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Illinois Congressman Jerry Weller,Refco and the collapse of Guatemala's Bancafe Bank

by Tony Ryals Monday, Oct. 30, 2006 at 8:04 PM
endoscam@lycos.com

Illinois Republican Jerry Weller does indeed have a conflict of interest in Guatemala besides his wife Zury Rios Sosa,daughter of ex-Guatemalan dictator General Efrain Rios Montt.Refco that donated to at least one of Jerry Weller's political campaigns in the past has collapsed and been found to be committing investor fraud and hiding certain transactions that should have been accounted for as losses.This has led to billions of dollars in investor losses worldwide.



Republican Congress:Illinois' Jerry Weller, Refco, Bancafe Guatemala, Virginia Senator George Allen, Balmore Fund,Xybernaut,etc.

by Tony Ryals

Worse yet,much of the hidden losses,if not most,may be due to involvement with U.S. penny stock 'investments' that certainly weren't losses for their often anonymous clients who use other sub-companies of Refco such as Balmore Funds,Celeste Trust an who knows how many more to route those worthless penny stocks back to U.S. and German penny stock markets to be sold retail to defraude investors in America or those buying these fraudulent U.S. stocks on other world markets or through boiler rooms that were operated in conjunction with and to Refco's real offshore clients who use penny stocks for 'pump and dump' fraud as well as money laundering that Congressman Jerry Weller should have been smart enough to realise.

It is no surprise that Refco has made use of Bermuda for some of its and its other shell companies' penny stock transactions and manipulations just as it has used Lichtenstein,etc. in Europe and is intimately tied to Bawag Bank of Austria as well.LOM or Lines Overseas Management of Bermuda has done the same for years and U.S. penny stock con artists such as James Dale Davidson founder of the National Taxpayers Union and penny stock cyber emporium Agora Inc of Baltimore have investe in and operated through LOM and probably its Charles Schwab and Vfin accounts.

Also the recent arrest of oil and arms trafficker John Deuss( of Iran Contra and South African apartheid days) in Bermuda by Dutch authorities recently demonstrates that Bermuda's role in and profit from

questioinable offshore banking and securities activities and transactions is something this islan will be very reluctant to give up.

Bermuda court system has aided LOM in withholding information on penny stock transactions from the SEC and unfortuneatly the SEC in this post 9/11 era has done little to enforse disclosures of offshores who use worthless U.S. penny stocks in a pump and dump money laundering offshore industry.Strangely onshore brokers such as Charles Schwab,Refco, Vfin,etc. hold most of the information the SEC pretends to be looking for in Bermuda but the SEC of Chris Cox John Negroponte and W Bush has no intention of bothering their real constituents who are these offshore crooks as well as brokers such as Charles Schwab.

However because Illinois Congressman Jerry Weller chose to take Refco's campaign contributions and look the other way as they ran a major international penny stock fraud network with U.S. penny stock shares, Guatemalans who have nothing to do with those worthless U.S. penny stocks that yielded Refco its losses and the total collapse of Bancafe of Gutemala,are the ones suffering !

Congressman Jerry Weller of Illinois in the U.S. where Refco with its Autrian Bawag Bank and offshore client connections was allowed to go public and sale its own penny styock backed 'futures market' in the first place was a contributor to Weller and in Guatemala where his wife Zury Rios Sosa plays a significant role in running the country as a congresswoman,Refco has created an economic catastrophe that may in the end cost Guatemalan banks to lose their credit rating.

Unfortunately Senator George Allen has gone one worse and rather than just taking campaign contributions from Refco,appears to have worked with the Xybernaut penny stock scam run by known con artists,Israeli or no.Yes although Balmore Fund and Celeste Trust appear to have Israeli clients who run penny stock scams such as Xybernaut through them, Balmore appears to be controlled by Bawag and an Austrian billionaire.

'Refco is a large foreign exchange and commodity broker providing clearing and execution services for global exchange-traded derivatives including futures,'..

- http://www.refco.com



The Congressman and the Dictator's Daughter

http://www.chicagoreader.com/features/stories/jerryweller/

Illinois Republican Jerry Weller is one of the most powerful men in Congress when it comes to Latin America. His wife is the most powerful woman in Guatemala’s controversial FRG party.

By Frank Smyth

August 25, 2006

JERRY WELLER WAS running for his sixth term as congressman from Illinois’ 11th District in July 2004 when he announced that he was engaged to Zury Rios Sosa, an outspoken third-term legislator in Guatemala’s congress and the daughter of former dictator General Efrain Rios Montt. “I am thrilled to have found my best friend and soulmate,” Weller stated in a press release. “Our love knows no boundaries.” In the same release Sosa said, “With Jerry, I am starting an eternal springtime. I admire his character, his commitment to his responsibilities, and his honesty.”

Their mutual admiration notwithstanding, the announcement raised a red flag. Weller, who would be the first congressman ever to marry a member of a foreign national legislature, sat on the International Relations Committee and its western hemisphere subcommittee--would his votes be influenced by Sosa?

In a July 12 editorial the Chicago Sun-Times said, “The problem is the image it conveys to our Latin American neighbors, who are critical enough of our policies without concerns about how a vote might have been influenced by a committee member’s wife.” The following day the Bloomington Pantagraph, the biggest paper in Weller’s district, ran an editorial that said, “Any time an elected U.S. representative privy to confidential information is intimately involved with a central figure in a foreign government--and one whose father has been accused of genocide within that country--there should be concern. . . . There are some boundaries that elected representatives have to draw in the name of U.S. security. We can’t say Weller has crossed that line, but he’s sure tiptoeing down it.”

The Sun-Times suggested that Weller, a Republican whose district includes parts of the south suburbs, resign from the committee. His opponent in the congressional race, Tari Renner, also called on him to give up the post. Weller’s spokesman, Telly Lovelace, told the Pantagraph the congressman had no intention of resigning. “If there is any obvious conflict,” Lovelace said, “Congressman Weller will do what’s appropriate.”........................................

In January 2005 Weller became vice chairman of the western hemisphere subcommittee, by far the most important committee in Congress writing legislation on Latin America and the war on drugs and overseeing U.S. policy on those issues. “The western hemisphere subcommittee has been one of the only ones overseeing U.S. drug policy, and it has been the main one making U.S. drug policy,” says Adam Isacson of the watchdog group Center for International Policy. “It has huge influence.” The 16-member committee also focuses on trade and democracy in the region.

Weller often talks about these issues as they relate to Caribbean and Latin American countries--but not Guatemala, even though it has 12.7 million people, a third of the population of Central America. He voted for CAFTA, the free-trade agreement that includes Guatemala, but he doesn’t talk about specific trade possibilities with that country. He also doesn’t talk about democracy in Guatemala, which is fragile at best, and he doesn’t talk about money laundering or drug trafficking there, even though up to 70 percent of the drugs that enter the U.S. come through Guatemala. All of which raises questions about whether he’s doing everything he can to address the concerns of his constituents. He’s painted himself into a corner, and he seems to be making no effort to get out.







The July 2003 riots in Guatemala City; poster of Efrain Rios Montt

AP Photo⁄Rodrigo AbdIN 2003, THE year Weller met Sosa, Guatemala was controlled by the FRG, and the nation’s president was her father’s handpicked FRG ally, Alfonso Portillo. Relations with the U.S. had sunk to their lowest in years. “By all accounts corruption continues to run rampant in Guatemala,” Otto Reich, an assistant secretary of state, had told the western hemisphere subcommittee in October 2002. “Organized crime, in particular narcotics trafficking and alien smuggling, is increasing. Guatemala is a major and growing transit country for narcotics, yet seizures have dropped to practically nothing. . . . Few high-level figures are ever charged or even formally investigated for corruption, and fewer go to trial.” Reich also stated that “large amounts of cocaine are being transshipped through Guatemala with almost complete impunity” and noted that narcotics smugglers had “very close ties to the highest levels of government.” The following month the Bush administration embarrassed Guatemala by denying a former intelligence chief a visa and accusing him of drug trafficking.

In January 2003 the Bush administration embarrassed Guatemala again by dropping it from the State Department’s list of countries seen as cooperating in the fight against drug trafficking. It was the first time Guatemala had failed to make the list since the U.S. began doing annual evaluations in 1987, and it was one of only three countries decertified, the others being Haiti and Myanmar.......

Rios Montt had been president before, having come to power in a military coup in 1982. The Guatemalan military was then at war with leftist rebels--they’d been fighting since 1960 and wouldn’t stop until 1996--and thousands of civilians were being murdered. During the war an estimated 200,000 people were killed, up to 70,000 of them during Rios Montt’s 17 months in office; he was overthrown in another coup. According to two truth commissions set up after the war, the military was responsible for over 90 percent of the violence. Rios Montt wanted to run again for president in 1990, but the constitution passed in 1985 barred former coup leaders from running. Four years later he ran for congress and won and was soon elected its head. When he tried to run for president that year the courts again barred him, but in 2003 he was back as a candidate.

Zury Rios Sosa, who’d started her political career in 1989 doing public relations for the FRG and was first elected to congress on the party’s slate in 1995, was running for reelection in 2003--and directing her father’s presidential campaign. She regularly stumped for him, saying Guatemala needed a “strong hand” and calling him her “inspiration.” (She hasn’t publicly distanced herself from his record or denounced the murders committed while he was president in the 80s.) In mid- July the constitutional court ruled that this time Rios Montt could continue his campaign, saying the law against former coup leaders running couldn’t be applied retroactively. The country’s supreme court said it wanted to revisit the issue, and on July 24 thousands of his supporters, armed with clubs and machetes, poured into the streets of the capital, burning cars, smashing windows, and surrounding court buildings and the U.S. embassy. A TV reporter chased by Rios Montt supporters threatening to douse him with gasoline suffered a heart attack and died. The rioters’ actions seemed coordinated, and for hours neither the police nor the military intervened. The U.S. State Department accused the FRG of providing tents and other supplies to the demonstrators, many of whom had been bused in the night before.

FRG party delegates were photographed in the middle of the crowds, and some people told reporters they’d seen Sosa among the demonstrators with a walkietalkie. A few days later a Prensa Libre journalist asked her, “There are those who say you were the brains behind the disturbances. What do you say to that?”

“Who says that?” she said.

“Some analysts, and yesterday a morning daily published their views.”

“For the moment I have no comment.”

“And with respect to the FRG party members involved and whose photographs have been published?”

“I don’t have any comment.” When the reporter asked if it was important that Guatemalans know who was responsible for the violence, she replied, “Every day thousands of people die of AIDS, and we have 13 million orphans in the world. This is what concerns me.”

Two weeks later Jerry Weller, arrived in Guatemala with three other members of the International Relations Committee to discuss trade and drug trafficking.

WELLER SAW SOSA for the first time at a reception the day he arrived. “From the moment I met her I realized I had discovered the most incredible woman,” he later told journalists. He reportedly confided his interest to the U.S. ambassador, and the following evening he found himself sitting next to her at a state dinner sponsored by the Guatemalan congress’s foreign relations committee, of which she was a member. He later told Guatemalan reporters he saw it as luck, but an embassy official who was seated at the same table says, “She arranged it.”................





The following summer Weller announced that he and Sosa were engaged. His spokesman said it would be the second marriage for both of them, and it’s not clear whether Weller knew this would actually be her fourth. At any rate, the day after they announced their engagement they sent a petition to the Federal Election Commission asking if Sosa--who had no intention of resigning her seat, applying for U.S. citizenship, or becoming a permanent resident--could make decisions in Weller’s reelection campaign as well as solicit funds for him and speak on his behalf. The FEC said the law prohibited foreign nationals from donating funds or participating in decision making related to any U.S. election, but if she worked as a volunteer she could make speeches and ask for money, though only from Americans.

Weller won in November 2004, then flew to Guatemala, where he and Sosa were married in a villa her father owned outside the capital. Her father was under house arrest in the capital, charged with inciting the July riots, but a judge gave him permission to attend. (He was cleared of the charges this past January; in July a Spanish judge indicted him for alleged crimes, including genocide, dating back to the early 80s. Meanwhile Portillo, who remains under investigation on embezzlement charges, fled the country, and top officials from his administration were jailed on corruption charges.)

Two months after his marriage Weller, ignoring calls for him to resign, became vice chairman of the western hemisphere subcommittee. It’s not that he doesn’t have plenty of other interests. He’s also on the powerful Ways and Means Committee and on the International Relations Committee’s terrorism and nonproliferation subcommittee. His record, of which he’s proud, covers a wide range of issues, from eliminating the marriage-tax penalty to redeveloping the Joliet Arsenal, establishing health clinics for veterans, creating tax incentives for companies to clean up brown-field sites, and lobbying to expand the use of alternative fuels.

In 2004 Weller released a statement saying he wanted to stay on the western hemisphere subcommittee “to focus on narcotics trafficking and international law enforcement,” and his Web site states that he “has taken an active role with U.S. government agencies in combating narco-trafficking.” Yet he seems determined to act as if Guatemala doesn’t exist. In January 2005 he led a nine-day delegation to Colombia, Panama, and Honduras to discuss trade and drug trafficking, during which he said, “Almost 90 percent of the cocaine and one half the heroin that comes into Illinois comes from Colombia and the Andean region.” He didn’t mention Guatemala, though Bush administration officials say most of those drugs passed through it. He didn’t make drugs in Guatemala an issue that May either, though he spoke about drugs in general terms: “We have tremendous concerns about narco-trafficking through the region.”........................

This March at a subcommittee meeting Weller told Bush administration officials he hoped they would focus on corruption in Venezuela, but he hasn’t talked about corruption in Guatemala. He denounced Venezuela for sheltering Colombian “terrorist groups” who’d assassinated judges and elected officials, but he didn’t denounce Guatemala, even though judges and elected officials there have been assassinated too. This spring one of the leading delegates backing legislation to fight organized crime, Mario Pivaral, was assassinated outside the building where the congress meets. (In July the congress passed the nation’s first law that specifically fights organized crime, allowing the government to tap suspects’ phone calls and put law enforcement agents undercover.)

A thorough search of online congressional records and news reports over the past three years turns up almost nothing Weller’s said publicly about Guatemala. He is quoted in a press release his wife distributed in Spanish in Guatemala City, saying, “I am a Republican and we believe our countries must work together.” He wouldn’t comment for this story, and in a January 2006 article an AP writer complained, “Weller refused repeated requests to discuss his marriage’s impact on his work in Congress.” Other members of the western hemisphere subcommittee talk about Guatemala, including the Republican chair, Dan Burton, who last year denounced “mob justice” in the country.

Weller clearly thinks he can’t even talk about anything good that’s happened in Guatemala, including the antiterrorism legislation sponsored by his wife. “There are some positive notes in this hemisphere,” he said during a subcommittee hearing in May. “Some countries, such as Panama, Trinidad, Tobago, Jamaica, Mexico, and El Salvador, have all made serious prevention and preparedness efforts” against terrorism. He didn’t say a word about Guatemala, which sits between Mexico and El Salvador.

Carlos Gomez, coordinator of the Chicago-based Foundation for Human Rights in Guatemala, thinks Weller’s silence hurts both the U.S. and Guatemala. “If he did not have a relationship with Zury he would be working against drug trafficking and organized crime in Guatemala,” he says. “It is the FRG that opened the door to drug trafficking and organized crime in Guatemala. So he can’t attack the same party as his wife.”

Like every politician, Weller must know that, no matter how confident he is that he’s serving his constituents fully, appearances matter. And silence doesn’t help.

...............................................................................................................

Not only was I defrauded by Refco as far as I can tell,(the SEC wishes to protect the guilty),by way of Balmore Fund,but also a substantial sector of the Guatemalan public got taken by Refco as well.Bancafe of Guatemala or Colombia or Miami or Barbados, depending on the article you read,had a large 'investment' in Refco so I guess it was the collapse of Refco shares that got the Guatemalans with Bancafe accounts.

Does anyone understand this ? What were those losses that were transfered to other Refco related companies or shells to avoid putting the losses on the Refco books ? Were they in part or great part penny stock losses or not ? Refco and Schwab(before they sold their market maker business to UBS),WERE THE MAJOR MARKET MAKERS FOR ENDOVASC AT ONE TIME,so didn't Charles Schwab realise the fraud the were profiteering from ? Did Schwab also work for or with Refco's Balmore ?

Yes I still have so many questions because Chris Cox's SEC is so corrupt in my opinion.He could ask someone at SEC to answer my questions.

Anyway after so many years of living in Guatemala in poverty for 'investing' in the Refco-Balmore-Stanford penny stock fraud Endovasc, it is paradoxical to realise so many Guatemalans were defrauded and lost their savings just by depositing them into what turned out to be a Refco related scam.We are in this boat together and people such as Virginia Senator George Allen are among our defrauders and I see no excuse whatsoever for his helping the Balmore and thus Refco to defraud us by touting its Xybernaut pump and dump and PROBABLE MONEY LAUNDERING OPERATION.

And all because the SEC,before and after Chris Cox and John Negroponte took it over,allowed offshores such as Balmore Trust and Celeste Fund to operate just like they still allow Bellador Group of Kuala Lumpur, etc.,to operate today,Refco grew into

an Austro-American Frankenstein monster.

And Charlie Schwab is still counting profits from his market makers many penny stock frauds and smirking at how smart he was to invest in W Bush's political future.Also I still believe 'Bobo' and David Patch and the sanitycheck penny stock touters know more about Refco than they pretend.Pretending to be above it all is just part of their stock fraud modus operendi just as it is in their Beltway political frauds and dirty tricks.

James Dale Davidson and the phony 'libertarians' are big fans of some right wing Austrian economist.

(Meisner ?) And Agora Inc has recommended Austrian bank accounts in the past although another bank than Bawag was mentioned.

Tony Ryals

.........................................................................................................

Refco,Bawag and some phantom bonds :

http://alabamaagainstfraud.com/phpBB/viewtopic.php?p=1358&sid=2d8be1181d

Bawag Masked Almost EU1 Bln of Losses, Nowotny Says (Update1)

March 24 (Bloomberg) -- Austria's Bawag PSK Bank used offshore companies to mask almost 1 billion euros (.2 billion) of losses from bond and currency investments that nearly drove the firm into bankruptcy, bank officials said.

Bawag shifted the losses to companies including six firms on the Caribbean island of Anguilla and wrote them down over time, Chief Executive Officer Ewald Nowotny said at a press conference in Vienna today. The bank may sue Wolfgang Flottl, a hedge fund manager, in connection with failed investments, he said.

``We had considerable losses of close to 1 billion euros,'' said Nowotny, 61, who took over as CEO of Vienna-based Bawag in January, after his predecessor Johann Zwettler resigned.

Guenter Weninger, the chairman of Bawag's supervisory board, said today that he learned of the losses in 2000, when the bank was close to bankruptcy. He said he plans to resign from the board. Flottl didn't return a call seeking comment today.

The revelation of Bawag's hidden losses may have ripple effects across the Atlantic in the bankruptcy case U.S. futures broker Refco Inc. U.S. prosecutors investigating Refco's collapse have found evidence that Refco maintained accounts for Bawag that held its offshore investments, people with direct knowledge of the probe said March 15.

Bawag, which owned 10 percent of New York-based Refco from 1999 to 2004, is already ensnared in Refco's bankruptcy. The bank is one of Refco's largest creditors, and has sued the company and its former CEO, Phillip Bennett, to recover 350 million euros it loaned to him in October.

The U.S. Attorney in New York and the U.S. Securities and Exchange Commission are investigating the alleged fraud at Refco.

To contact the reporters on this story:

Matthias Wabl in Vienna at mwabl (at) bloomberg.net;

Otis Bilodeau in Washington at obilodeau (at) bloomberg.net;



Bawag Masked Almost EU1 Billion of Losses, Chief Says (Update2)

March 24 (Bloomberg) -- Austria's Bawag PSK Bank used offshore companies and accounts at Refco Inc. to mask almost 1 billion euros (.2 billion) of losses from bond and currency investments that put the bank at risk of insolvency in 2000, bank officials said.

Bawag shifted the losses to companies including six firms on the Caribbean island of Anguilla, and wrote them down over time, Chief Executive Officer Ewald Nowotny said at a press conference in Vienna today. The bank may sue Wolfgang Flottl, a hedge fund manager, in connection with the failed investments, he said.

``We had considerable losses of close to 1 billion euros,'' said Nowotny, who took over as CEO of Vienna-based Bawag in January after his predecessor Johann Zwettler resigned. The majority of the losses occurred in 2000, Nowotny said.

The revelation of Bawag's hidden losses may have ripple effects across the Atlantic in the bankruptcy case of U.S. futures broker Refco Inc. U.S. prosecutors investigating Refco's collapse have found evidence that Refco maintained accounts for Bawag that held its offshore investments, people with direct knowledge of the probe said March 15.

Nowotny confirmed that these accounts existed. He said he didn't know whether former Refco CEO Phillip Bennett had a role in the offshore companies.

Hedge Fund Losses

Bawag's losses came after the company invested funds with Wolfgang Flottl, the son of former Bawag CEO Walter Flottl and former head of hedge fund Ross Capital Markets Ltd., Nowotny said. Flottl didn't return a call seeking comment today.

``Mr. Flottl influenced these investments and he is to be held responsible,'' Nowotny said.

Guenter Weninger, the chairman of Bawag's supervisory board, said that he plans to resign from the board.

Bawag, which owned 10 percent of New York-based Refco from 1999 to 2004, is already ensnared in Refco's bankruptcy. The bank is one of Refco's largest creditors, and has sued the company and Bennett to recover 350 million euros it loaned to him in October. The U.S. Attorney in New York and the U.S. Securities and Exchange Commission are investigating the alleged fraud at Refco.

Nowotny, 61, said the offshore transactions were approved by the bank's auditors. Prosecutors in Vienna are investigating Bawag's use of the offshore accounts.

The U.S. investigation of Refco's collapse found as much as 5 million in securities linked to Bawag with identification numbers that don't correspond to registered bonds, four people with direct knowledge of evidence gathered in the probe said March 15.

U.S. Probe

Refco held the bonds for Bawag and a hedge fund called Liquid Opportunities, said the people, who declined to be named because the investigations are continuing. U.S. prosecutors have been trying to learn how the bonds were created and valued, they said. One person said Bawag and Liquid Opportunities had shares in six Anguilla companies, which in turn held the suspect bonds.

Bawag spokesman Thomas Heimhofer said March 17 that the bank severed ties to the six companies by the end of last year.

Jonathan Knight, a Florida-based fund manager at Liquid Opportunities until November 2004, said in a March 16 press release that the bonds weren't registered because they were private instruments and each had a single lender and a single borrower. He didn't name them.

``The fund's mandate included the administration of several euro-denominated note instruments contributed by an investor,'' Knight, 36, said in the release. He said Liquid Opportunities held the instruments in an account at Refco Capital Markets, in Bermuda, and had no reason to suspect they were ``problematic in any way.'' Liquid Opportunities was ``fully redeemed'' at the end of 2004, he said.

Offshore Companies

Offshore companies played central roles in the accounting frauds at Enron Corp. and Parmalat Finanziaria SpA, according to prosecutors in those cases. Houston-based Enron allegedly used subsidiaries in the Cayman Islands to cut the company's U.S. taxes and hide losses, before collapsing in the U.S.'s second-largest bankruptcy in 2001.

Parmalat, the Italian food company that in 2003 filed the country's biggest-ever bankruptcy case, inflated sales, fabricated assets and funneled debt through units in the Netherlands Antilles and the Cayman Islands, according to Italian court documents.

To contact the reporters on this story:

Matthias Wabl in Vienna at mwabl (at) bloomberg.net;

Otis Bilodeau in Washington at obilodeau (at) bloomberg.net;

Last Updated: March 24, 2006 08:53 EST



...........................................................

Fitch Sees Challenges for Guatemalan Banks & Regulators After the Intervention of Bancafe

http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=news

NEW YORK--(BUSINESS WIRE)--Fitch Ratings comments on the recent intervention of Guatemala's fourth largest bank, Banco del Cafe (Bancafe) and the potential implications for the national banking system.

Last week, the Banking system regulator announced the intervention and planned liquidation of Bancafe, the fourth largest bank at end-August 2006 by total assets (roughly USD 1.022 billion - 8% market share) and deposits (USD 889m - 9%). The problems at Bancafe initiated in October 2005, when Refco Ltd. declared bankruptcy. This event harmed Bancafe's unconsolidated related off-shore entity domiciled in Barbados, since this had roughly USD204 million of its assets managed by one of Refco's problem subsidiaries, which have been frozen since then. While the stand-alone performance of Bancafe in Guatemala had remained reasonable, its efforts to aid the liquidity of its related offshore entity weakened Bancafe to the point of its intervention by the Guatemalan authorities.

While the deposit insurance fund (FOPA - Fondo para la Proteccion del Ahorrante) guarantees deposits for up to GTQ 20,000 (roughly USD 2,630), the banking regulator decided to distribute Bancafe's deposits among three local banks (Banrural, Agromercantil and Reformador, ranked third, fifth and sixth in the national system, with a joint market share of 23% of deposits at end-August 2006). In turn, these banks will be beneficiaries of trust certificates drawn on a trust that will hold and liquidate Bancafe's assets, as well as the liquid resources available at FOPA, roughly USD180 million. This Friday, October 27, Bancafe's depositors would be able to request or renew their deposits at the respective institution where the account was transferred to. The country's two largest banks, Banco Industrial and Banco G&T Continental, did not participate in the scheme to distribute Bancafe's domestic deposits.

While the direct exposure of other Guatemalan banks to Bancafe was insignificant at the time of the intervention, Fitch remains concerned about the potential negative effect of this situation on the banking system's liquidity and public confidence. Particularly, Fitch will closely monitor the reaction of Bancafe's depositors once they are allowed to withdraw their deposits. Since only a small portion of Bancafe's assets is liquid, the ability of Banrural, Agromercantil and Reformador to preserve these accounts, or alternatively, to honor these deposits, is a critical factor to maintain public confidence in the banking system. The Guatemalan Central bank could provide temporary liquidity support, if required. Fitch anticipates that even larger banks could see their liquidity somewhat pressured, if their off-shore banks eventually face a deposit run or a decrease in other funding sources, and they attempt to access short term liquidity provided by their related Guatemalan bank.

Fitch also notes that, while under local regulation Bancafe was the 'responsible company' of the entities comprising Grupo Financiero del Pais (including the off-shore bank), the intervention meant the dissolution of the financial group and the cancellation of any inter-company responsibility. Fitch has expressed in the past its concern about the sizeable off-shore banking activities of the Guatemalan banks. In Fitch's view, the intervention of Bancafe highlights the risks associated with these entities, which are inherently less regulated and perhaps less supervised, given the legal limitations for most banking regulators in the region regarding extra-territorial supervision. Positively, this event could over time improve the awareness of depositors, creditors and other stakeholders in regard to riskier off-shore banks. Fitch also highlights the need to further disclose financial information of the off-shore banks and the consolidated or combined financial groups.

Bancafe's total deposits at end-August 2006 accounted for 2.4% of Guatemala's forecasted GDP for 2006, while the liquid resources available to FOPA were equivalent to 0.6% of GDP. In the event that FOPA's assets are extinguished or considerably absorbed to honor Bancafe's deposits, domestic banks could be required by the authorities to make extraordinary contributions for up to 50% in excess of regular contributions (0.1% p.a. of total deposits, at present).





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Did Israel President Moshe Katsav aid Muslim Terrorism or only fraud ?

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Israel: Gal Lusky's 'IFA' Caught Up in Moshe Katsav,Mohamed Hadid, Zwebner 'UCSY' scam ?

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Did Israel President Moshe Katzav aid Muslim Terrorism or only fraud ?

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SEC Covers Up UAE Money Laundering with U.S. Stocks

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John Reed Stark UAE,SEC,Georgetown University Stock fraud Academic fraud Cyber fraud

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Does NSA Serve SRA International's 'Cookies' ?

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Porter Goss: CIA Cyber and stock fraud ops damaged by leaks ?

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D.C.Terrorbaggers:James Dale Davidson,Don Nickles, ex-CIA Chief Woolsey,Asa Hutchinson,Tom McMillen

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Mantas Inc,Herndon, Va, Pro-Money Laundering Arm of International Bankers,Brokers...

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Bancafe,Guatemala,Bawag,Refco and Vipasa..... Tony Ryals Saturday, Nov. 04, 2006 at 2:32 AM

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