RBC Bank takes its distance from Corallo-companies

POSTED: 11/6/13 1:22 PM

Court rules that ending relationship with Atlantis is justified

St. Maarten / By Hilbert Haar – RBC Royal Bank does not have to restore its relationship with Francesco Corallo’s Atlantis World Management NV and two related companies, the Court in First Instance ruled. RBC terminated the relationship due to the negative publicity surrounding Corallo about his alleged links to the Italian mafia and his possible involvement in criminal behavior. The Corallo companies objected to the measure and demanded in court that RBC maintains its bank accounts, but the court has now, after a procedure that began in May of this year, rejected the company’s demands.

Atlantis World Management manages four casinos in St. Maarten. “Francesco Corallo is indirect shareholder of Atlantis and he is registered at RBC as beneficial owner of Atlantis c.s.,” the court ruling states. The company started banking with RBC (and its predecessor RBTT) fourteen years ago. Another Corallo company, Dawn Properties Ltd. (established in Nevis) started using the same bank seven years ago. International Financial Planning Services, the company that manages the industrial complex near the Atlantis Casino in Cupecoy has a 16-year history with RBC where it held seven different accounts. Together these three companies are identified as “Atlantis c.s.” in the court ruling.

On February 15 of this year, RBC terminated the relationship with the Corallo companies in writing: “We write to advise you that our policy guidelines require us to risk assess our client portfolio on a regular basis. Regretfully at times, we are left with no other choice but to end longstanding relationships as a result of changed risk profiles which no longer fit our risk appetite,” the bank wrote.

RBC added that “after careful consideration” it was “not in a position to maintain our banking relationship with you” and demanded that the accountholders make alternative banking arrangements “no later than March 16.”

In a ruling in summary proceedings dated April 5, the court noted that it is “not implausible that the standard judge would rule that there are sufficient serious considerations to justify ending the relationship.” At the same time, the court noted that the way RBC used its authority to end the relationship would probably not hold up against a review on fairness. The court ordered that the banking relationship has to continue for at most one year after its ruling.

Atlantis demanded in court that RBC continues the relationship: “Ending the relationship leads to unacceptable consequences because other banks do not want to open accounts for Atlantis. This way the company is no longer able to participate in the economy,” its attorneys  Jeroen Veen and Willem Nelissen reasoned.

RBC’s attorney  Richard Gibson Jr. and Michael Snijder countered that RBC is not Atlantis’ house banker and that the company has accounts with other banks, that some of the accounts are hardly ever used and that “continuing the banking relationship leads to an unacceptable risk at damage to RBC’s reputation.”

To substantiate its position, RBC submitted a number of newspaper articles to the court and noted that Corallo recently made the news due to “alleged links to the Italian mafia, drug dealing, money laundering via St. Maarten, paying bribes and corruption related to loans to his companies by the Banco Popolare di Milano.”

The bank furthermore noted that several arrest warrants had been issued against Corallo and that he is “currently in preventive custody because of his suspected involvement in criminal behavior linked to the Banco Popolare di Milano.”

RBC made a risk assessment and concluded that “because of these circumstances, Atlantis falls outside the limits of risks RBC wishes to accept. These circumstances result in a justified fear for damages to our reputation, if the bank is associated with Corallo.”

Atlantis countered that Corallo’s name has been cleared by the Tribunale Civile di Roma in an arrest dated September 9, 2011, and that Corallo’s behavior is “impeccable” according to a fax message from the Italian authorities.

The court ruled however that the bank’s fear for damage to its reputation is justified, also because Corallo was negatively in the news again with reports about the same suspicions after the ruling by the court in Rome and the fax message from the Italian authorities.

“The fear for reputation-damage is legitimate. Because RBC has to guard its financial integrity due to its social responsibility, there is a serious ground for ending the banking relationship,” the court ruled. “Apparently RBC has reached the limit of what it find acceptable.”

The court documents show that Atlantis and the other two companies attempted to open alternative bank accounts at Banco di Caribe, the Windward Islands Bank and CIBC FirstCaribbean.

FirstCaribbean would allow Atlantis to open accounts “with income (credits) solely from resources of rental income or sale of loan assets and no other external sources of deposits.”

At the WIB, Atlantis asked to open accounts for casinos and at Banco di Caribe it requested accounts for legal entities “other than Atlantis c.s.” The court ruled that Atlantis would be able to do business with other banks than RBC in St. Maarten “by reorganizing its companies.”

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