Earlier this month, the US Securities and Exchange Commission charged billionaire entrepreneur-cricket promoter Sir Allen Stanford with investment fraud for over $ 8 billion. The SEC has stated the fraud was “based on false promises and fabricated historical return data”. Following the framing of charges, there were several raids by federal regulatory agencies in the Stanford Group’s Houston and other US offices. In addition the BBC reports that a US judge has frozen the assets of Sir Allen and the other defendants as well as those of the Stanford Group, its Antigua-based subsidiary Stanford International Bank (SIB) and another subsidiary, investment advisor Stanford Capital Management. Consequent fallouts have been the termination of all the Group’s contracts between the English and Antiguan Cricket Boards.
What is chillingly coincidental, however, is the alarming frequency of frauds, manipulation and scandal being unearthed at the critical juncture of the ongoing financial downturn. Clearly, there are many links between the hostile consequences of the crisis and the bursting of fictional bubbles (the most important of which have been Satyam, Maddoff and Stanford). The crisis, in addition to exposing the chinks in the free market armour, is also a clarion call to improve standards of corporate governance to usher norms of fair and ethical business practice.
