Suisse Security Bank & Trust Ltd., which lost its Supreme Court battle to have its banking license restored, charged that the ruling further erodes the confidence of international investors in The Bahamas.
Responding to the April 2, 2003, ruling handed down by Justice Austin Davis, SSBT said that to suspend and revoke the banking and trust license of SSBT is “most disappointing and an outrage”.
In a statement released on the weekend, SSBT also stated that the ruling represent a very troubling, disconcerting message sent to the local and international banking/financial community.
The bank said that it committed energy and resources to aggressively appeal and have the ruling overturned.
“No doubt, our success will restore in the eyes of local and international investors some measure of confidence in the system of banking regulation as practiced in the Commonwealth of The Bahamas and in a properly functioning, democratic-based judicial system.”
Last Wednesday, Justice Davis ruled the appellants failed to prove any grounds for their appeal and dismissed the appeal “in total.” The Central Bank considers the court’s decision to be an important affirmation of the regulator’s authority.
“The Central Bank of The Bahamas is pleased that the statutory appeal brought against its decision to revoke the bank and trust license of Suisse Security Bank and Trust Limited (SSBT) has now been decided. The Bank is satisfied with the decision relating to the appeal.”
This confirmation of the authority conferred on the regulator by the Banks and Trust Companies Regulation Act, 2000, inspires continued confidence in the ability of Bahamas regulators to protect the quality of Bahamian banking service.
Criticising the duty of the Central Bank governor, SSBT said having its banking license revoked “represents a very troubling, disconcerting message sent to the local and international banking/financial community.
“Clearly, this ruling did not take into account the obvious facts of this case.”
Added SSBT, “Such an endorsement is bound to cause additional apprehension among the international financial community, as we have already received contact from international investors expressing their shock and disbelief over this ruling.”
The bank said that it plans to get its license restored and resume business.
The legal wrangling between Suisse Security Bank & Trust and the central bank began on March 5, 2001, when Governor Francis suspended the license , which he claimed failed to formally fulfill certain prudential requirements and satisfy the Central Bank of The Bahamas as to its affairs.
Police officers seized physical control of the bank’s documents, ordering all employees out of the building at Orissa House on East Bay Street.
At the time, there were 45 employees, 43 of them Bahamians. The Trade Union Congress was able to negotiate an estimated $1 million in severance pay for the employees.
At a press conference following the bank’s closure, chairman Mr. Mohammed Harajchi said that when he opened the bank, it was not only for business but to get involved with Bahamians.
Mr. Francis appointed chartered accountant and banker Raymond Winder as receiver, with a mandate to control the bank’s affairs in the interest of creditors.
Subsequently, the new Bank and Trust Companies Regulations Act came under attack in an action filed in the Supreme Court by Suisse Security. The institution asked the court to declare the act unconstitutional, thereby eroding some of the powers given to the central bank governor under the act.
Suisse Security further challenged the central bank’s authority to suspend its license, and to appoint a receiver.
Mr Harajchi, who has lived in The Bahamas for 21 years, vowed to continue to fight, saying his institution has never been involved in money-laundering activities nor named in any cases of corruption.
He then said: “We became the only bank in The Bahamas never involved in money-laundering or any other cases about corruption.”
The power to license banks and trust companies and to oversee generally the financial services industry in the public interest, which was once vested in the Minister of Finance, is vested in the Governor of the Central Bank of The Bahamas.
By Lindsay Thompson, The Nassau Guardian
