Solomon Island: pyramid fraud shuts cb and banks

Source: Sydney Morning Herald

Australia has urged the Solomon Islands to "get its house in order" after its financial system was shut down yesterday, and staff from Australian banks there were recalled home, amid growing civil unrest over a failed pyramid investment scheme.

The latest crisis to hit a country regarded as the archetype of the failed Pacific island nation-state was prompted by a visit to the offices of the ANZ Bank in Honiara by representatives of the shadowy Family Charity Fund demanding to open an account.

Backed by what an ANZ spokesman called "well-known Solomon Island enforcers", discussions soon became heated when the request was refused.

"There were threats to blow up a branch and harass staff," he said.

ANZ hired a charter jet to fly its expatriate bank officials to Melbourne and Westpac and the National Bank of Solomon Islands followed suit by closing their branches, along with the Solomon Islands central bank.

The ANZ spokesman said the bank was concerned that the request to open an account could serve two purposes - to provide the means to launder money or to encourage irate investors to besiege its premises demanding promised returns.

A fraudulent document circulated by the Family Charity Fund purporting to have $US167 million ($257 million) deposited with the bank heightened those fears.

A spokeswoman for the Department of Foreign Affairs and Trade, Lyndall Sachs, said Australian diplomats were working to resolve the crisis but supported the decision of the Australian banks to shut their doors.

"We have urged the Solomons to get their house in order. Law and order must be re-established," Ms Sachs said.

Promoted by a mysterious Fiji-based woman, Jane Hebala Maenua, the investment scheme has attracted thousands of investors and is said to have support from powerful law enforcement and government figures.

For an outlay of 250 Solomon Island dollars ($60), investors were promised a $1.2 million payout in three months, later revised to three years with a Christmas bonus last year of $25,000.