The BPA scandal in Andorra
The BPA scandal blew up over a fracas with the USA. The resulting court cases and counter claims are still very much ongoing. There will be an update soon but nothing really of interest as ever when courts and lawyers are involved.
Please start here at the bottom and scroll up for historical order...
STOP PRESS - BPA closure was a mistake, an innocent bank was destroyed by political maneouverings and a concocted allegations of money laundering and links to Venezuela, Chinese and illegal organisations. Truth or Fiction?
A new documentary/film called the Andorra Hustle has been released and can be watched on the link below. The whole film is 1hour 53mins so get a beer and settle down.... However as soon as you hear in the pre-amble that most of the rich Andorran families made their money with the plunder and murder of jews escaping the Nazi holocaust by trying to flee through Andorra I knew we were in for some fiction. In fact the documentary/film has been clearly made by the BPA defence team with a sprinkling of the conspiracy theorists input and the monotnous drone of the American guy who hosts the Government cover ups of UFO sightings, moon landings being filmed in a studio outside LA or that 911 was the work of the US Government. While most of the facts are interesting and some to the point especially concerning HSBC and other institutions, vitally important other facts to the detriment of BPA' s claims are noticeably missing. BPA is portrayed as the innocent pawn in a political gain for the Spanish Government to decapitate the finances of the Catalan Independence movement and its leaders, the allegations of money laundering were fictitious and designed solely to allow the Americans to shut down BPA with the simple publication of a "311 notice". Well, you make your own mind up....The Andorra Hustle
And if you read the comments below you can see how powerful a tool the internet is....make your own mind up !!
December 2017 - So what's the story now ?
BPA was sold to J.C Flowers for 29 million euros and the "good" clients were transferred to the new Vall Banc. The new bank is now operational, well sort of, they still have correspondent bank problems but are starting to get things ironed out. BPA, no longer a bank, continues administratively with over 95% of accounts now cleared and transferred to Vall Banc. Meanwhile in May 2017 Ramon i Higini Cierco the former directors and major shareholders of BPA had their action in the Federal Court in the USA thrown out. They had claimed that the original Treasury action that started the downfall of BPA was illegal as it was started based on secret evidence. Meanwhile parallel court cases drag on from each side with the Cierco brothers claiming 364.6 million euros from the Government actions and the brothers facing a number of criminal charges including a dummy company account through which they are alleged to have made illicit gains. All of these cases will drag on for years both in Spain and Andorra. The US had since praised the actions of the Andorran Government in takinmg immediate action, the bottom line is that the Andorran banks do not want to fall foul of the US or any global organitation and opening a new account here can be a daunting process.
19th July 2016 - In 2012 BPA had commissioned a corporate law firm and then hid the findings.
In 2012 the board of directors of BPA hired a Spanish corporate law firm to conduct an independent analysis on its operations to test for compliance. The report which was only discovered earlier this year and 12 months after the BPA scandal, courtesy of an un named ex director having a copy on his lap top, delivered a devastating finding of BPAs methodology. In particular it found in its subsidiary Banco Madrid in Spain ( Long since closed by the authorities, please see below in historical articles) had a system of express accounts which could be opened witout any original document being produced nor any checks whatsoever on the source of funds. The most important conclusion in para 22 stated that there is a "significant risk .......for the commission of crimes of money laundering ......... especially from income pertaining to non-residents". The Andorran authorities state that this report now forms a significant part of proving the case against 12 ex directors of BPA in that it is prima facie knowledge of criminal negligence of the ex directors in the very least. What is not commented on though in the media is the clear failure of the Andorran and in particular the Spanish authorities in their own regulatory inspections. Perhaps the letter from FinCen of the US Treasury was not just blind shooting from the hip as many would like to have believed.
12th May 2016 - None of the anticipated rush for the exit at Vallbanc after day one.
At close of play at day one of the operation of the new Vallbanc, things were reported to be rather normal, with 300 or so clients attending the new branches. Over a million euros was withdrawn, most likely from pent up frustrations and debts owed by those whose funds had been frozen. The only bad news of the day was that at the last minute before opening the Government announced that the maximum withdrawal would be 15% and not 20% of the account balance up to 25,000 euro maximum. It was reported yesterday with a feeling of relief that there was no stampede or mass withdrawal with all branches appearing ro weather a normal banking day. For those unsure whether an existing account has been transferred, or whether existing account holders who did not answer the call of the auditors to provide due diligence, their accounts can still be cleared at two branches of BPA, one opposite ILLA store and the other opposite the Government. Bearing in mind the extreme difficulty of opening new accounts now in Andorra, it may be prudent to finalise the switch to Vallbanc?
9th May 2016 - Lawsuit at last minute from the BPA preferential shareholders.
At the 23rd hour of the last of the 15 days prescribed for legal challenges to the 21st April 2016 BPA resolution, an army of preferential shareholders who stand to lose every cent have put in a claim to AREB and INAF for a settlement of 45 million euros of the issued 60 million preferential shares. Apparently this legal response took a team of 10 international auditors working flat out 24 /7 to file the claim in the detail required. This is not going to affect the Vallbanc opening scheduled for this Wednesday. Work is already underway for the opening as the attached photo shows.6th May 2016 : Hardly a fond farewell to BPA!!
So this the last trading day for BPA has arrived, no fanfare, no tears, just damned relief in most quarters. On 11th May Vall Banc, the new baby of J C Flowers opens but with restrictions for the first 6 months of operation for allowing for withdrawals of up to 20% of any funds deposited and cleared with the BPA up to a maximum amount of 25,000 euros. International transfers will also face restrictions pending new correspondent bank relationships.
140 employees from BPA will don a new uniform in the four branches in Pas de la Casa, Escaldes, Andorra La Vella and La Massana whilst the auditors and regulators will continue behind the scenes in their analysis of what is left of BPA with their rubber gloves on. So what is the outcome? No local bank bidded, and yes it was an argument with AREB in that they could not get any guarantee on a rush for the door for assets to the other local banks once restrictions were lifted, in effect they could have been left holding an empty shell. That did not put off two of the four foreign bidders and the winner J C Flowers will eventually pay about 29 million euros, a cheap bank to say the least. Suffice to say they may not be too concerned about a rush for the door, more so that they have a prized banking license in Andorra, the only foreign entity to actually have ever had the opportunity. That banking license to them is worth every cent of the 29 million and I am sure that we are in for quite a ride when the bank gets fully up and running.
22nd April 2016 : J C FLOWERS & Co.INVESTMENT FUND TO ACQUIRE VALL BANC.
Finally in a quicker than expected decision AREB has announced a clear winner. The valuation in July 2015 for BPA was 103 million negative, and JC Flowers will pay 29 million for the new Vall Banc. J C Flowers is a US investment company run by billionaire Christopher Flowers with 15 billion dollars invested globally in 44 countries, the firm also manages 7 billion of assets with Headquarters in New York and London. Whilst the full document on the transfer and operation will be released soon, Vall Banc is expected to start working from 11th May 2016 and during this period all of the accounts that have been cleared will transfer across, correspondent banks will be announced, as will a period of continuing operative restrictions. The new bank will only for the time being operate in Euros and it is expected that full unrestricted operations may take up to 12 months. It is reported that there will be access to clients hiterto restricted investments and deposits, I will wait for official confirmation as and when the detailed timetable is released. Good news for all, and a long overdue opening of the banking sector in Andorra to foreign competition. BUT before we all get too excited, the decision is still subject to final approval by INAF, although it would be a very brave Jordi Cinca to throw the proverbial spanner, in reality it should be a rubber stamp!
13th April 2016 - BPA analysis thrown upside down, no local banks involved at all
9th April - A timely visit by the boss of BPA Panama.
Just slipped into the papers was a visit by Javier de Gamboa the boss of BPA Panama. One had to feel somewhat apprehensive that Andorra would be mentioned somewhere in the "Panama papers" scandal (Other than the prominent figure in Government) that has named so many of the rich and infamous. Well BPA is now linked to the Petrobas scandal whcih threatens to topple the Government of Dilma Roussef in Brazil. 14.6 US $ million was paid to an account for ficticious construction contracts in BPA. The account name was Kingsfield Consulting Corporation and yes you guessed it, it was created by Mossack Fonseca, source of the Panama papers. I assume that the BPA account was in Panama, hence the appearance of the boss here, I am not suggesting any direct knowledge or involvement but more of concern should be PWC, have they not had wind of this as the auditors? Have the BPA offices worldwide not been part of the audit and process? Has this account been pulled from the "good" to the "bad"? As with the restructuring of BPA, so many questions and so little answers.
9th April - Bids close bit whats the result ?
A very unclear announcement indicates that at least one of the eight finalists have made a bid. Along with this very unclear announcement it is not known whether any of the foreign bidders (out of which we know there are two American companies Apollo Global Investments and JC Flowers (JCF)) have made an offer before the latest deadline which closed yesterday. Furthermore we will have to wait an unknown number of weeks for whoever it is to decide, although the winner "should be" announced by the end of this month. Strangely also the information on assets and liabilities afforded to foreign bidders in the "Data Room" was different to that granted to local bidders, no surprises there then.
6th April 2016 - No April Fools or even a hint of joy for BPA clients.
The light hearted insertion into the website of Catalan proficiency met with some interesting feedback, I wish we could have a laugh over BPA but no. The deafening silence continues, as does in Andorra the ominous lack of news. It is quite apparent that matters have come to an impasse with the Ciercos legal actions and demands weighed against the appetite for any entity be it Andorran or Foreign to take on such an unknown liability. NO financial institution could ever be expected to take over BPA with outstanding legal actions in Europe and the USA, the Ciercos have played a masterful hand and will not roll over without a fight. It is interesting to note that the Government current account statistics for 2015 were released today with an expenditure of 400 million euros, and that puts into proportion the Ciercos claim of 350 million! The Government who played fiddle to the Americans (and in reality they had no choice) did not count on the rear guard legal actions of its former family controllers. The transparency promised seems to have died a natural death some time ago along with any imminent solution, on the latter, I hope I am wrong for the sake of long suffering clients.
11th March 2016 - Happy Birthday, my turn for a rant.
Today marks one year and one day of this episode after promises of a quick and transparent resolution that would take weeks and maybe a month ot two. Many papers are rightly scathing on all fronts so I thought it is time I also had a go. A casual reader may be forgiven thinking that references to the Cierco brothers may be some clown act in a travelling circus but being at the centre of Andorra's biggest financial headache their rearguard actions only serve to delay and add pain to many areas of Andorran society:
- Savers who cannot access their life savings
- Unemployed who can no longer live on an exhausted current account
- Pensioners or persons who cannot draw down funds for private life saving treatments outside Andorra
- People who have lost a down payment on a house to the seller, not being able to honour the payment of the balance
- Honest and hardworking family businesses that have collapsed without access to their capital
- Businesses forced to take the standby line of credit and having to pay interest at 2% above Euribor
- Investors in funds that they may have had switched or realised prior to one of the worst performing financial years on record
- BPA staff who do not know whether they will have a job to feed their families next week
The list goes on while the guys in that travelling circus pile on global lawsuits, compensation claims, and other delaying tactics that quite frankly are working in their favour and so far have landed the Andorran "taxpayer" a 14 million euro bill for PWC auditors. Whilst it goes without saying that the Cierco's amassed fortune would allow a life style that most would envy regardless of the fate of BPA it only serves to highlite the very selfishness and darkside of shareholder greed. With the promised Government transparency akin to midnight in a coalmine with dead torch batteries, it would seem the headscratching down at Decision HQ is starting to cause profuse bleeding and that quite frankly the file is being passed around like kids playing pass the parcel with a lump of red hot lava. Enough suffering and enough delays, please can we have a solution that benefits those innocents whose lives have been put on hold?
8th March 2016 - BPA the hidden agenda?
Things seem to be hotting up now especially with the announcement that in the "event" that the bidding is won by a local bank the Ciercos could be "compensated" by offering them a negotiable amount of shares in the new entity Vall Banc in exchange for the dropping of all legal challenges globally and of course yertseday's demand for 375 million compensation. A spokesman says that this could be the best for all involved ( Certainly for the Ciercos). It would appear then that the Ciercos may have the Government over a barrel, but how long has this barrel been there given that as always suggested here based on local sources Mora Banc have always been the front runner to run the new bank. This probably is the reason for even further delays on the end of auction yet again announced yesterday by AREB. It would be interesting to hear from the four foreign "bidders" whether they may feel a little stitched up or whether they genuinely believe they were ever in, and still remain in the running?
7th March 2016 - Ciercos send a demand for 375 million euros for nicking their bank.
The major shareholding brothers of BPA ( or rather the ex major shareholders) have sent a demand note to the Government for 375 million euros being 75% ( equal to their "ex" shareholding) of their valuation of BPA and Banco Madrid at the date before the wheels fell off last March 2015. The lawyer for the Ciercos is appealing to the good will of the Government since the lifting of the note from FinCEN and the subsequent "evident" mis appropriation of BPA by the Government. Just how much goodwill the Government may have on their part remains to be seen, especially as the demand amounts to about 10% of the country's GDP, frivolous and vexatious may spring to mind, a suggestion for an Andorran equivalent would be welcome !! On the downside yet again the date for the auction to finish has again been pushed back, this time until the end of March 2016, meanwhile the first aniversary will most likely pass without too much comment in the local media.
2nd March 2016 - BPA Clients frustrations.
An "air of despondency"(1st March 2016) seems to be an understatement for one client which may well spell out the general grassroots clients' frustrations as he writes:-
"This freaking mess goes and on and on...
As far as the depositors are concerned, it makes no damned difference if their accounts are moved to VALL and then automatically to the buyer or stay at BPA (with or without a new name) if the Ciercos win their case.
As a matter of fact, if not for the mess that AREB created BPA should have been free and clear to operate normally with correspondents and all as of 18/02/2016, because all legal restrictions on it have been removed.
Finally, certain people in charge are very lucky to exist in a laid back sleepy little principality in the Pyrenees. Had the same mess taken place in the US for example, Joe Public would have entered their offices armed a long time ago".
As ever we always appreciate hearing from you all...
1st March 2016 - 11th March new deadline, and that is just the bidding deadline.
What was supposed to be an original deadline at the end of December 2015 has now been announced for 11th March to complete the "sealed" bidding process for Vall Banc. The delays are reported to be due to the finalisation of the true assets and liabilities which are still being analysed, these being fairly important as the bidders can then understand what exactly they are bidding for. The date of 11th March 2016 is one year and a day after the fan was hit by the proverbial human waste following the Fin CEN note that proved to be the demise of BPA, and since withdrawn. With these delays and with Cierco's rear guard actions in the USA and locally, Joe Public has a right to an air of despondency with no end in immediate sight. 2nd March 2016. An air of despondency seems to be an understatement for one client which may well spell out the general grassroots clients' frustrations
26th February 2016 - General Cierco's last stand?
The general plan is for Vall Banc to rise from the ashes and for BPA at some stage to cease to exist after the final audits on remaining accounts and the final bill is calculated for who owes what and who will pay for what. BPA will never exist again as a 
licensed bank once the new one is up and running. That is not the view of the majority shareholders the Cierco brothers who are now fighting a rear guard action to prevent the transfer of assets and performing liabilities to the new bank. They are trying to enlist the support of the minority shareholders that the Cierco's way forward is the best in that BPA can and should continue as the bank. They have also written to the Andorran bank watchdog AREB claiming that the recent letter from FinCEN that lifts the restriction order on BPA from last March has been issued due to an imminent ruling by the District Court of Columbia on an action bought by the Ciercos back in March 2015 against the issue of the original Fin CEN notice. They have "requested" AREB to stop the whole process failing which they will revert to judicial process against the Government and the authorities involved. In summary the Ciercos are saying that the notice from FinCEN is no longer in existence and therefore BPA has a right to function which in their mind means that the transfers of the "good" as explained below to Vall Banc amount to corporate theft.
licensed bank once the new one is up and running. That is not the view of the majority shareholders the Cierco brothers who are now fighting a rear guard action to prevent the transfer of assets and performing liabilities to the new bank. They are trying to enlist the support of the minority shareholders that the Cierco's way forward is the best in that BPA can and should continue as the bank. They have also written to the Andorran bank watchdog AREB claiming that the recent letter from FinCEN that lifts the restriction order on BPA from last March has been issued due to an imminent ruling by the District Court of Columbia on an action bought by the Ciercos back in March 2015 against the issue of the original Fin CEN notice. They have "requested" AREB to stop the whole process failing which they will revert to judicial process against the Government and the authorities involved. In summary the Ciercos are saying that the notice from FinCEN is no longer in existence and therefore BPA has a right to function which in their mind means that the transfers of the "good" as explained below to Vall Banc amount to corporate theft.23rd February - BPA figures released, the good the bad and the ugly.
From an initial deposit base of 1,500 million euros before the FinCEN note we now have:
The good - 800 million euros is the amount so far that will be transferred to Vall Bank, this figure will change (increase) as and when the bad and ugly final figures are known.
The bad - 350 -400 million euros which have not been vetted and cleared by Price Waterhouse and are regarded as dubious. The onus will be on the account holders to now clarify and prove their integrity and be moved with that green light to Vall Bank.
The ugly - 300 million euros withdrawn so far by clients during the restricted access period ( still in effect) with the 2500 euro weekly limit. This amount I have labelled as ugly simply because the withdrawals only apply to current accounts and not investment accounts or funds. If the account type had been unrestricted there undoubtedly would have been very little in the "good pot".
POST NOTE: Sources have questioned how and from where 300 million euros could have come from to satisfy the demand for withdrawals given that all of the bank assets and correspondent bank accounts outside Andorra were frozen? There must be one hell of a big safe at BPA unless there was some agreement somewhere with someone about something?
This last paragraph then begs the question of how the new bank can lift restrictions without a stampede for the exit? There must be a credible guarantee mechanism in place to rebuild confidence, and that together with legal actions by Ciercos, shareholders, and account holders is providing quite a conundrum, hence the fast approaching birthday of the FinCEN and without any further announcement of dates by AREB.
20th February 2016 - The Green Light for BPA and Vall Bank.
I am grateful to one reader who sent to me the news that FinCEN have withdrawn their findings and proposals issued on March 13th 2015. This effectively gives the green light both for BPA and its successor Vall Bank to operate without restrictions. The article is released below and the full text of the order can be read here. Although the order is dated 18th February, only today does it appear in the local press. Further in the local press there is no mention of any new timings for Vall Bank nor any news on the bidding process. Mora Banc which has consistently been reported here from many sources to be the favourite remains so at Rumour Control.
29th January 2016 - American bidders.
In between some political wars of words over the lack of transparency as reported previously here it appears two of the four foreign runners are American. Was this all a plot ? It has emerged that Apollo Global Management and an executive of Goldman Sachs, JC Flowers are all in the bidding, perhaps they will make an offer that can't be refused(?). One of the final delays apparently is an agreement with Caixa Bank in Spain who since this blew up has refused any transfers in or out. The BPA funds that are in Caixa Bank hitherto unannounced but substantial should soon be agreed to be repatriated to BPA so it is reported. Things are hotting up as the finishing post comes into sight, hoping that this is the final furlong and that there are no further laps.
25th January 2016 - A new hope for dates.
There seems to be a little more urgency now at last, a positive move to get the new bank up and running, especially as that all important first anniversary of this mess is creeping up ominously. We are told that the new bank, Vall Banc, should be up and running by 8th February 2016 and will run in parallel with the old BPA while the "auction" is decided and winner announced by 29th February (Fortunately 2016 is a leap year). It does sound a little tricky though having the two banks run together especially with Cierco's litigation and now the transfer of the BPA staff pension funds that somehow seem to have been forgotten. On top of that we have the "Data Room" process ongoing which stands for the phase where the final bidders can access the balance sheets to find out what they may be buying. February should be the month when resolution starts to move towards the finishing post but its far too early to rule out further delays, it is a very complicated situation, watch this space....
20th January 2016 - Problems and delays.
Beginning to sound a little repetitive but it is almost as if the proverbial wall of silence has descended upon any indication of a resolution, the promised transparency of the whole process seems a distant promise. The sticking point or at least one of the reported sticking points is that potential "bidders"for Vall Banc( The new BPA) were given a snapshot of the assets and liabilities as at their bid submission date, whatever those details we may never know. Unfortunately all of the individual account 2500 euro daily withdrawals continue to drain on this snapshot. Of more concern is the situation where significant depositors and investors may also have accounts in the other four Andorran banks. Under current Andorran banking laws sharing of this information is not only not available but is illegal, so we have a problem of inequality where the local banks may have an advantageous position while the foreign bidders remain down the coal mine.without a torch.
14th January 2016 - The inevitable silence and the passing of deadlines.
I have received a few emails asking for an update on this saga, and quite rightly so. Sadly there are no answers nor is there any news in what was proudly announced to be a transparent and open process. There is actually nothing further on this, not a sausage. The winner (or should I dare to say the chosen entity) has not been announced by the end of December as was intended, nor strangely are there any rumours from behind those closed doors. Rest assured that I shall report the latest as soon as we have anything at all !
23rd November 2015 - Eight bidders in the shortlist for the next stage of the auction.
AREB, the local equivalent of the banking Commisssion, has announced that eight candidates will progress to the next stage and that is the sealed bids for the new bank called Vall Banc. It is understood that together with the four local banks being successful (no surprise there then) there are four others as yet not identified but believed to be all foreign, two banks and two investment companies (A further unconfirmed source has suggested a Swiss interest). The eight candidates have already now received the document of sale that contains all assets and liabilities etc and binding offers must be made by the middle of December with a view to announcing the winner at the end of December 2015. It is considered that if a local bank wins then the bank will be absorbed into that entity, if a foreign bid wins then the name Vall Banc will be used. One issue that will affect potential value and the bids made is the loan portfolio in relation to property believed to be 500 to 600 million euros. The realisation potential and current values of properties secured for these loans to promoters and purchasers has not been fully analysed in the audit.
31st October 2015 - The auction process begins but how real is the transparency?
For 10 days from today until 9th November those entities interested in bidding for Vall Banc, the new Phoenix bank of Andorra will be able to register their interest in bidding. This phase One we are told is for due diligence (without the usual Apostillised documents though). Come November 9th those who successfully "qualify" will progress to Phase Two in which they will sign a confidentiality agreement and have access to the accounts, assets and liabilities with a view to making their sealed bids. AREB ( The new banking Agency overseeing the process) will announce the winner once they ( and their advisers Key Capital Partners) have sifted through the bids. AREB has declared the process "competitive, transparent and non discriminatory". It is difficult to grasp that confidentiality agreements, sealed bids, no publication of Price Waterhouse audits, etc ad nauseum is really transparency, and we will never here about the competitiveness and non discrimantory aspect: Is Andorra lifting its restriction in the banking area to Foreign Institutions or will their bids just be unsuccessful ? At least the end of this saga may be in sight for those blocked and restricted accounts at the old BPA. Lets hope the light at the end of the tunnel is not the train coming the other way !
29th October 2015 - Vall Banc, an unfortunate name ?
The new bank of BPA called Vall Banc may be unfortunate in the pronounciation for non Catalan speakers. Where in English "VALL" is pronounced V-A-L-L, in Catalan it is pronounced similarish to "B-Y-E", so lucky really the bank is not representing the two valleys of Andorra, other wise it really would be BYE BYE BANK !!
27th October 2015 - BPA auction draws near, 25 potential bidders
Price Waterhouse is expected to complete its audit of BPA accounts with a final report as to which accounts and assets will be included in the new bank called Vall Banc. 25 potential bidders have expressed interest ranging from the usual suspects of Andbank, Credit Andorra, Morabank, Banc Sabadell, some foreign institutions including venture capitalists to the co-opearative proposal called Raiffaisen. The value on offer is yet to be determined as are the ground rules for the bidders. It is understood though that the details of the accounts and overall financial position will not be made public at least at this stage and the bidders will be required to sign a confidentiality document for access to the accounts. The time table indicates that the results of the process will be known by the end of the year with the usual proviso for a slight delay into 2016. Not sure that Joe Public and those who have suffered this saga personally and from a business perspective will ever know...opaque transparency !
15th September 2015 - End of Audit and the inside story revealed
Price Waterhouse will complete the audit at the end of this month to lay the groundwork for the auction of the new bank "Vall Banc". Meanwhile the Government have re-iterated their stance that every legitimate depositor will continue to have access to all of their monies in full within the framework of the new bank. Meanwhile it has been revealed that up to 26 directors and employees are implicated in a scheme in the bank whereby predominantly Spanish money was moved to Andorra after a domestic deposit with Banco Madrid the former subsidiary of BPA. The funds were transferred by using the accounts of Andorran residents or entities and then after that the funds were placed in the actual clients account. This circumvented the requirements for international transfers by Spanish subjects that would otherwise be subject to exchange controls. In the case of Joan Pau Miquel the Director still the sole person incarcerated in prison here, it is alleged that he personally received funds from the entrepreneur in Spain named Rafael Pallardó who had a more than dodgy involvement with Gao Ping's "art collections" globally. It is alleged that Joan Pau Miquel oversaw the funds being remitted to China directly from Andorra in various false names. The Chinese connection was originally specified in the original report from FinCen. Gao PIng is currently awaiting trial in Spain.
11th September 2015 - British Interest in the new BPA
Representatives of CLW Capital, associated with the investment bank Salamanca Group,and Key Capital Partners met yesterday with the Minister of the Exterior in Andorra to discuss their interest and vision and learn first hand about the procedure for the auction of the new bank "Vall Banc". I actually cannot find any reference to CLW Capital in London or elsewhere so I assume it has been formed as a venture capital project for this purpose ? Anyone know any more about CLW ?
3rd September 2015 - Waitiing and waiting...
All of the summer has been taken up with workers rights and an agreement for the wellbeing of the staff. Finally it seems both sides have reached agreement and staff will be transferred as and when to Vall Banc the good bank that is due for auction. Unfortunately this has been delayed ( latest estimate to mid September) as Price Waterhouse have not been able to complete the audit nor identify the exact level of assets and liabilities. When that is finalised then there will be a further period of 6 -8 weeks while bidders do their business ( they are expecting 5 - 12 bids). After that we don't know exactly how long the process is going to take to finalise, hence I do not know wen restrictions on BPA will be lifted. The idea of a Co-operative bank is still a viable option but appears to be losing momentum against an auction process. All is all not an eventful summer for those in BPA still sufffering from frozen assets.
25th June 2015 BBB- *rating retained for Andorra from S&Ps
S & Ps yesterday reiterated the rating of BBB- for Andorra in spite of heaping praise on the measures taken by the Government. They also highlight that to date there is no evidence of contagion to other banks and the financial system appears to have weathered the BPA crisis. However there still remain unknowns and that is led by the intended resolution by splitting BPA and selling ( by auction) the new good bank under a new name and as a new entity. The bad and toxic assets also are still being analysed. Until this is successfully resolved S&Ps will retain the negative outlook for Andorra.
* BBB status, one below "A" is defined as "An obligation rated 'BBB' exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation" The Negative addition is a further measure of caution.
As a quite meaningless comparison S & Ps rating for Greece is CCC +
20th June 2015 - BPA staff not happy.
The Government have announced that in the event that BPA staff are laid off they will get 25 days compensation for each year worked. The subsidiary in Spain awarded 33 days per year when that was wound up. The staff here are demanding 45 days per year. It would appear then that lay-offs are inevitable and that would tend to suggest that a local merger is the favourite option and that would be Morabanc. Nothing official yet, but when banks merge they pool branches, a sale to say a foreign entity may lessen any lay-offs, lets wait for the "auction" of the new bank.
16th June 2015 - BPA a new beginning, the plan is announced.
Agència Estatal de Resolució d’Entitats Bancàries (AREB) the newly formed Banking Commission tasked with reporting on BPA has announced that the name of BPA will cease to exist as from 31st July 2015. A new bank ( name to be decided) will be formed as at that date with the existing good assets. All accounts will be systematically transferred to the new entity and this new bank will be auctioned on the local and international markets by the end of 2015 and if this fails to attract bidders the remaining option will be to then dissolve the bank. It is reported though that there is positive international interest from foreign banks, as well as local interest from Morabanc in Andorra to take over this new bank. The plan for AREB is that the old BPA, the "bad" bank, will continue temporarily as a separate entity with each remaining "toxic" account being transferred across to the new bank once each account and funding have been examined and cleared for transfer. The current weekly restrictions on withdrawals will continue until the new bank is established ( no date fixed to lift the restrictions) and the new bank will ( hopefully) provide full employment for the current BPA staff. All in all this is a welcome development and confirmation that decisions are being taken to resolve the BPA issue.
12th June 2015 - 13 Parliamentary questions on BPA but few indications of a resolution.
Unfortunately rather than moving forward much of the debate in yesterday's parliamentary session centred around the verbal notice given to the Andorran Government by FinCEN on March 4th that the proverbial would hit the fan on March 10th and why the Government did not act. The conspiracy theorists take the typical anti establishment view that the Government tried to hide it and do a deal with FinCEN not to make it public, whilst Government replies were that during that period the Co-Princes were informed almost immediately as were INAF and other Government organs to prepare contingency plans for that date. What is more of a concern is that the Auditors are insisting that each of the 23,000 account holders be interviewed in person to verify the legitimacy of the source of funds which they now estimate cannot be c0mpleted before the middle of August. That date must be questionable given the seasonal summer malaise where deckchairs are more inviting than BPA offices. It is also now the middle of June and there is no real sign of the report to Government which could map forward a resolution in the BPA saga. One gets the inevitable feeling that system drag, politics and procrastination are beginning to take their stranglehold where decisions and resolution are there....at the end of the rainbow.
3rd June 2015 - BPA report and proposed resolutions due within 2 weeks.
Agència Estatal de Resolució d’Entitats Bancàries (AREB) the newly formed Banking Commission tasked with reporting on BPA is expected to release its report and recommendations to the Government around the middle of June. This will have taken into account the audit by Price Waterhouse with the division of the good, bad and the ugly. One proviso though is that whilst AREB wants to get the situation resolved and funds unblocked it is making quite clear that they only are making recommendations for the Main decision makers of Government. In realspeak that is an advanced apology that a resolution is out of the hands of AREB and that they bear no reponsibility for Government prevarications. Once again we urge the decision makers no political infighting or points scoring, just get this resolved quickly.
28th May 2015 - The controling family of BPA take their defence to the Wall Street Journal
Ramon Cierco who with is brother Higini own 75% of BPA has protested against the accusations of FinCEN highlighting in the Wall Street Journal that from the year 2000 onwards BPA had been audited by KPMG and Deloittes specifically on anti money laundering audits and had always emerged with flying colours. He also asked why in the months of investigation by FinCEN and US enforcement agencies, and before they directly informed the Andorran Authorities, that nobody had picked up the phone to them or had even contemplated an internal investigation. Everything to the Cierco family had come as shock and disbelief. There are also questions raised as to why the Andorran Government sat on the information from FinCEN (which the authorities dispute) before taking the resulting drastic action against the entity.
Whilst the final report by Price Waterhouse is still being digested, the general feeling is now that the bad components of the bank (known to be a not too significant minority of invested funds) can most likely be written off and met by reserve and family funds, and that the creditors, investors and depositors will be fully re-imbursed. There is still nothing concrete on the future structure of the bank, local rumours have tended to indicate a possible merger with another local bank, but realistically whether a new bank arises from the ashes or whether there is a takeover the old name of BPA is unlikely to be around for much longer.
As an editorial opinion the priority is resolution and full access to funds and investments and most importantly that all current and impending court actions and of course the inevitable political point scoring whether in Andorra or elsewhere must not be allowed to delay this.
12th May 2015 -BPA the day of reckoning
Today marks 60 days since the sorry saga of BPA blew up and this day is the deadline laid down by FinCEN ( Of the Department of the US Treasury) for the findings from the investigation. The report completed by INAF and Price Waterhouse, seconded into help with the audit, is now probably in the hands of a representative from Andorra being made to wait outside the Treasury in the pouring rain. There is no deadline though from the masters across the pond for a response nor will we know their views until they decide when or if to make a statement. Meanwhile the so called fifth and strongest special measure of their operating manual continues in effect (meaning that BPA has no access whatsoever to the US market nor the clearing house in New York), as do the local restrictions of the weekly withdrawals. Now is the time for the Government here to release the findings, good or bad. Every day that passes will serve only to undermine public confidence, forget the hush hush secrecy, the public and especially the clients need to know and quickly.
9th May 2015- BPA fingerpointing starts in earnest.
Big headlines today that the Cierco family who own BPA are blaming the Americans for "destroying a viable and solvent financial entity" . They and major shareholders of BPA also blame Jordi Cinca, the Minister of Finance for taking such irreversible and drastic action based on some unproven communication from a Department of the US Treasury. As I outlined in recent editorials, very little has in fact been found and the challenge now for the Government is how to deal with this and prevent the stampede for the door when restrictions are lifted. Shareholders also suspect that Spanish (revenge) politics relating to historical problems with Andorra on its doorstep and all the missing monies from cases unrelated to BPA (Pujol being just the last in this series) may have played a role in this. I am sure that neither the Americans nor the Spanish are losing any sleep over what has happened in Andorra: Whether or not there is a criminal case against the only Director detained for this, Joan Pau Miquel, remains to be seen. I would not fancy his chances since a release and no charge will lend support to the voices here that the Government have been inept!
5th May 2015 - BPA- Reached rock bottom but still digging
The initial kneejerk reaction to placate the Americans went down well in International circles and has avoided a potentially game changing sanction against the bank. For the local community frustrations are at boiling point with pressure groups, court actions and anti Government rhetoric. Local businesses in particular have been in some cases fatally affected by the weekly limit of 2.500 euro withdrawals, not to mention the thousands of individuals who are getting no answers. The problem is finding and end game for all of this. My sources close to the investigations reveal that very little in fact has been found as the Americans huffed and puffed at day one. Price Waterhouse who are auditing the bank on behalf of the Ministry of Finance ( INAF) have separated the good and the bad: It seems though that the bad comprises expired passports, lack of KYC forms ( which incidentally has not been compulsory by the Banking Authority as in other countries), and general superficial failings in documents at the time of opening, if this is the case it may all prove rather of an embarassment to the level of Government action taken. Having taken that action and looking forward, just how can the Government lift the weekly restrictions without every client and company making a run for the exit with their rightful money?
The only way is for a third and most preferably foreign bank to take over and form an umbrella to restore confidence, and this is a prime opportunity for Andorra to finally shuffle off its xenophobic idealism and allow in that foreign bank (of which there are many who have expressed an interest in this). Let us implore to the Government that this opportunity is unique, allowing Andorra to go forward with the economic opening with which it is far too cautiously dabbling.
(Incidentally Andorra has just dropped 31 places in the rankings of countries on free speeech and reporting.....Not on this website !!)
2nd April 2015 - BPA Positive Developments
Some positive developments are emerging as the BPA case progresses. Firstly as was urged in an editorial below, it appears that the Government in concert with the remaining four banks unaffected by the BPA scandal are now orchestrating a central fund together by allocating 7.5 million euros each. Now the exact purpose of this fund which is designed as a safety net in future banking crisis (and which is long overdue in my opinion), has not yet been finalised or announced and whether this may form the basis of a central deposit guarantee fund or indeed be relevant to the current BPA scandal.Secondly the USA has re-assured Andorra and more importantly the global community that the initial complaint was and remains restricted to the evidence of money laundering by elements within that bank, and that NO economic sanctions are intended against the bank as a whole. This second point is signiificant and indicates what Government sources have indicated in that BPA will continue after being restructured, possible rebranded and with the bad elements removed from the existing structure. The article in the Telegraph recently suggesting that Andorra is the next banking crisis is based on fiction not fact, it is a very different situation from the EU banking crisis but which has unfortunately allowed foreign journalists to ( probably jealously) draw this fictional analogy. It is my opinion ( only) based on facts and contacts available here that the situation will be resolved but this will take more time.
23rd March 2015 - BPA line of credit established
The Government has agreed on a line of credit with the new team running BPA. The 272 staff also held a long meeting with Government to express their concerns over the work place and salaries. It does now appear that BPA will pull through this unfortunate incident but after a critical restrucure that separates the good and the bad portfolio. A four point plan has now materialised with the Government and the new temporary team of Directors overseeing operations and compiling the all important analysis of the dodgey accounts there. (For the facts please see below). The Government is now at pains to convince international banking authorities that it has acted immediately and in good faith in dealing with this matter. The bank is open in usual banking hours and in the normal course of business, however the restrictions on cash withdrawals remain in effect.Once again the Government is also at pains to repeat this is not a solvency issue but a criminal act allegedly by a few of the top directors and managers. No further arrests have yet been made. Meanwhile the Fitch rating for the remaining banks in Andorra has been maintained at A- but with the caveat that they are watching events closely for any sign of contagion.
13th March 2015 - BPA latest- The fallout:-
As of today this is the latest effect from the BPA money laundering investigation:
- The Director General of BPA, Joan Pau Miquel has been ordered to be held in jail custody pending further investigations
- Other arrests are expected to be made
- The Government has appointed auditors to investigate and report within 60 days
- BPA has a solvency ratio of 22% and a liquidity ration of 70% which is way above the EU norm and BPA is not in financial trouble
- In spite of the above the Government has imposed a weekly withdrawal from each account of € 2,500 to preserve stability
- Operations within Europe have been re-instated but trade with or through the USA remains suspended.
- The BPA subsidiary Banco Madrid where the board of Directors resigned voluntarily to facilitate an independent investigation has now been closed but not before the Spanish Government had guaranteed deposits up to € 100,000 per person even while efforts were being made to continue operations.
- Standard & Poor's have downgraded Andorra's rating from BBB+ to BBB as a consequence of the BPA saga
- The funds of € 2 billion allegedly involved were connected with organised crime in China, Russia, Venezuela and Mexico.
And how it all started....
12th March 2015 - BPA directors in big trouble.
An investigation has started after complaints from the US money laundering department of the Treasury that BPA directors were taking payoffs to turn a blind eye to a bit of money laundering. Unfortunately the "bit" comes in at over € 2 billion dollars and involves Russian, Chinese and Venezuelan links. Today the head of Government announced the suspension of the whole Board of Directors, also a subsidiary of BPA, Banco Madrid has announced the resignation of the board. The Government here has been quick to put to rest fears that BPA may go under and has emphasised that operations for the public continue as normal and the Government will give full support to the bank . In spite of that, figures indicate a 50% to 60% increase in withdrawals since yesterday. This is not good for the image of Andorra that has worked hard to comply internationally with due diligence, we have not heard the last of this, the proverbial for waste has hit the fan !!