The Tribune

• Regulators silent on Britannia choice for Lucayas assets

• Former’s ultimate principal charged with bribery in US

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Central Bank-appointed administrator has transferred former Lucayas Bank (PIB) clients, and their assets, to another Bahamas-based institution whose ultimate principal has since been charged with bribery in the US.

Julio Herrera Velutini, the financier who controls and owns a majority interest in UK-headquartered Britannia Financial Group, parent of Britannia Bank & Trust, is accused of attempting to bribe a former candidate for Puerto Rico governor in a bid to ensure his preferred financial services regulator was installed in the US territory.

The indictment against Mr Velutini, who has pleaded not guilty and is vehemently denying all allegations against him, was disclosed just three months after Lucayas clients were informed by Igal Wizman, the EY (Ernst & Young) accountant and partner, that their assets were being sold to the Venezuelan’s Britannia Bank & Trust.

Mr Wizman, who did not respond to a Tribune Business e-mail seeking comment, told Lucayas clients via a May 2, 2022, notice that he was “working towards an expedited closing of the sale” to Britannia on or before May 16. “I can confirm that the bank’s assets under management portfolio has been sold to Britannia Bank & Trust, the origins of which in The Bahamas dates back to 1997,” the EY accountant wrote.

“Britannia, which principally provides similar wealth management services as Lucayas.... is a subsidiary of Britannia Financial Group, a privately-owned holding company headquartered in London with a network of entities offering investment banking, securities, brokerage, asset and wealth management, banking and trust products and services in major financial centres.

“The sale of the bank’s assets under management portfolio has been carried out in accordance with a process approved and overseen by the Central Bank of The Bahamas and continues to be in the best interest of its customers and stakeholders.” Lucayas is now in liquidation, with Mr Wizman having advertised for creditor claims.

The Central Bank used its enhanced powers under the recently-reformed Central Bank Act to appoint Mr Wizman as statutory administrator of Lucayas Bank, the former Private Investment Bank (PIB), on October 27, 2021, after the regulator became concerned its new owners had not lived up to commitments to recapitalise the institution with equity cash. That is being vigorously disputed before the Supreme Court.

There is nothing to suggest Mr Wizman, the Central Bank and others involved in the sale and transfer of Lucayas Bank’s client assets to Britannia Bank & Trust have done anything wrong. However, the fact that the US Justice Department charges were unveiled against Mr Velutini so soon afterwards is likely to raise questions about whether the level of due diligence conducted was sufficiently thorough.

And now-former Lucayas clients may well have ‘out of the frying pan, into the fire’ sentiments given the turmoil they have endured through multiple ownership changes within a matter of several years. Their assets are now in the care of a fourth institution during that time, having been sold by PIB’s owner, Banque Cramer, only for it to take them back and ultimately settle on Lucayas’ principals as the preferred purchaser.

John Rolle, the Central Bank’s governor, declined to respond to Tribune Business questions over the Britannia/Velutini and Lucayas situation. “The Central Bank does not make public comments on such matters,” he replied, when asked by this newspaper whether the regulator was aware of the charges against Mr Velutini, and if this was likely to provoke a regulatory response in The Bahamas in terms of an ‘inspection for cause’ on Britannia or other additional scrutiny.

He was also asked if the client asset transfer had been completed, and if the indictment against Britannia’s ultimate principal and controlling shareholder would interrupt the process or prompt a rethink. The US government indictment against Mr Velutini, who is free on a $1m bond and awaiting trial, alleges he “sought to interfere with the functions” of Puerto Rico’s financial services regulators by paying bribes to a candidate for the island’s governorship, Wanda Vazquez Garced.

His Bancredito International Bank & Trust Corporation had undergone a regulatory inspection which, on September 18, 2020, “identified numerous areas” that “required corrective action”. Included in the deficiencies was the bank’s failure to file suspicious activity reports (SARs) as required by US law, with regulators identifying “dozens of transactions.... deemed suspicious”.

“Several of these financial transactions involved bank accounts and entities owned or controlled by the bank’s owner, Velutini,” the US government alleged. It added that Bancredito “conducted business with corporations located in New York, Florida, Panama, The Bahamas and elsewhere”, although Britannia Bank & Trust and its Bahamian broker/dealer affiliate, Britannia Securities, were not mentioned by name.

Research by Tribune Business, using Britannia Financial Group’s filings at the UK’s Companies House, reveals that Mr Velutini stepped down as a director in May this year just months before the US charges were unveiled. However, there has been no indication of any ownership change, with corporate documents showing he “exercises significant influence or control over the activities of a trust” that owns 75 percent or more of the UK parent.

Britannia entered the Bahamian financial services market relatively recently when it paid £22.416m to acquire the former Amber Bank & Trust in 2019. The financials for the UK parent for that year, the last to be filed, show that £15.514m was paid for Amber’s net assets upon acquisition, with the remainder representing a £6.902m goodwill premium.

Britannia Financial Group, in which Mr Velutini has a controlling interest of more than 75 percent, is shown to own 99.98 percent of Britannia Bank & Trust’s equity share capital. It acquired Amber Bank & Trust in a year when it suffered a £4.404m loss.

The Bahamas Financial Services Board’s (BFSB) website names Jose Herrera Velutini, Jose’s brother, as the principal of Britannia Bank & Trust, with filings from UK Companies House also confirming he resides in The Bahamas and is a director of the UK parent. Another Britannia Financial Group director is Vincenzo Piantedosi, who sold Amber Bank & Trust to the UK parent and Mr Velutini, and who is listed as a contact person for the Bahamian securities business.

Britannia Financial Group did not respond to Tribune Business requests for comments, or questions on whether the client asset transfer from Lucayas Bank was now complete and if Mr Velutini still retains control. It also did not respond when asked if Britannia Bank & Trust was the runner-up to Lucayas’ owners in the bidding for PIB, although Tribune Business sources have confirmed it was.

There is nothing to suggest that Britannia Bank & Trust and Britannia Securities, or their directors, shareholders and staff, have done anything wrong in relation to Mr Velutini’s Puerto Rico woes.