HANOVER HANGOVER – A US senate investigation into the activities of an Antiguanregistered bank, controlled by a former adviser to Charles Haughey, has claimed that the bank is linked through clients to a number of high-profile, multi-million dollar frauds in England, the US, Japan and Europe.
John Mulligan investigates the extraordinary activities of Hanover Bank clients and its owner, one-time newspaper man Tony Fitzpatrick
WHEN a US senate investigation sought to interview clients of Hanover Bank, the Antiguan-registered institution owned by Dubliner Tony Fitzpatrick, it ended up in some unusual places. Like Wormwood Scrubs prison, London. There, art dealer Terence Wingrove, currently awaiting extradition to the US to face 17 counts of wire fraud and 14 counts of money laundering, spoke about his relationship with Hanover and Fitzpatrick.
Asked whether he trusted Hanover with his money, Wingrove said that he told Fitzpatrick: “If my money goes walkabout, you go walkabout.” He added: “That wasn’t a threat, it was a promise.” Wingrove was also asked if he was concerned that he did not receive regular account statements from Fitzpatrick. He replied: “You don’t go into a fish and chip shop and ask for fillet mignon.” But Wingrove is not Hanover’s only colourful client. The report of the senate investigation, which centres on a range of institutions, details a string of controversial deals linked to Hanover clients. It states that the bank was operated out of Fitzpatrick’s Dublin home, appears to have had few if any trained employees and had no computerised records. The offshore bank was set up in 1992 at a cost of just $25,000. Fitzpatrick, who acted as Charles Haughey’s press officer in 1981-82 and has no banking experience or qualification, is 100% owner of the bank.
Suspect funds According to the US senate report, Hanover clients have been linked to a number of frauds, with suspect funds totalling millions of dollars having flowed through the bank during the past eight years.
The trouble began almost immediately after the bank was established. In early 1993, with the bank open less than a year, Hanover was linked to an attempted stg£20m fraud from the Clerical Medical insurance company. The money was later recovered by Clerical Medical, but it led to the first investigation of Hanover Bank’s activities.
Also in 1993, Eric Rawle Samuel, who represented himself to be an employee of the Hanover Bank, was arrested by the FBI in Atlanta for offering to launder up to $12m through the bank.
According to Samuel’s indictment, he negotiated the sale of letters of credit to be issued by Hanover Bank in exchange for drug proceeds and a $100,000 fee for each $1m laundered through the bank. Samuel was convicted and served five years in prison.
The largest fraud linked to Hanover Bank clients involved $100m stolen from Japanese company Casio Computers by one of its employees, Osamu Sayo in 1998. He enlisted the help of another Japanese national to hide the money, and in Hanover Bank Theoddor Tsuru saw an opportunity to do just that. The senate subcommittee estimates that about $12.6m of deposits at Hanover were linked to the Casio fraud. Of the $100m that went missing from Casio, $15m has yet to be recovered.
Fitzpatrick denies strenuously any knowledge that the funds lodged in the bank were the proceeds of any illegal activity. Fitzpatrick’s background is interesting to say the least, with the Hanover Bank being just the latest in a history of intriguing business dealings. In the 1960s, he worked as a journalist with the People group of newspapers, which had no hang-ups about exposing Fitzpatrick’s exploits in the Sunday People.
The paper linked him to a greyhound racing scam that Fitzpatrick strenuously denied.
After a spell in Spain, he toiled away on behalf of Fianna Fáil, and worked as the party’s press officer before accepting editorship of the Sunday Journal. After the paper ceased publication, he made a new career with his own PR business. One of his major clients was John Carway, the highlycontroversial businessman at the centre of the Countyglen saga.
At one point in 1992, Fitzpatrick was close to bankruptcy, when two banks and a building society had registered judgment mortgages totalling £208,000 against his stately home in Rathfarnham.
Even his Visa card had been cancelled.
From teetering on the brink, Fitzpatrick went that same year to owning a Caribbean bank that would soon see millions of dollars passing through its accounts.
No banking experience So how did a man with absolutely no banking experience manage to establish an offshore operation?
The person Fitzpatrick turned to for help was Richard O’Dell Poulden. A UK national with an Oxford law degree and business qualifications from Harvard, Fitzpatrick knew Poulden prior to establishing the Hanover Bank, and figured his qualifications and work with a leading merchant bank and accounting firm would impress GOAB (Government of Antigua and Barbuda) authorities. Poulden’s father had also been an ambassador.
Other people were also enlisted so Hanover would adhere to GOAB banking regulations and Fitzpatrick paid PriceWaterhouse $25,000 to establish the bank, $10,000 of which was used for licensing fees.
Despite fronting the money for the bank’s establishment, Fitzpatrick was not initially listed as a director. He was not therefore subject to due diligence by the GOAB authorities, which instead focused on Poulden, then Hanover Bank’s sole shareholder and chief executive ? a situation which was to soon change.
The stg£20m Clerical Medical scandal the following year saw Poulden resign from the bank. He transferred all his shares to Fitzpatrick for a consideration of $200,000, a sum that Fitzpatrick never paid. Poulden, however, would be back five years later.
The Clerical Medical episode was one of the earliest reported cases involving prime bank notes – fictitious guarantees to pay a specified amount of funds which are then presented to other parties as being available for trade at a discounted price.
Clerical Medical got its money back and although UK authorities investigated Hanover, no action was taken against it.
The investigation of Hanover in 1993 was just one of three during an eight-year period. In 1997, it actually had its licence revoked, albeit briefly, after a not-too-successful effort by Antiguan authorities to reform offshore banking operations on the island. They issued a notice of intent on 24 March, 1997 to revoke Hanover’s licence. Two days later it was revoked, but one of Hanover’s local directors filed suit in Antigua to overturn the decision.
It wasn’t the court, but the head of the government’s International Business Corporations Unit that reversed the decision and returned the licence.
Meanwhile, Fitzpatrick seemed to be getting on fine without assistance from Poulden. From 1997, a Swiss company controlled by John Burgess, The Trust & Agency Company (Tragenco), managed a significant portion of Hanover’s business.
Tragenco’s clients lodged $50-60m in deposits with Hanover and provided the bank with about $2m in earnings until its “investment programme” ended in early 1998.
But 1998 saw the unexpected return of Poulden to Hanover. He telephoned Fitzpatrick to see if he would be interested in selling the bank to a group of Japanese stockbrokers. Fitzpatrick indicated he was, and Poulden supposedly conducted lengthy negotiations after which a $1m price-tag was settled on.
As part of the proposed deal, Poulden requested an appointment as chairman of Hanover Bank, and that two Japanese businessmen to whom Fitzpatrick was introduced, Theoddor Tsuru and Takuma Abe, be made directors. Fitzpatrick agreed to the changes in the board structure.
A company called Cranest Capital, apparently linked to Tsuru, was to be used for the purchase, but that later changed to Societe Suisse, a bearer share corporation owned by Poulden. An initial payment of stg£20,000 was made to Fitzpatrick and a second payment of $100,000 followed.
The deal with the Japanese was to fall through, but during his tenure as chairman Poulden became very active in Hanover’s operations, delighting Fitzpatrick with new accounts and millions of dollars in deposits. Some of those deposits came from Tsuru and Abe. Within months, events took an interesting turn. Japanese electronics giant Casio filed suits in a number of countries alleging that Tsurur was a key conspirator in a $100m fraud. His assets, including a $2m house in Japan, a $2m house in Florida, a $1.8m apartment in New York and a $4m yacht were seized.
Casio said that “the various conspirators had lied to and cheated Casio and each other, generated fraudulent records to conceal the frauds, and engaged in an elaborate series of wire transfers in an effort to launder the stolen funds and conceal their racketeering activities”. Casio claimed Tsuru had stolen at least $8m of its funds.
Fitzpatrick told the senate investigators that he had Tsuru removed from the board immediately after hearing of his involvement in the Casio fraud.
The focus of the subcommittee’s investigation centred on the use of correspondent accounts for money laundering.
They’re used when one bank provides services to another, to move funds, exchange currencies and to carry out other financial transactions.
Hanover Bank had a number of such accounts.
Apart from the one with Standard Bank, there was another held with the Harris Bank of New York, a subsidiary of the Bank of Montreal.
Following its investigation, the subcommittee said that correspondent accounts have “become conduits for dirty money flowing into the American financial system. . . and have facilitated illicit enterprises including drug trafficking and financial frauds”.
All of Hanover’s deposits were held in correspondent accounts. Its account with Standard Bank was opened quite informally, ignoring the usual procedures, as Poulden knew the bank’s managing director.
Resignations In 1998, the Jersey Financial Services Commission reprimanded Standard Bank for failing to pursue “normal” procedures and said institutions on the island should “ensure proper verification of the bona fides of their customers and of the kind of business they expect to undertake”. The managing director of Standard Bank and another senior official resigned. The UK Financial Services Authority also investigated Hanover that year for alleged breaches of the Banking Acts in England and Jersey. An injunction attained by the SFA was discharged upon the bank giving permanent undertakings not to contravene certain sections of the acts.
During the same year, the Japanese considered buying Hanover, Terence Wingrove also expressed an interest in its purchase, but never took any steps to do so. Fitzpatrick opened Wingrove’s account in 1998, and immediately afterwards millions of dollars began to flow through it.
As money from the Casio fraud was being filtered through the bank, Wingrove was helping two fraudsters, William Koop and Johnny Cabe, deposit about $12m with Hanover Bank. Koop had been conducting an investment scam in the US, while Cabe, a religious minister, had helped defraud his own followers of $7m.
Fitzpatrick told the senate subcommittee of an incident where he was moving home in Ireland and received a request for an outgoing wire transfer from Wingrove.
With bank records boxed up for the move, Fitzpatrick couldn’t access them to check to see if Wingrove had sufficient funds. He approved the transfer anyway, but it transpired that Wingrove didn’t have enough funds. In fact, he was short about $800,000. The transfer went through anyway, with money taken from another client through the correspondent account with Standard Bank.
The other client was Yoshori Doi, and although Wingrove only ever paid $400,000 back to him, Doi never asked for the remainder, and he may also have been involved in the Casio fraud.
Hanover Bank is a prime example of how poorly-regulated offshore banks can be quite seriously misused. The international bank was effectively a shell operation. The Antiguan authorities could not walk in the bank doors, ask questions and inspect documents.
Fitzpatrick, who co-operated fully with the investigation, claims never to have known of any suspicious dealings at the bank. He also claims that the bank’s name was used by third parties without his knowledge. He certainly made a substantial amount of money from the bank and it’s not a bad return on a $25,000 initial investment.
According to the company accounts, in 1998, when Hanover’s profits were listed as just $1m, Fitzpatrick received a handsome dividend payment of $1.9m.
Fund argument In the final strand of the story thus far, an argument arose between Poulden and Fitzpatrick over where the remaining funds in the Standard Bank correspondent account should go. Both wanted it sent to different attorney trust accounts. They couldn’t reach agreement, so Fitzpatrick removed Poulden from the Hanover board and sent the money to Finers, a reputable London law firm. It’s not known how much was sent to Finers or how much is left in the account. The firm has refused to comment.
When contacted by the senate investigation team, personnel from the Central Bank indicated that they were unaware of Hanover Bank’s activities in Ireland.
They did not know that Fitzpatrick was involved in international banking, that he was the sole owner of the bank or that he was keeping bank records and faxing wire transfer instructions from his home here.
The report said: “Even after learning of its existence in the jurisdiction, Irish regulators were hesitant to exercise oversight of a bank that was licensed in the Caribbean, accepted deposits in the Channel Islands and limited its day-to-day activities in Ireland to making telephone calls and faxing wire instructions.
Fitzpatrick may come under further scrutiny. A New Jersey-based law firm which represents Casio, said it will review the Hanover details outlined in the senate report and will be consulting its client about whether to initiate further action.
February 11, 2001
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