The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Opposition’s leader last night warned that The Bahamas’ reputation as an international financial and business centre is in danger if the latest FTX claims are not investigated as “a matter of urgency”.

Michael Pintard, demanding that the Prime Minister launch a “thorough” probe into accusations that the collapsed crypto exchange and its jailed founder, Sam Bankman-Fried, paid a total $675,000 to “entities affiliated with high-ranking Bahamian government officials and their families”, argued that failing to respond could see this nation “squander” multiple economic diversification opportunities.

The emergence of these allegations, in a report by Robert Cleary, appointed by the US Department of Justice trustee to examine FTX’s collapse, is especially timed from The Bahamas’ perspective as it coincides with this jurisdiction’s renewed digital assets push through the recent tabling of the revised Digital Assets and Registered Exchanges Bill in the House of Assembly.

Mr Pintard told this newspaper that, if not addressed properly by the Government, the claims in Mr Cleary’s report could undermine not only The Bahamas’ digital assets ambitions but traditional financial services and other forms of business if this nation becomes perceived as an irresponsible jurisdiction.

Noting that the Opposition’s stance on FTX had been relatively reserved in the immediate aftermath of the crypto exchange’s collapse, so as “to make sure we were not unwittingly contributing to reputational damage for The Bahamas” and to prevent the Government portraying it as such, Mr Pintard said the Davis administration’s initial silence created “a vacuum” that was filled by speculation.

Keishla Adderley, the Prime Minister’s acting press secretary, on Friday declined to comment on Mr Cleary’s report on the basis that it contained no specifics, and no identities or names of the “families”, “officials” and “entities” involved were mentioned.

However, Mr Pintard argued that it was “in our collective best interest” that the Government not leave another void when it comes to FTX. Renewing earlier calls for a bi-partisan parliamentary select committee to be appointed to investigate FTXs collapse, featuring members from both political parties, he argued that the Davis administration has an obligation to reply.

“The Government is duty-bound at the highest level to speak on the record directly to this matter,” Mr Pintard told Tribune Business. “They have absolutely no choice. Failure to do so put this administration and officials in a very bad light, particularly as they dodged questions earlier.

“This moment of truth arises once again for them to set the record straight and we hope they do just that to protect us from further reputational damage.... It’s in our collective best interest that the Prime Minister launches an investigation and speaks candidly on the record on these matters.”

Voicing concern about the potential economic fall-out, Mr Pintard added: “It’s very important that we do not squander an opportunity to diversify the financial services sector and put ourselves in a position where we are seen globally as a responsible jurisdiction that has the capacity to not only attract but manage a whole range of businesses including the digital asset space.

“This is in our interest as a mature financial destination. If persons do not have confidence in us, it will not only impact our potential in the digital asset space but the entire reputation we have in the traditional financial services space. We must move with a sense of urgency to address these new revelations and the accusations that go with them. We don’t want to squander this opportunity.”

Mr Cleary’s report, filed with the Delaware Bankruptcy Court, in a section entitled “payments to and contacts with Bahamian government officials”, drew on evidence assembled by Nardello & Co, a global investigations firm that specialises in bribery and corruption-related matters, plus Sullivan & Cromwell, the law firm working for FTX’s US chief, John Ray, to reach its conclusions.

“Sullivan & Cromwell and Nardello also found that the FTX group made several donations to entities affiliated with Bahamian government officials and their families,” Mr Cleary wrote. “For example, the FTX group sent $500,000 as a purported donation to an entity owned by relatives of a high-ranking Bahamian government official.

“In addition, the FTX group donated $175,000 to other entities affiliated with family members of high-ranking Bahamian government officials. Finally, Sullivan & Cromwell and Nardello’s investigation identified other contacts between the FTX group and Bahamian government officials.”

No names or identities were disclosed by the FTX examiner. However, there is no doubt that Mr Cleary, Mr Ray and their teams know who the “entities”, families and “officials” are as the report references that these details came from a Nardello report dated May 13, 2023, which is titled: ‘Issues concerning Bahamian insolvency proceedings involving FTX’.

Also mentioned as a source for the $675,000 payment information is a Sullivan & Cromwell report dated March 15, 2024, and described as a ‘Review of post-petition investigations for examiner’. The information in these documents and Mr Cleary’s report will also be available to the US Department of Justice.

The findings do not distinguish between Cabinet ministers/MPs and top civil servants in employing the term “official”. Nor do they say whether the “government officials” are affiliated with the FNM or PLP. While FTX’s collapse occurred under the Davis administration, the crypto exchange first arrived in The Bahamas - and was licensed - under its Minnis predecessor.

Tribune Business research, using prior Supreme Court reports by FTX Digital Markets’ liquidators, shows the crypto exchange’s Bahamian subsidiary was incorporated on July 22, 2021, and licensed and registered to operate in The Bahamas under the Digital Assets and Registered Exchanges (DARE) Act on September 10 that year.

That would have occurred under the Minnis administration just six days before the general election. Former prime minister, Dr Hubert Minnis, could not be reached for comment yesterday but previously told this newspaper he could not recall seeing or dealing with any of FTX’s permit applications during his time in office. “They never reached us,” he said. “They never came before any committee I chaired or sat on.”’

Mr Pintard, in a written statement issued last night, urged: “To protect the Bahamas’ reputation as a credible and legitimate place to do business, the Prime Minister must immediately agree to launch a complete and thorough investigation into these allegations of potential public corruption.

“Which companies received these monies, and who were the ultimate beneficiaries of the funds? What purposes were the monies paid out for? Did the senior government officials involved declare the conflict of interests? Were these senior government officials in positions that directly or indirectly influence decisions impacting FTX, its competitors or the digital marketplace?

“Do the Bahamian court-appointed liquidators have access to this information regarding nearly $700,000 in ‘donations’ to companies affiliated with high-ranking Bahamian officials and their families? Have the Bahamian liquidators put the matter forward to the authorities for further criminal investigation?”

Mr Pintard urged the Prime Minister to “bring the same energy to investigating this matter as he has brought to investigations of alleged wrongdoing by Opposition members” in a thinly-veiled reference to the probes into the COVID-19 health travel visa and COVID-19 food programme.

“We anticipate that the necessary investigation will examine the activities of all public officials who had spheres of influence over decisions related to FTX, regardless of political affiliation, before and after the change in administration. Let the proverbial chips fall where they may,” Mr Pintard added.

“Let’s not forget that although the investigation and subsequent trial of now-convicted felon, Sam Bankman-Fried, uncovered a series of crimes that would also breach the DARE Act of The Bahamas, we have received no explanation for why those apparent breaches of Bahamian law were never thoroughly investigated and pursued.

“We must look past partisan politics and work collaboratively across the aisle with industry stakeholders to ensure that our legislative, regulatory and policy framework can build a robust and nimble digital assets industry that attracts only credible entities committed to sound business practices,” the Opposition leader added.

“The Prime Minister must ensure that the Bahamas government gets out front on the investigation and not be pressed to move by subsequent revelations from external sources. If the Davis administration shirks from its constitutional duty to protect the integrity of the jurisdiction from grave allegations of apparent misconduct by Bahamian public officials, the Prime Minister will yet again demonstrate to the Bahamian people and the global investment community that he and his Cabinet have neither the interest or the inclination to uphold the rule of law and the necessary standards of conduct in public life.”