October 10, 1984

For more than a decade, international drug traffickers have used the

Bahamas as a vital gateway for U.S.-bound cocaine and marijuana. Sparsely

populated and strewn over 100,000 square miles, the country’s 700 islands

are a smuggler’s dream and a law-enforcement nightmare. Only an hour

by air from the Florida coast, dozens of unguarded beachfront runways

and scores of secluded harbors make the Bahamas an ideal spot for storage,

refueling and escape. U.S. officials estimate as much as 33 to 40 percent

of all illegal drugs entering Florida pass first through these islands.

Smuggling on such a scale could not flourish without corruption,

and drug traffickers say they often find a warm

welcome in the Bahamas. In the glib assessment of one smuggler, it

is “a payable situation” — but a tragedy for honest citizens of the

developing island country.

Earlier this year, as a commission of inquiry in Nassau gathered

testimony about payoffs, protection and narcotics, The Miami Herald began

a concurrent investigation of corruption in the Bahamas and its shattering

impact. In five months, reporters followed a trail of drug-related graft from

the police to the Parliament. They interviewed numerous smug glers,

crooked cops, dishonest lawyers, de≠spairing civic leaders and the most

tragic recipient of the smugglers’ windfall, young Bahamian cocaine

addicts.

The six-part series, published Sept. 23-28, was reported by staff

writers Jim McGee and Carl Hiaasen, and supervised by Investigations

Editor James Savage. Research assistance was provided by Gay Nemeti

and Nicki Kelly. The major photographs were taken by Tim Chapman, and

the art work was composed by Rick Brownlee. Graphics Editor Don Kent

designed the project.

A NATION

FOR SALECorruption in The Bahamas

By Carl Hiaasen and Jim McGee

The disclosures have left no layer of Bahamian government

untainted. Some of Prime Minister Lynden O. Pindling’s closest and most

powerful associates have been implicated in payoffs, money-laundering

and drug shakedowns, while Pindling himself was the subject of a serious

bribery accusation. The Herald also reported that the prime minister

received millions of dollars in undisclosed gifts and loans from foreign

businessmen - money that went to build a new $3 million mansion.

Pindling and his men have denied any wrongdoing, but today the

government shulders in political turmoil. The portrait of the Bahamas that

emerged in recent months is a sinister contrast to its image as a sun-

drenched tourist resort. It is a portrait of a nation on the take, and a

generation in peril.

As long as cocaine and marijuana smugglers consider South Florida

a prime destination, the Bahamas will be a key link in the South American

drug pipeline. High-level corruption in the Bahamas directly affects the

flow of drugs to American shores; more importantly, it endangers the future

of 223,000 Bahamians.

For most of them,who have worked hard and rejoiced in their country’s

independence, drug corruption has brought shame, misery and an

unprecedented crisis of leadership.

RICK BROWNLEE / Miami Herald Staff

Excerpts taken from a Miami Herald Special Reprint

September 23rd - October 10th, 1984

The money came from those who

depended on the goodwill of the

government or contemplated

investments in the Bahamas.

During the past 12 years, foreign investors in the Bahamas

channeled nearly $17 million to Bahamas Prime Minister

Lynden O. Pindling or to companies in which he had a secret

interest, records show.

The money took various forms: gifts, unorthodox bank

loans, direct payments to Pindling creditors, unusual stock

deals or generous home mortgages.

It came from businessmen who depended on the goodwill

of the Pindling government, sought approval of government-

regulated ventures or contemplated investments in the

Bahamas.

The largest chunk, $14 million, came from a Bahamian

bank controlled by fugitive financier Robert Vesco. The bank

fin =laced companies in which Pindling had an undisclosed

one-third interest.

Despite this steady flow of funds, which allowed him to

enjoy a millionaire’s lifestyle, Pindling sank deeper into debt.

Since 1977 Pindling spent $4 million - eight times his

reported total earnings during that period, according to a

Bahamas Commission of Inquiry.

“I owe plenty money,” Pindling testified, slipping into a

Bahamian dialect.

Hundreds of thousands of dollars contributed by foreign

businessmen went for the construction of Pindling’s new

house, a lavish lakefront home east of Nassau that his attorney

says is worth $3 million.

The commission’s estimate is almost certainly on the low

side because thousands of dollars were paid by unidentified

donors directly to the contractor building the new house.

Bailey said it is misleading to combine the money Pindling

received personally with the money his companies received

from Vesco’s bank.

“You are completely wrong to lump together loans from

(Vesco’s bank) and loans to the prime minister,” Bailey said.

“. . .It’s an apple and an orange, and when you put them in

the same bowl you are trying to create an impression which I

think is false and misleading.”

Pindling, who has repeatedly denied any wrong-doing,

declined to be interviewed.

Pindling’s financial records were provided to commission

investigators during the inquiry because of allegations he

received bribes from drug dealers.

The disclosures were meant to allay suspicions of drug

involvement. Instead, they raised questions about a series of

unusual transactions that secretly benefited the prime

minister.

None of the money has been linked to drug smug-

By Jim McGee And Carl Hiaasen

Pindling Received Millions

From Foreign Businessmen

Prime Minister Lynden O. Pindling’s mansion west of Nassau has been partly financed with hundreds of

thousands of dollars from foreign businessmen.

TIM CHAPMAN / Miami Herld Staff

.glers. But the prime minister could not

explain the source of $238,000 in bank

deposits. Nor could he explain who paid

$60,000 on his behalf to the building

contractor.

“I am more concerned, quite frankly,

about what I do not see in the bank account

than what I do see,” said Frank Richter, a

f inancial invest igator with the Royal

Canadian Mounted Police.

Rich te r, who i s ass igned to the

commiss ion , re fer red spec i f ica l ly to

payments that were made to Pindling’s

creditors “without going through the prime

minister’s accounts.”

This is the first detailed account of the

source and circumstances of money that

flowed to the prime minister.

I t is based on Pindling’s f inancial

records and other information obtained by

Commission of Inquiry and The Herald. It

shows that the hero of the Bahamian

independence movement has received huge

sums from rich foreigners.

The records show:

• Boca Raton developer George

Barbar gave Pindling $250,000 in

personal loans in 1983 that were

secured by a second mortgage on

which no monthly payments have

been made.

“The Bahamas needs a prime minister’s

residence,” Barbar said. “The country

needs a p lace where he can rece ive

dignitaries.”

After a Commission audit found that

Pindling had not made monthly interest

payments on a bank loan of nearly $1

mi l l ion , Barbar guaran teed another

$500,000 to reduce those charges.

A friend in need

“I believe a sincere friend will stand by

his friend when he needs help,” Barbar

said.

This money, which Barbar said has not

yet been delivered, was provided under a

generous financing arrangement in which

the Pindlings transferred ownership of the

mansion to their son Obie.

The house served as collateral for the

no-interest $500,000 loan, which was

actually made to Obie. To repay the debt,

Obie agreed to work for Barbar in a

“business relationship.”

Barbar said he plans to support Obie in

a building project in Nassau. “When I help

Obie , I he lp the count ry a l so ,” the

developer said. “... He will pay back that

money.”

Barbar, who is part owner of a seven-

acre estate on Cat Cay, said he has no

business interests in the Bahamas. A year

ago, he said he was “very much interested”

in constructing office buildings in Nassau

- a venture that could require government

approval.

Bailey said Barbar once considered

going into business with Pindling after the

prime minister left public office. “If he had

not run for another term... they [Pindling

and his son] were going to go into the

development business with the guidance of

Barbar.”

During the Commission investigation,

Bailey was asked about large deposits to

the bank account of Pindling’s political

party during the 1982 election. Bailey said

that

Barbar ar ranged for $500,000 in

campaign contributions -roughly $5 for

every registered voter in the Bahamas.

But Barbar told The Herald he had

nothing to do with those deposits: “I have

never made a contribution to the (political

party).”

• The major stockholders of the

Bahama Development Company,

Ltd., in Freeport gave Pindling

a total of $750,000 in 1983 at a

time when the Prime

Minister needed money to

complete work on his

mansion.

The arrangements were handled by

Edward St. George, a major partner in the

Freeport-based development company, who

said during the Commission that he does

not expect the money to be repaid.

Loan Forgiven

“If necessary it (the St. George loan)

would be forgiven,” Bailey explained. “...It

is a personal loan.”

An initial $250,000 went through an

account in the law firm of attorney Kendal

Not tage , a cab ine t min is te r. Not tage

himself is being investigated on unrelated

charges that his law firm laundered drug

money for a Boston Mafia figure.

“The original approach to St. George

was from Kendal Nottage,” Bailey said.

The Nottage law firm paid some of the

Freeport money direct ly to the pr ime

minister ’s credi tors . The rest went to

Pindling’s bank account. Later, St. George

arranged another infusion of $500,000 to

Pindling. It took the form of a loan which

St. George told the Commission Pindling

would not have to repay.

“I’m not the least bit interested in what

you publish,” St. George said. “.. . It sounds

to me like you are making some appalling

mistakes.”

The Grand Bahama Deve lopment

Company, Ltd., which is controlled by

foreign investors, manages the deep water

port, public utilities and airport in Freeport

under a joint operating agreement with the

government.

“It is certainly accurate to say they have

to look to the government for some things,”

Bailey said. “(But) . . . the Grand Bahama

Development Company does not get any

favors.”

He added: “You are dealing with what

we would call (in the U. S.) the appearance

of impropriety, versus impropriety itself.”

Questions about money from Freeport have

a special irony for Pindling, who came to

power in 1967 on the heels of the “Bay

Street Boys” scandal.

At that t ime, disclosures of i l l ic i t

payments from Freeport casino interests to

government o ff ic ia l s d i sc red i ted the

previous Bahamian administration.

• Resorts International casino

company in 1981 gave a Nassau

law firm $91,000 that was

promptly passed along to a

building contractor working

on Pindling’s new mansion.

The money went through the Nassau

law firm of Rolle, Knowles, which passed

it along to Yasmar Investments, a firm

controlled by Everette Bannister, Pindling’s

friend and confidante.

Two days af ter Yasmar received a

slightly larger sum from the Resorts’ law

firm, Bannister bought a $91,000 bank draft

payable to genera l cont rac tor Arnold

Cargill.

“It wasn’t done at my request,” Pindling

insisted.

Initially, the lawyer involved in the

transaction, Jack Duffus, told investigators

he was specifically instructed by Resorts

to pass the money to Bannis te r ’s

corporation.

But Resorts officials insisted the money

was an advance for future legal fees - not

to pay Pindling’s construction debts. Duffus

later changed his statement. The lawyer

said he’d re≠freshed his memory and that

his firm’s records showed the money was

meant for legal fees.

He dec l ined to comment fu r ther

Sunday.

“Everette Bannister had asked him

[Duffus] to loan him 90 grand for a very

urgent matter,” Bailey said. “Duffus went

[to Resorts] and got an advance on the legal

fees. He said nothing to anybody about

Bannister ... Bannister did not tell Duffus

why he needed the money.”

At the time of the payment, a Resorts

subsidiary was seeking a contract from the

government’s Hotel Corporation to manage

a cas ino in Freepor t . P ind l ings i t s as

chairman of that regulatory board.

“Resorts International has done nothing

ei ther i l legal or wrong,” sa id Rober t

Peloquin, a senior official with the casino

firm.

Aside from the money originating with

Resorts, the Commission identified three

more payments totalling $60,000 to Cargill

on behalf of the prime minister. Pindling

said he could not recall who supplied the

money.

• Everette Bannister, a Bahamian

businessman now under

investigation for taking an

undercover payoff from U.S.

agents, gave Pindling

$533,000 that originated with

foreign investors.

The funds were delivered in 1980 and

1981, and were never reported on the prime

minister’s financial disclosure forms.

“He needed the money, ” Bannister

explained. “He was building his house.”

The to ta l inc luded $333,000 of a

“finder’s fee” that Bannister said he earned

from the 1980 sale of the Paradise Island

bridge. The seller was Resorts president

James Crosby, who cont ro l led the

corporation that owned the bridge.

We were shocked when we found out

... this guy Bannister had an interest in it,”

said attorney Charles Murphy, Crosby’s

lawyer in the bridge sale. He said Crosby

thought the law firm that handled the sale

got the f inder ’s fee . “We’re innocent

victims,” he said. “But it looks horrible.”

Bannis te r i s a $50 ,000-a-year

consu l tan t fo r Resor t s In te rna t iona l .

Pindl ing said he never knew that the

Bannister money came from the bridge sale.

He said he thought it stemmed from a real

estate deal. Resorts International, one of the

la rges t inves tors in the Bahamas , i s

periodically subject to a wide range of

decisions by the Pindling government.

Bannister also gave Pindling $200,000

in 1981 obtained during a business deal that

involved two would-be casino investors,

Sorkis J. Webbe Sr. and Victor Sayyah, both

U. S. citizens.

Bannis te r sa id the money was an

investment in Bahamas World Airways ’74

Ltd., an ailing airline Bannister operated.

Instead of using the Webbe-Sayyah money

to fly airplanes, Bannister gave most of it

to Pindling.

Casino Application

At the time, Sayyah had applied for

permission to operate a casino in Freeport.

Bannister said he didn’t know Webbe was

the source of the money.

Last year, Webbe was described by a

federal prosecutor as “a working associate

member of La Cosa Nostra” in St. Louis -

an allegation he vigorously denies. Webbe

was also general counsel of the Aladdin

Casino in Las Vegas at a time when federal

officials said it was controlled by organized

crime.

Sayyah couldnot be reached for

comment. Webbe acknowledged loaning

money to a Sayyah corporation that was

la te r g iven’ s, , to Bahamas Wor ld in

exchange for a stock interest. But Webbe

said he had no idea the bulk of the money

would be passed a long to P ind l ing .

“Absolutely not,” Webbe said.

To expla in these payments ,

Bannistersaid he had an “obligation” to the

prime minister. Bannister said he felt bad

because of the failure of another airline in

in which Pindling had a secret interest.

Bannister said it was a handshake deal.

“Nothing was written down,” the prime

minister agreed.

The $533,000, Bannister said, was

meant to compensate Pindling for his stock

in the airline and another company - a

successful airport catering service.

Commission investigators questioned

whether Pindling deserved anything for the

airline stock. One testified that the stock

was worthless, and Pindling hadn’t paid a

dime for it anyway.

Commission Chief Counsel Robert

Ellicott said the commission must consider

whether the Bannister-Pindling stock deal

was just an “excuse” to cover up “certain

illicit payments” to the prime minister.

• A bank controlled by fugitive

conman Robert Vesco loaned $14

million to two corporations in

which Pindling had a secret

interest. Only $3.6 million was

ever repaid.

Vesco’s Bahamas Commonwealth Bank

was the principal backer of both Bahamas

Wor ld Ai r l ines (BWA) and Bahamas

Catering, Ltd., during the early 1970s.

More than most foreign investors,

Vesco depended heavily on the goodwill of

the P ind l ing Adminis t ra t ion . He was

wanted in the U. S. for his alleged role in a

$224 million mutual fund swindle. He

needed a safe hideout in the Bahamas

Except for a three-year sojourn in Costa

Rica, Vesco was allowed to remain in the

Bahamas from 1972 until 1981.

“I didn’t go to bat for him one way or

the other,” said Pindling.

The Vesco bank loaned BWA $3.6.

million to purchase two jets and allowed

the airline another $7 million in unsecured

bank loans. The bank also provided $3.6

mi l l ion for the purchase of Bahamas

Catering, which provides food service at

the government -owned Nassau

International Airport.

“In 1970 and 1971, we all looked at Mr.

Vesco as something of a financial wizard,”

Pindling said.

Vesco’s bank collapsed in 1974, partly

because of the huge, unsecured loans to the

Pindling-Bannister airline that were never

repaid. The catering firm repaid its loan.

When it came to BWA, the Vesco bank

was a “continuous tap that somebody forgot

to turn off,” according to liquidator David

Jones.

Even after it was obvious the money

would never be repaid, the bank kept

loaning millions to the airline, eventually

allowing the total debt to swell to $10.5

million.

Pindl ing’s Attorney General , Paul

Adderley, recently described Vesco as the

“single most criminal, corrupting factor in

the Bahamas in the last 10 years.”

• The Whitfield Corp. bought

Pindling’s previous residence, known

as “Long Bay,” for $650,000 in April

1979 under a generous lease-back

arrangement that allowed him to

continue living in the home.

Whitfield Corp. was controlled by Texas entrepreneur

Abe Lieber, who opened the Nassau-based Amford Bank

and Trust Company in 1978. He was involved with

Bannister in several transactions and once considered

financing the government-owned casino at Cable Beach.

Helping Pindling

“I did it to help the prime minister,” Lieber said of the

Long Bay sale. “There is no question about that, I don’t

see anything wrong with it. I didn’t pay more than the value

of the house.”

Documents obtained by the House of Assembly

indicate that Lieber’s purchase of Long Bay was part of a

package that included other business ventures in the

Bahamas - projects which would have required government

approval. Lieber says those documents are forgeries.

“Show me one favor I go t f rom the Bahamian

government,” Lieber says.

After the sale, the Prime Minister continued living in

the Long Bay house for four years. Pindling’s monthly

payments were charged off against the balance he was

still owed by Lieber.

After Pindling finally moved out of Long Bay this year,

Lieber put the house on the market.

Pindling did not disclose the income from the 1979

house sale until three years later, when a Select Committee

of the Parliament was empaneled to investigate the

Bannister-Lieber transactions.

Similarly, the prime minister did not reveal the interest

he says he had in Bahamas Catering and BWA until

Commission investigators acquired his bank records.

Both firms had government contracts. The Bahamas

Code of Ethics forbids cabinet ministers from holding an

active interest in companies with government contracts.

“If you want to apply U.S. standards you can do a

hatchet job on the Bahamas very easily,” Bailey said.

The one man who was involved in all these transactions

was Pindling’s busnness attorney, Jack Duffus.

It was Duffus who was hired to form BahamasWorld

Airways and BahamasCatering, Ltd.

More recently, it was Duffus who handled the Resorts

International money that subsequently went into Pindling’s

new house.

During the final week of public testimony of the

Commission of Inquiry, Duffus was asked to appear to tell

thestory of the money. He didn’t. When investigators tried

tofind him, Duffus’ secretary said her boss had left the

country.

Duffus to ld The Hera ld he was no t o ff ic ia l ly

summoned to the commission. The lawyer said he went on

vacation instead.

Pindl ing’s adminis t ra t ion has been f rac tured by

accusations of bribe-taking, money-laundering and other

corruption involving international narcotics smugglers.

By JIM McGEE And CARL HIAASEN

Herald Staff Writers.

Nicki Kelly also Contributed to this report.

Bahamas Prime Minis ter Lyn-den O. Pindl ing

acknowledged Tuesday night that his government is caught

in “the eye of a storm,” and that a lengthy investigation of

drug-related corruption has caused “severe political and

economic damage” to the country.

“I know that as the country’s leader, I must take

responsibility for that,” the prime minister said in a

national radio and television broadcast. “Where there is a

storm, it is the duty of the captain to step up ...and take

control.”

Pindling’s administration has been fractured by

accusations of bribe-taking, money-laundering and other

corruption involving international narcotics smugglers.

The prime minister, who has ruled the Bahamas for

17 years, conceded that his administration has made

“serious errors in judgment.”

“Where I have been too trusting, I must now be more

vigilant,” he declared. “Where I have been too lenient, I

must now be more exacting.”

The 15-minute speech came one day after three top

Cabinet ministers resigned and two others were fired in

the lingering wake of the Bahamas’ drug scandal.

Under pressure

The prime minister recently has been under pressure

to resign or call new elections, but he gave no indication

Tuesday night that he was ready to do either.

“The government will not be swayed by the noise in the

marketplace,” Pindling said.

Meanwhile , another key member of Pindl ing’s

government res igned Tuesday amid a l lega t ions of

corruption.

Senator Edward A. “Dud” Maynard, former chairman

of Pindling’s Progressive Liberal Party (PLP) and a vocal

supporter of the prime minister, announced that he was

quitting the Senate “in the best interest of the country and

our party.”

In a Miami Herald article published Sept. 28, Charles

Hilliard, a convicted robber and confessed cocaine was

arrested on U.S cocaine conspiracy charges last month in

Atlanta.

Tuesday n igh t , P ind l ing announced a major

reorganization of his Cabinet, shifting several Cabinet

members to posts left vacant by Monday’s resignations

and firings. Edward Maynard’s brother Clement was named

both foreign affairs minister and minister of tourism; A.

Loftus Roker was appointed to the newly created post of

mMinister Of National Security, and Darrell Rolle was

named Minister Of Works, Housing and Insurance.

In addition, Economic Affairs.

Minister Alfred Maycock takes over the duties of ex-

Agriculture Minister George A. Smith, who resigned

Monday, and Livingstone Coakley assumed the duties of

former Youth Minister Kendal W. Nottage, who also quit.

Both Smith and Nottage were implicated in drug-

Prime Minister Concedes Big ‘Errors In Judgement’

Pindling’s administration has been fractured by accusations of bribe-taking, money laundering and other corruption involving internationalnarcotics smugglers.

related corruption in testimony before a Commission of

Inquiry. Both deny any wrongdoing.

Pindling also announced that Transport Minister Philip

Bethel would be put in charge of local governments, and

Attorney General Paul Adderley would give up the Foreign

Affairs Ministry to become minister of education.

The only new Cabinet member is Dr. Norman Gay,

who will be minister of health.

The prime minister said a smaller Cabinet would deal

more effectively with the Bahamas’ problems. “You and I

know that a hard tough line will have to be taken on crime

and drugs,” he said.

In closing, Pindling asked for the support of the

Bahamian people “to pledge anew that we will preserve,

defend and protect our heritage as free Bahamians.