The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

FTX could be “a game changer” for the Bahamian financial services industry’s growth prospects, a well-known businessman warned yesterday, with the country facing “severe attack” over its implosion.

Sir Franklyn Wilson, the Arawak Homes and Sunshine Holdings chairman, told Tribune Business that the crypto currency exchange’s collapse and subsequent arrest and indictment of its founder, Sam Bankman-Fried, had placed The Bahamas under global scrutiny like never before.

Arguing that much of this is based on misleading information that has “no basis in fact”, he added that it was impossible for The Bahamas to afford the kind of public relations (PR) spend that is necessary to counter the battering this country’s integrity and reputation took before Congress during the US House of Representatives Financial Services Committee’s Tuesday probe into FTX’s failure.

John Ray, head of the 134 FTX entities in Chapter 11 bankruptcy protection in Delaware, told that hearing that The Bahamas’ provisional liquidation proceedings “lack transparency” while again implying that the Securities Commission and the Government were colluding with Mr Bankman-Fried. This was despite him being provided with an explanation for why the Bahamian regulator moved $300m in digital assets for their own protection - a move authorised by the Supreme Court.

“The FTX matter is such that I honestly believe it’s a game changer for us,” Sir Franklyn told Tribune Business. “A lot depends on how we survive this FTX matter. It’s not conventional banking, but obviously the banking community I suspect are watching it. The Bahamas is very much in the regulatory light, and the brand of the country is being subject to severe attack.

“I think anyone with a degree of objectivity would justly be concerned. There’s a legitimate basis for concern. I don’t seek to be a pessimist, but there’s risk. One or two names out there, known banks, their names are being called and who knows what the implications will be?”

Sir Franklyn, who did not identify the banks he was referring to, added: “This is serious stuff. When you have the attention of the US Congress and Senate, and in a way where politicians are grand-standing and playing loose with the truth, where facts don’t really matter and it’s easy to condemn and indict countries like The Bahamas......

“There are a number of US legislators who don’t care about telling the truth. If they’re standing before a large audience, it gives them a chance to appear strong before a crowd. The country doesn’t have the budget to correct all the misstatements and misrepresentations. It takes a hell of a lot of money to offset a lot of the negative talk that we hear from various members of the US congress. That takes a big budget.”

Asked whether he has reached out to Congresswoman Maxine Waters, chair of the House financial services committee, and other US legislators that he knows, Sir Franklyn declined to disclose the details of specific contacts and conversations.

However, he added: “I will endeavour to do all I can to encourage people not to take an adverse view of The Bahamas on the basis of misinformation. I encourage all Bahamians, and all friends of The Bahamas, to do likewise; call anybody they know and say a lot of what is being said is unfair and the truth is not being told.”

Sir Franklyn then reiterated that The Bahamas “has a long history of dealing with the liquidations of large companies”, recalling his appointment as liquidator for Commodore Computers, which in the 1980s and early 1990s was arguably that industry’s biggest name. He said himself and his attorney, the late Paul Adderley, were able to reach an agreement with US creditors over how the company was to be wound-up.

“We have the experience, we know this. We’re tested,” Sir Franklyn told this newspaper. “It’s unfair to our jurisdiction for persons in the US and elsewhere to paint a picture of us not being up to it.. There’s no reason to say a judge in the US is more capable than a judge in The Bahamas. We have to ensure people don’t think like that.”

He had previously told Tribune Business: “I was the court-appointed liquidator for Commodore Computers in the early 1990s, which at one time was one of the world’s biggest names. The fact of the matter is that The Bahamas survived Commodore Computers. It was a New York Stock Exchange listed company, truly a global company when that matter came up as being settled in the courts of The Bahamas.

“We had dozens of attorneys, maybe hundreds, in the courts. The creditors committee of the US subsidiary came to The Bahamas, objected to The Bahamas being the centre for the liquidation. It’s the same issue here,” Sir Franklyn argued of FTX. “We got through that. Myself, Paul Adderley and the creditors committee, we were able to negotiate an agreement where the liquidation proceeded in both jurisdictions. The same problem here.

“When people come here they must see competent judges. They must see competence within the judiciary. That’s what they must see. They must see our regulators holding the line. They must see that in our attorneys in The Bahamas they are equal to those on Wall Street or Bay Street, Toronto. That’s what they must see. They must see competence.”