A total of $500,000.00 has been budgeted by government to pay for small depositors of Capital Bank International Ltd (CapBank) but depositors will only receive 80% of their savings.
Prime Minister and Minister of Finance, Dr. Keith Mitchell made the announcement as he delivered the 2013 budget to Parliament just over a week ago.
“This Budget provides $500,000.00 to address the smallest depositors of Capital Bank. By smallest depositors, I am referring to depositors with savings accounts of $500.00 or less and net of accrued interest and any outstanding loans to Capital Bank”, Dr. Mitchell told Parliament.
He said that by helping small depositors, Government is taking care of 80% of the total depositors of Capital Bank.
Depositors were led to believe that their complete savings of $500 or less will be returned to them, however minutes from the April 09 Standing Committee on Finance revealed otherwise.
The document as obtained by this newspaper said among other things: “Honourable Tobias Clement (Member of Parliament for St. George North-east) asked for clarification on relief for the small depositors at Capital Bank. He inquired whether the monies were to pay depositors under five hundred ($500) eighty percent (80%) of their deposit. The Chairman (Dr. Keith Mitchell) replied in the affirmative”, the report stated.
“The Permanent Secretary, Ministry of Finance further explained that the total depositors at the time the bank was intervened was just over 5000 and the number of depositors that had a savings account of five hundred (500) or less was just around four thousand (4000), so therefore they would recover eighty percent (80%) of their deposits”, it said.
The Standing Committee report disclosed that the Keith Mitchell-led government initially estimated that $1.6 million was needed to pay small depositors.
However, additional work undertaken discovered that only $500,000.00 was needed and this was budgeted for by government in the 2013 Budget of Revenue and Expenditure.
A previous Mitchell-led administration had consistently promised before losing office in the July 2008 general elections that it would make payments to Capbank depositors on the low-end.
Following the February 19 General Election in which Dr. Mitchell and his New National Party (NNP) won all 15 seats at the polls, the promise was re-iterated in
The Throne Speech delivered a few weeks ago by Governor General Sir Carlyle Glean who have an undertaking to pay the depositors during the administration’s first year in office.
Last week during the Budget presentation at the Grenada Trade Centre, Prime Minister Mitchell told the House “the demise of Capital Bank International is deeply unfortunate and has brought untold hardship to depositors and creditors”.
Dr. Mitchell said his understanding is that there were 5,126 depositors of Capital Bank, at the time of government intervention in 2008 of which 4,102 are depositors with $500.00 or less.
The bank, operated by Businessman Finton DeBourg, was plagued by controversy since its establishment in 1988.
During its 1990-95 period in government, the National Democratic Congress (NDC) administration of Sir Nicholas Brathwaite refused to grant a license to the bank to operate based on advice given by the Eastern Caribbean Central Bank (ECCB).
Unfortunately, the NNP under the leadership of Dr. Mitchell took the bold step to grant the license to Capbank but the ECCB responded by refusing to allow the controversial local bank to use its Clearing House facility.
The bank eventually ran into problems when depositors started to complain of not being able to make withdrawal of their funds.
Attorney-at-law, Anselm Clouden took the bank to court on behalf of a client who was having difficulties in accessing his deposit of just over one million E.C dollars.
In the face of mounting public pressure, the Mitchell government was forced to step in and appoint a Receiver in February 2008 to take charge of the affairs of the bank.
De Bourg was subsequently slapped with four counts of fraudulent breach of trust for allegedly converting $18,227,902.60 of money entrusted to CapBank to himself.
He was placed on bail in the sum of one million dollars and currently awaiting a high court trial before a judge and jury.
The bank has remained in Receivership for the past five years.