The story of the foundation, operation and collapse of the Gibraltar based bank, International Investments Ltd (IIL), is outlined in a deposition lodged with the federal court in Muskogee.
Insp Noel Leckey of the RUC, who has been involved in a 13-year investigation into the collapse, lodged the deposition as part of his application to the Oklahoma court for the extradition of Mr Ross.
According to the deposition, the millions of pounds investors placed with IIL were given by IIL as unsecured loans to individuals; to companies set up by Mr Ross in the Republic for the purpose of property development; or invested in the US via a company, Pan European Resources Inc, which was controlled by Mr Ross. Money was also diverted to Mr Ross personally. The names of the individuals who were given unsecured loans are not given in the inspector's deposition.
When IIL went into liquidation in 1984, with debts of about £7 million, more than 1,200 depositors lost their savings. For many the lost investment represented money put aside for retirement. A liquidator who looked at the company's books said he found "misfeasance and misappropriation on a large scale". By then Mr Ross was in the US.
IIL was incorporated in Gibraltar by Mr Ross in November 1978. Two years later it was granted a banking licence to raise deposits outside Gibraltar. At the time Mr Ross was a director of the Irish Investment Society, a friendly society registered in Dublin and with depositors in the Republic and the North.
In 1978 the government introduced new regulations governing friendly societies. Mr Ross convinced the bulk of his investors with the Irish Investment Society to transfer to IIL. The Republic's currency control regulations meant Mr Ross concentrated on Northern Ireland in his search for investors. He promised high returns and the chance to move funds beyond the sight of the revenue authorities.
Difficulties emerged in the early 1980s. The firm began to pay interest on existing investments with money received from new deposits. In late 1983 Mr Ross and another figure convinced some investors to put more than £500,000 into IIL. The company had been insolvent for the previous 18 months.
No prosecutions have resulted. The Director of Public Prosecutions here decided there was not enough evidence. The Gibraltar authorities decided not to act. The RUC's extradition request came 14 years after the event.
Investors are now hoping that Mr Ross's return here will lead to more light being shed on the disastrous affair. Where did the money go? Is anyone else besides Mr Ross responsible for what occurred, or even guilty of fraud? Mr Ross is to appeal the decision of the Muskogee court that he should be extradited. The process involved is complicated and has the potential to take up to a year. A bail hearing will take place in the next two weeks or so. But if the IIL investors have learned anything it is surely how to be patient and to be wary of smooth-talking financiers offering low risks and high returns.
