Photo: Michael Feinstein
Atlantic Bank target of ad campaign; Central Bank gives assurances of system stability
BELIZE CITY, Thurs. Apr. 25, 2024
An advertising campaign against Atlantic Bank Ltd. (ABL) has been thrown into the fray in the dispute regarding the Stake Bank Enterprise Limited (SBEL) receivership. We had previously sought comment from Atlantic Bank on the receivership and the subsequent allegations by SBEL contained in a lawyer letter to the Governor of the Central Bank of Belize in which SBEL’s principal, Michael Feinstein requested that some of ABL’s activities be investigated. No one spoke on the record but on Tuesday evening, ABL felt compelled to address the smear campaign.
In a press statement titled simply, “Feinstein sued for fraud,” Atlantic Bank affirmed that the sole purpose of the advertising campaign is to erode public confidence in the bank “and the financial system in general.” In response, the Bank proclaimed that its fundamentals are strong. It shared that the Bank’s stability and strength are underpinned by its “Paid-Up Capital, which is the largest within the banking system.” It added, “The Bank remains the second largest financial institution in Belize, with the largest lending portfolio, funded by the second largest deposit base.” The Bank also declared that it is buttressed by a “US$21 billion financial group with over 50 years of service in Belize and more than 110 years of service in the region.”
The Bank reported that it is suing Feinstein personally for fraud and breach of trust, and expressed confidence that at the end of the proceedings, it will be vindicated in court. As to the leaked lawyer letter that Feinstein had his attorney send to Governor Kareem Michael, Atlantic Bank considers it libellous and categorically denies the allegations. It says it is evaluating bringing a defamation suit.
For its part, the Central Bank issued a statement on Wednesday to reassure the public about the stability of Belize’s financial system amid the high stakes legal dispute. It stated that Belize’s financial system continues to be supported by “a stringent regulatory framework and diligent oversight measures that safeguard the interests of depositors. The Central Bank further remarked that it upholds the highest standards of integrity and transparency. It proceeded to urge the public to be cautious about the information consumed, and encouraged the media to be prudent and responsible in disseminating information.
Atlantic Bank affidavit claims Feinstein reneged on representations he made to the Bank
In an 11-page affidavit signed by the Managing Director of Atlantic Bank Limited submitted as part of the Bank’s lawsuit against Michael Feinstein, it is alleged that Feinstein made certain representations to the Bank which he did not keep. Gregory Maheia in the sworn statement reports that Feinstein made a request in August 2018 for SBEL’s bridge financing to be extended by $20 million.
According to Maheia, Feinstein explained that because the original Stake Bank Island was too small for the project, SBEL planned to extend it through dredging and seabed reclamation by 24 acres. The bank then provided SBEL with a facility letter on September 20, 2018. It was signed by Feinstein and other SBEL directors. However, Maheia says while Feinstein signed the draft of the mortgage debenture for the $20 million, it was never dated and was kept by Atlantic Bank’s attorney. The reason for this, as explained by Maheia, is that the Bank was still waiting for the titles for the original island which were still in Feinstein’s name, and also because Feinstein did not want to pay stamp duty for the debenture, insisting it was covered under SBEL’s fiscal incentives exemptions.
Maheia indicates that a little over a year later, in October 2019, Feinstein once more approached the Bank for more funding. This time, the sum was $8.1 million which was meant to be used for the dredge works to extend the island. Maheia asserts that Feinstein represented to the Bank that the extension of 24 acres would be the property of SBEL. Instead, Feinstein secured title in his name. This has been confirmed by a first statement issued by SBEL about the receivership. In the document, SBEL says the 24-acre extension was not purchased by SBEL and so the Company has no equitable interest in the property. SBEL makes a similar claim about the purchase of heavy equipment including barges, cranes, luxury vehicles, vessels and other assets.
According to Maheia’s affidavit, SBEL used the equivalent of US$1,350,000 from funding provided by the Bank to buy a dredge for the reclamation works which were completed between 2019 and 2021.
Maheia reports that in January of 2022, the Bank decided to deduct stamp duty from SBEL’s bank account so the mortgage debenture could be registered. It therefore entered the date of January 18, 2022 in the mortgage debenture that had been signed by Feinstein in 2018.
Notably, Maheia confirms that SBEL defaulted on its payment due to the Bank on March 1, 2024, and so the Bank proceeded to appoint a receiver who moved to take possession of SBEL’s assets on March 14, 2024. The fact that the extension is in Feinstein’s name means, according to Maheia, that development of SBEL’s Port Coral project is not possible because the company “… does not currently have legal title to the land necessary to build the two piers and other developments.” Maheia also asserts, “The Bank has advanced $62,000,000 to SBEL; if an injunction is not granted and Mr. Feinstein disposes of the Property, the Bank would lose a substantial portion of its security for the loan. The Bank has lost trust and confidence in Mr. Feinstein as he is acting in breach of his fiduciary duties owed to SBEL and to the Bank as creditor of SBEL.” He added that if Feinstein disposes of the extension, Atlantic Bank will be unable to register its charge and it won’t be possible to complete the project. As it now stands, Maheia says Feinstein’s refusal to convey the extension to SBEL is delaying the completion of the port project and may likely increase the cost for its completion. Interesting to note here is that there are reports Michael Ashcroft expressed interest in purchasing the SBEL debt.
