The STAR Businessweek- The Caribbean Campaign Against Blanket 'Blacklists'

THE STAR BUSINESSWEEK SEPTEMBER 29, 2018

WWW.STLUCIASTAR.COM

Financial crime crackdown curbs emerging markets Global regulators’ assault on terrorists, tax dodgers and money launderers is sapping vitality from a host of emerging market economies, according to the private-sector arm of the World Bank, as big banks cut ties that could expose them to sanctions.

THE CARIBBEAN CAMPAIGN AGAINST BLANKET ‘BLACKLISTS’

BY ED KENNEDY, STAR BUSINESSWEEK CORRESPONDENT

Recent times have seen the Caribbean’s financial sector at an epicentre of global debate surrounding offshore banking and tax havens. This debate has always existed in the region but, following the revelations in recent years from the mass-leak of documents commonly known as the Panama Papers and the Paradise Papers, a new dynamic has arisen.

Continued on page 4

Over the past few years banks such as HSBC, BNP Paribas and JPMorgan Chase have paid billions of dollars of fines for failing to keep tabs on criminal activity, while spending heavily to increase their routine flagging of suspicious transactions.

Page 3

2

THE STAR BUSINESSWEEK

SEPTEMBER 29, 2018

WWW.STLUCIASTAR.COM

DEALING WITH DE-RISKING

As the Caribbean struggles to maintain its CBRs, de-risking has emerged as one of the biggest threats to banking in the region

BY CATHERINE MORRIS, STAR BUSINESSWEEK CORRESPONDENT

The STAR Businessweek

BY CHRISTIAN WAYNE – EDITOR AT LARGE

Unlocking finance for growth in the context of a less favourable global economy is key for Caribbean countries, many of which are facing gaps in financing, heavy debt burdens, and high vulnerability to economic shocks and natural disasters.

In 2014, Saint Lucia’s then-Prime Minister Kenny Anthony hosted the third regional Caribbean Growth Forum to discuss new strategies and tools to achieve growth in the Caribbean. Few of these strategies have since materialized, but nevertheless, one key take-away from the discussions in Saint Lucia was that being small has a number of advantages. Go figure. For instance, small states can be more agile in ensuring high competitiveness.

For example, a number of small states continue to rank at the top of the annual Global Competitiveness Index including Singapore, Mauritius and Malta.

Given the large debt burdens faced by many Caribbean countries, financing growth calls for combining public and private finance.

To free up greater public financing for growth, continued efforts on fiscal consolidation and structural reforms are essential. But high debt burdens also stem from weak competitiveness, low productivity, low skill levels, high logistics costs and poor connectivity. In this context, Caribbean government must commit to a path of fiscal reform and private-sector led development.

Workforce development is central.

Since 2014, however, the Caribbean’s financial ecosystem has been under siege by the constantly moving goalposts of global banking compliance requirements, most of which underpin the Caribbean’s banking relationships to the metropoles of the world. While combatting the financing of terrorism, illicit trade, and transnational crime are commendable pursuits, standing ‘hard against crime’ shouldn’t be used to justify the severing of key avenues for Caribbean growth and poor policy-making.

In this banking and finance themed edition of The STAR Businessweek, we’re getting under the hood of the Caribbean financial system, looking at where we are today, and what we’re doing to move forward.

It’s Nothing Personal. It’s Business.

Stay connected with us at: Web: www.stluciastar.com Social: www.facebook.com/stluciastar Email: starbusinessweek@stluciastar.com

Correspondent banking is the cornerstone of the global payment system, designed to serve the settlement of financial transactions across country borders.

It allows companies and individuals to safely move money around the world and supports and encourages global trade

C

orrespondent Banking Relationships (CBRs) are crucially important to banking institutions around the world. These business connections (usually forged between global banks and their smaller, regional counterparts) allow banks to share best practices, mitigate risk, make cross-border payments, provide more diverse services and plug into the global financial system.

Speaking at a conference in The Bahamas last week, Carolina Claver, Senior Financial Sector Export in the International Monetary Fund (IMF)’s Legal Department emphasised the importance of these connections, saying: “CBRs play a key role in global trade and economic activity.

Many of the transactions that take place on a daily would not be possible [without them]. CBRs are a communication highway where banks in one jurisdiction have access to services in another country.”

De-risking occurs when global banks decide to sever their CBRs,

pulling out of regional markets and retrenching to their country of origin.

The decision is usually made based on a cost-benefit analysis. If operations in the foreign market are considered low-margin and high-risk, banks have little incentive to remain. “The withdrawal of CBRs is a reflection of the correspondent bank’s assessment of profitability and risk,” says Claver.

“What we [at the IMF] have noticed is that banks do an analysis of the whole situation. It is a business relationship based on trust and the correspondent bank needs to have confidence in the way that domestic banks manage their risk. We all know we cannot eliminate risk. Risk is out there. The question is if the framework is in place to properly manage that risk.”

In recent years, concerns over Anti Money Laundering (AML) and Combating the Financing of Terrorism (CFT) have come to the fore in the Caribbean, leading many banks to conclude that their presence in the region just isn’t worth it. According to a 2015 global survey by the World Bank Group, the Caribbean is the region most severely affected by the decline in CBRs and the market most likely to cut ties was the US followed by the UK, France, Germany

and Canada. This impacts services such as international wire transfers, check clearing, cash management and trade finance.

BIG IMPACT ON SMALL COUNTRIES

De-risking is bad news for both banks and consumers. Not only does it leave respondent banks more vulnerable to the vagaries of the market, it also limits financial inclusion. Around half of the Caribbean’s adult population is ‘unbanked’, meaning they don’t have a bank account or access to banking services. Operating purely in a cash-based economy, these citizens are at the mercy of crime, corruption and poverty.

De-risking is a challenge for all Caribbean banks and Saint Lucia has not escaped its effects. Proven Investments Ltd snapped up The Bank of Saint Lucia International Limited (BOSIL) for a “bargain price” last year after the bank struggled to maintain its CBRs. Heavily dependent on Latin American business, BOSIL was hit hard by the de-risking trend and sold to Proven at around twothirds its value. The bank’s new owner has since committed to building back that business by doubling its CBRs. Continued on page 5

INTERNATIONAL FINANCE CORPORATION

THE STAR BUSINESSWEEK

SEPTEMBER 29, 2018

WWW.STLUCIASTAR.COM

© The Financial Times Limited [2018]. All Rights Reserved. Not to be redistributed, copied or modified in anyway. Star Publishing Company is solely responsible for providing this translated content and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation

FINANCIAL CRIME CRACKDOWN CURBS EMERGING MARKETS IFC says cut in bank ties has depressed legitimate growth

BY BEN MCLANNAHAN, FT CORRESPONDENT IN NEW YORK

G

lobal regulators’ assault on terrorists, tax dodgers and money launderers is sapping vitality from a host of emerging market economies, according to the private-sector arm of the World Bank, as big banks cut ties that could expose them to sanctions.

Over the past few years banks such as HSBC, BNP Paribas and JPMorgan Chase have paid billions of dollars of fines for failing to keep tabs on criminal activity, while spending heavily to increase their routine flagging of suspicious transactions. As a result, many of them have trimmed their networks of relationships with banks in other countries, fearing that such connections may be more trouble than they are worth.

But according to the International Finance Corporation, these cuts to so-called correspondent banking relationships — bilateral agreements to handle basic services such as remittances or letters of credit — are having the effect of shutting out households and small businesses from the global financial system.

In a new survey of more than 300 of its banking clients around the world, the IFC found that more than one in four reported a decline in their CBRs. In seven countries — including Kenya, Lebanon, Pakistan, Paraguay and Vietnam — the banks said that a lack of CBRs, or tightened terms on the ties that remain, were their sole obstacle to growth.

The Federal Reserve’s plans to shrink iits balance sheet are likely to impact upon emerging markets © FT montage; Bloomberg

Marcos Brujis, Washington-based global industry director of the financial institutions group at the IFC, noted that the cutting had spread well beyond regions such as the Pacific Islands and some Caribbean countries, where declines in CBRs have been widely reported. In sub-Saharan Africa, in particular, he said, the declines have been particularly acute, forcing some lenders into unregulated networks.

“As a result of all these additional costs, emerging-market banks have less capacity to serve their countries, which affects jobs, economic growth, decisions to migrate and so on,” he said. “The effects of ‘de-risking’ are very subtle, complex and pervasive.”

The survey adds to a growing body of work on the unintended consequences of efforts to enlist banks in the global fight against crime. The International Monetary Fund flagged concerns earlier this year,

warning that a steady decline in CBRs has exacerbated fragilities in the financial system by concentrating flows of money across borders. The Financial Stability Board took a similar line in July, arguing that falls in CBRs had slowed global trade by lengthening chains of payments, while increasing dependence on smaller groups of lenders.

Lobbyists for the big banks, meanwhile, have long complained of unreasonable expectations heaped upon them. A report issued in February by The Clearing House, a powerful Washington-based lobby group, claimed that big financial firms were spending at least $8bn on anti-money laundering compliance each year — not much less than the $9.5bn budget of the FBI. The Clearing House is at the forefront of a loose collection of bodies trying to create some kind of shared global depository of knowyour-customer information, which could lower compliance costs for banks all over the world.

Regulators including the Federal Reserve and the Office of the Comptroller of the Currency, and FinCEN, the US Treasury’s Financial Crimes Enforcement Network, have shown an interest in supporting such an initiative, according to people familiar with the situation.

The IFC is pushing in that direction too, says Susan Starnes, head of trade and commodity finance strategy.

“None of us feels we can do this on our own. We’re trying to find a way where there is protection in numbers.”

Rodgin Cohen, senior chairman at Sullivan & Cromwell, the law firm, said the project “could be the ultimate win/win. Costs are cut but more importantly, the potential for catching bad actors is sharply increased.”

3

4

THE STAR BUSINESSWEEK

SEPTEMBER 29, 2018

WWW.STLUCIASTAR.COM

THE CARIBBEAN CAMPAIGN AGAINST BLANKET ‘BLACKLISTS’ Continued from page 1

One where there’s renewed pressure on institutions locally and globally to crack down on the excesses and abuses that can occur in the local financial industry. This can drive local nations to revolt at receiving orders from foreign capitals, the practice hearkening back to the bad old days of colonialism. Let’s look now at the latest on the state of local banking and global pressure.

TAX HAVENS DEFINED

Because the financial industry is so complex as a standalone - and this made even more complex when it shifts from a national to global perspective - many different views can swirl around just what a tax haven actually is. That’s why it’s essential that a clear-cut definition is inhand here, in order to recognise where the pressure points exist.

Put simply, a tax haven is a sovereign country or place (such as an overseas territory of a large country) where the existing rate of taxation for foreigners is regarded as so low as to be ineffective. Hence why these havens appeal to many of the world’s wealthiest who wish to avoid paying a far higher rate in their home nation.

The traditional culture of secrecy (what some may call ‘discretion’) that surrounds these havens has further incentivised clients while angering government accountants, criminal investigators and social activists around the world who often point to tax havens as a source of global evil.

The reality of the matter can see more shades of grey, especially when it comes to a global business being attracted to the region after it previously headquartered in a place that may have had very high rates of tax. Also, many nations actively cut or keep low certain tax rates (such as the Republic of Ireland to incentivise foreign tech companies to headquarter there).

Nonetheless, in an era that sees the greatest global rich-poor gap since the beginning of the 1900s, few ‘regular citizens’ have an appetite to hear about how billion dollar businesses and individuals are hard done by.

PARADISE AND PANAMA PAPERS

Most regular citizens would understandably find the revelations contained within the Paradise and Panama Papers odorous. The idea that, even if offshore banking and tax minimisation may be totally legal, it may be done exclusively to avoid a regular rate of taxation in an individual’s native nation, can be unpalatable, not only for people in the individual’s home country but throughout the Caribbean.

The old adage ‘I’m not rich enough to pay no tax’ is often cited as a lament here.

It’s a reality, too, that offshore banking at its worst can provide a safe haven for the ill-gotten gains of despots, thieves and hypocrites. Oftentimes they are one and the same.

Commonly, powerful authoritarian individuals, who patronise the poorest of the poor in the world, decrying all ‘the evils of the West’, will, at the same time, make use of a financial avenue that the western world provides, in order to ensure that their huge wealth (often gained by thievery or exploitation of those same vulnerable people) is secured under the rule of law in a nation with a stable democracy. History shows that irony is never lost on criminals.

Nonetheless, many people in the Caribbean are ready to work in good faith and look to common-sense reforms of issues in the region’s various financial sectors. It’s also true that people in the Caribbean family want to see that there is a level playing field globally when it comes

to tackling this issue, and recent times have seen doubt thrown on that possibility.

THE EU ELEPHANT IN THE ROOM

When the European Union announced in December 2017 its blacklist that ‘named and shamed’ tax havens, it was no surprise that a number of Caribbean nations caught publicity on the list, with Panama, Barbados, Grenada and Saint Lucia (among other nations) featured. But the absence of one tax haven was especially noted: the UK. British academic and accountant Professor Prem Sikka went so far as to say the list ‘smacks of imperialism’. Many people of

the Caribbean felt the same, wondering why the region’s little nations had been encircled when sizeable powers far closer to European shores had been overlooked.

Since then, some common ground has been found and inroads made - in May the EU removed the Bahamas, Saint Lucia and St Kitts and Nevis from the blacklist and shifted them to a lesser ‘grey list’.

But the EU’s process has also (ironically) faced criticism for its ambiguity, prompting Brussels to ultimately release further documentation surrounding how the tax status of a nation on the blacklist is assessed.

The elephant in the room here is the Brexit negotiations. Just as it was the day

You are never too young to start saving money or planning for tomorrow St. Lucia Workers Credit Union Young Dreamers Account offers special features and incentives to help keep our children financially fit

• Parent must provide their ID and the child’s birth certificate upon opening account • No withdrawal policy (Except under special or emergency circumstances) • Parent/guardian must be a member of the credit union

THE STAR BUSINESSWEEK

Pierre Moscovici, European Commissioner for Economic and Financial Affairs, Taxation and Customs, says he seeks a ‘credible’ EU blacklist of tax havens

after the vote, it’s plain and clear that the negotiating power in this matter resides with the European Union. Great Britain now confronts a difficult and uncertain future, and Brussels knows that whatever London achieved via Brexit, it must come with a powerful form of deterrence to ensure that other nations flirting with the idea of an EU exit know it will leave them licking their wounds.

That said, the EU also recognises that Britain will remain a key trading partner in the European bloc. It will also remain important as a security partner and diplomatic ally. And ultimately, Brussels cannot afford to alienate London totally, given it is presently the second biggest economy in the EU, sitting between Germany and France.

GETTING EVERYONE IN THE CONVERSATION

Put simply, a tax haven is a sovereign country or place (such as a overseas territory of a large country) where the existing rate of taxation for foreigners is regarded as so low as to be ineffective

This absence on the blacklist of the UK is a key example of inequality when it comes to reforming global tax havens. If such a two-tiered approach to reforms is allowed to grow, it in turn increases the risk that many people in the Caribbean, who would have otherwise been ready to support change in good faith, instead revolt against it. They believe that whatever issues may exist in the financial sector, it doesn’t provide license for an overseas power to issue edicts and demands from afar while overlooking issues closer to home.

Furthermore, unlike the more wealthy and affluent nations that function as tax havens, for many Caribbean nations the financial industry is a lifeblood (alongside tourism) that runs their economy.

There’s no suggestion that this grants permission to commit any crime; just, instead, that reforms need to be pursued with good faith and partnership with regional nations. Demonisation and declarations from afar not only generate painful reminders of history, but could represent a huge economic risk to the livelihoods of people in the Caribbean family, if recklessly handled.

That’s unlikely to win support locally, especially if people of the Caribbean feel there’s no global understanding of the region’s concerns.

SEPTEMBER 29, 2018

WWW.STLUCIASTAR.COM

5

DEALING WITH DE-RISKING Continued from page 2

As a small country, Saint Lucia is particularly vulnerable to de-risking. Some of Saint Lucia’s biggest money-makers – tourism, Citizenship by Investment programmes, FDI - rely on international investors and the ability to offer a range of cross-border banking services. “Smaller countries face certain challenges. These are small, open economies which have extensive links to the global economy and a strong reliance on tourism, trade, remittances and FDI. There’s limited resilience to shocks and capacity constraints,” explains Claver.

DIALOGUE AND SOLUTIONS

De-risking is essentially a business decision. CBRs can be preserved provided they tip the balance between risk and cost for a more favourable result. There are several ways to reduce risk while increasing profit but one of those gaining attention is FinTech. Leveraging financial technology can help banks save by lowering compliance costs, streamlining services and identifying inefficiencies. “FinTech could have a lot of benefits. Technology needs to be brought to the table in the medium and long-term,” says Claver.

In March the Eastern Caribbean Central Bank (ECCB) signed an agreement with Barbados-based FinTech firm Bitt Inc to create a pilot on blockchain technology in ECCB member states. The banks hope the scheme will mitigate the Eastern Caribbean’s risk profile and therefore guard against further de-risking.

Projects such as that undertaken by the ECCB and Bitt Inc are helpful in creating a more effective AML/CFT regime in the region, addressing the perception that the Caribbean is a high-risk area. The Caribbean Financial Action Task Force has been proactive in ensuring states are following best practices, implementing the necessary regulation and staying ahead of industry issues. Improved communication between correspondent banks and respondent banks would help convey these efforts and highlight the progress made.

Money laundering is the process of making illegallygained proceeds appear legal. Typically, it involves three steps: placement, layering, and integration. First, the illegitimate funds are furtively introduced into the legitimate financial system. Then, the money is moved around to create confusion, sometimes by wiring or transferring through numerous accounts. Finally, it is integrated into the financial system through additional transactions until the “dirty money” appears “clean”

In 2017, the Caribbean Development Bank launched a US$ 2,550,000 initiative to help prevent de-risking. The three-year project will be implemented in the Organisation of Eastern Caribbean States and aims to strengthen financial integrity standards, increase the technical capacity of banks and improve public-private sector coordination with regulators.

The IMF is playing its part too, hosting several Caribbean roundtables to open up discussion. Claver explains: “The IMF has taken a multipronged approach to monitor trends and risk, to facilitate dialogue among stakeholders and to tailor capacity development. We need to sit together to find a shared response. It is not enough if all efforts are on one side, we need collective effort. Countries need to dispel the misperceptions, clarify what is expected and communicate efforts undertaken.

“Loss of CBRs is stablising in the region [but] we need to keep engaged, foster dialogue and continue to try to find practical solutions.”

6

THE STAR BUSINESSWEEK SEPTEMBER 29, 2018

NEW COMPANY INCORPORATIONS

WWW.STLUCIASTAR.COM

The Saint Lucia Registry of Companies & Intellectual Property Company Incorporations Directors: Reminista Clement – Kawiche,

Name: Angel INC.

Name: SkyTel Communications LTD.

Date Incorporated: 12-Sep-18

Description: Holding and investment

Description: Telecommunications

Chamber: SEDU, Saint Lucia

Directors: Lisa Kessell, Linda Daher

Directors: Catherine Sealys, Srinivasa Rao

Date Incorporated: 3-Sep-18

Kadeem, Dr. Veeraprasad Makineedi

Name: E.M.R.S. Ltd.

Chamber: Deterville, Thomas and company

Date Incorporated: 5-Sep-18

Description: Hemo Dialysis

Chamber: TM Antoine Partners Chambers

Directors: Edmund O’Brian,

Name: VTR Manufacturing Ltd.

Manoj V. Mathew

Description: Manufacturing operations of the retail

Name: Health Zone LTD.

Emmanus Alfred, Lester Anthony Date Incorporated: 12-Sep-18 Chamber: SEDU, Saint Lucia

Description: Medical & Diagnostic center

Name: Rokam Suites Ltd.

Date Incorporated: 12-Sep-18

of toilet tissue paper, kitchen paper towels, napkins

Directors: Dr. Dharmendra Shah,

Description: Real Estates Sales and

Chamber: SEDU, Saint Lucia

and other closely related tissue paper

Sachin Narhari

Development

Date Incorporated: 5-Sep-18

Directors: PIF Corporate Services Inc.,

Name: Tet Paul Scenic Trail Ltd.

Date Incorporated: 12-Sep-18

Chamber: Leslie Mondesir Chambers

Rokam development Inc

Description: Nature Trail, restaurant

Chamber: SEDU, Saint Lucia

Date Incorporated: 12-Sep-18

& cottage, farming

Chamber: Peter I. Foster & Associates

Directors: Maureen Fontenelle

Name: CRE8 Event Planning and

Date Incorporated: 12-Sep-18

Management Solutions Inc.

Chamber: SEDU, Saint Lucia

Description: Events Planning

Name: SQZ Inc. Description: Printing, advertising and marketing

Name: Beautiful Properties Ltd.

Directors: Shara-Ann Velasquez, Ricardo

Description: Real Estate, development

Directors: Terence Gustave

Directors: Simone Teres Alleyne, Foster Nee

Velasquez

and Mortgage Services

Name: Travel N’Venture Inc.

Date Incorporated: 5-Sep-18

Directors: Adrian Dolcy, Cleophas

Description: Transfers and

Date Incorporated: 13-Sep-18

Chamber: Leslie Mondesir Chambers

Daniel Phillips

Excursions Services

Chamber: Theodore & Associates

Roxburgh, Ryan Christopher Foster

Financial Investment and Consultancy Services Ltd #15 Bridge Street, Castries Providence Commercial Centre, Rodney Bay

THE NEXT BIG THING IS HERE !!

MBO U J

MORTGAGE

F

E IN C AN

Too BIG TO PASS UP...CALL NOW FOR MORE INFO JUMBO MORTGAGE FINANCE FEATURES • Offering Attractive Interest Rates • Up To 25 Years Mortgages (Land & House) • Up To 15 Years Land Loans • Built In Savings Plan • 100% Financing (Adequate Security) • Consolidation Of Other Debts • Built-In Personal Loan–Maximum $20,000 Available Immediately Or When Needed (Depending On Size Of Loan And Customer’s Ability To Pay) • Mortgage Payment Holiday • Fast Approval - Credit Checks When Necessary • Repayment 2 Months After Disbursement Terms And Conditions Apply

TEL: 758-458-8700 \ 758-458-8740 CEL: 758-727-8700 \ 758-520-8740

Email: info@ficsltd.com \ fics_ltd@candw.lc P.O. Box 1516, Castries. Web: www.ficsltd.com

THE STAR BUSINESSWEEK

SEPTEMBER 29, 2018

WWW.STLUCIASTAR.COM

TAILOR-MADE FINANCIAL SOLUTIONS INVESTMENT BANKING SERVICES

Capital Market Services Merchant Banking Services Custody Services Research and Advisory Services

2nd Floor, Financial Centre, 1 Bridge Street P.O. Box 1860, Castries LC04 101 St. Lucia Telephone: 1 (758) 457.7231 | 456.6884 | 457.7256 Email: boslinvestments@bankofsaintlucia.com www.bankofsaintlucia.com

7

8

THE STAR BUSINESSWEEK

SEPTEMBER 29, 2018

DIGICEL GROUP LTD

WWW.STLUCIASTAR.COM

© The Financial Times Limited [2018]. All Rights Reserved. Not to be redistributed, copied or modified in anyway. Star Publishing Company is solely responsible for providing this translated content and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation

DIGICEL REQUEST FOR BOND REPAYMENT DELAY REJECTED

Investors dismiss Irish tycoon’s proposal to extend debt as worries rise over default

BY ARTHUR BEESLEY, FT CORRESPONDENT IN DUBLIN

Big investors have rejected Denis O’Brien’s attempt to postpone repaying $3bn in bonds

Flow and C&W Business Solutions

encourages everyone to be on alert and ready to take the necessary steps to protect family and property during the Hurricane season. Our commitment is to keep our customers connected to family and friends especially when it matters most, during times of disaster.

Follow Flow on Facebook, Twitter and Instagram

A

push by Ireland’s richest man to refinance his heavily indebted Caribbean telecoms company has hit a wall after big investors rejected his bid to postpone repaying $3bn in bonds.

Denis O’Brien’s effort to buy more time for Digicel to repay the debt comes at a critical time for the company, amid anxiety about a possible default on a $2bn bond due in 2020.

Now bondholders have dismissed Mr O’Brien’s proposal to extend by two years this debt and a $1bn 2022 note, saying the terms he has offered were “unacceptable”.

A statement from a bondholder committee suggests it will take a robust approach to talks with Mr O’Brien, who took Digicel into 31 markets after founding the company in Jamaica in 2001.

Digicel’s bondholders are known to include Ashmore, BlackRock and Eaton Vance but their precise stance is unknown and it is not clear whether they are represented on the committee.

Mr O’Brien faces the prospect of having to sweeten the terms of a restructuring proposal that has led to downgrades from rating agencies Moody’s and Fitch.

The company has been a lucrative investment for Mr O’Brien but its bonds

have been trading at 60 cents and 70 cents on the dollar, as concern mounts about its indebtedness at a time of anxiety over risks to emerging markets more generally.

Revenues and earnings have declined and Digicel has cut tariffs for data to boost the slow uptake of services introduced after a $2.4bn investment in networks.

Law firm Akin Gump, which is advising the bondholder committee, said investors holding more than 60 per cent of each bond have “entered into a lock-up agreement” in which they resolved not to tender their notes in response to Mr O’Brien’s proposal to prolong the debt.

In response, Digicel said that it was extending by three weeks the early tender deadline for the offer until October 19.

This move, days before the Friday deadline for acceptance of the offer, was the second extension. “Digicel continues constructive discussions with an ad hoc group of noteholders regarding the exchange offers,” the company said.

Digicel’s bondholders are known to include Ashmore, BlackRock and Eaton Vance but their precise stance is unknown and it is not clear whether they are represented on the committee Without naming any Digicel investors, Akin Gump said it has held two teleconferences for multiple financial institutions who together hold $2.8bn of bonds issued by the company.

“Based on the strong feedback received from Digicel Group Ltd noteholders, Akin Gump has informed Digicel Group Ltd and its advisers that the current terms of the proposal set out in the offering memorandum are unacceptable to . . . noteholders,” it said.

The committee has directed Akin Gump to communicate a request to other bondholders to refuse to tender their notes “and thereby further increase the already sizeable majority of Digicel Group Ltd noteholders” who oppose it.

PRINTED & PUBLISHED BY THE STAR PUBLISHING CO, (1987) LTD. RODNEY BAY INDUSTRIAL ESTATE, MASSADE , P.O. BOX 1146, CASTRIES, ST LUCIA, TEL (758) 450 7827 . WEBSITE WWW.STLUCIASTAR.COM ALL RIGHTS RESERVED