Apparently, more than ships can get lost there. Refco sent $20 billion there and got back $18 billion. Where did the $2 billion go?
Refco established a Bermuda company although there were no employees in Bermuda; all business was conducted out of the New York office. The Bermuda operation was not regulated by any agency, so Refco mixed client money with company money and did not account very well for either. When the loans made by the Bermuda outfit were not repaid, the losses were hidden. They also took greater loan risks than most other firms; e.g, Lukoil was able to borrow up to 50% of its market value from Refco, Bear Stearns would only give them 15%.
However Refco did it, it was good enough to fool a hell of a lot of sophisticated investors. This Bermuda operation reminds me of Enron's Raptors.
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