local governments, and
Attorney General Paul Adderley would give up the Foreign
Affairs Ministry to become minister of education.
The only new Cabinet member is Dr. Norman Gay,
who will be minister of health.
The prime minister said a smaller Cabinet would deal
more effectively with the Bahamas’ problems. “You and I
know that a hard tough line will have to be taken on crime
and drugs,” he said.
In closing, Pindling asked for the support of the
Bahamian people “to pledge anew that we will preserve,
defend and protect our heritage as free Bahamians.