bDucet & Inter Bank

A key player in the promotion of Cayman was a Canadian banker from Montreal named Jean Doucet, who had learned about Cayman through Langer in 1967.

After first forming International Corp. of the Cayman Islands, later becoming known as International Bank (referred to as Interbank), Doucet moved to Grand Cayman in 1968.

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In his efforts to promote Cayman, Doucet commissioned Langer and attorney W. S. Walker to write a booklet extolling the tax benefits of Cayman. He mailed 20,000 copies of the pamphlet to potential investors around the world.

Doucet continued the practice for years and spent about $250,000 on printing and mailing it out in 1973 and 1974 alone. Doucet also created a 35-minute film, The Cayman Islands, to promote Cayman for tourism and financial services.

Attorney Casey Gill praised Doucet’s efforts.
"He brought in a lot of business," he said. "He helped put Cayman on the map." In 1970, Doucet formed Sterling Bank and Trust, which later opened a branch in London.

People saw Doucet as an innovator. His bank was the first in Cayman to bring in a computer to handle accounts; his female staff members were encouraged to wear hot pants, mini skirts and knee-high boots to work; the Interbank House featured wall-to-wall carpeting; and there was a sign on the front door that read: ‘Come in, as you are.’

Some people, like Austin, had doubts about the flamboyant Doucet’s establishments. "I always regarded his banks with suspicion," he said. "His girls used to dress in hot pants; he offered very high interest rates; he did all the things you don’t do as a conservative bank."It turned out the suspicions of Austin and other were well founded.

Cayman’s First Black Eye

In July, 1974, Doucet hosted about 1,000 guests at the Holiday Inn hotel, in what many considered one of the most lavish parties ever held in Cayman, to celebrate the launch of Cayman Mortgage Bank Ltd. One of that bank’s main goals was to offer home loans to Caymanians.

On 16 September, a little more than two months later, Doucet’s $50m empire collapsed because of liquidity problems.

Doucet, who left on a private jet three days earlier, went to Monaco with his wife as the first major company liquidation in Cayman began.

The failure of Doucet’s banks affected Cayman in many ways, Johnson said. "He had well over 100 people working for him and was the largest employer on the Island after government." Many Caymanians also had deposits at the bank, which were immediately frozen when the doors closed.

Austin, who was appointed as one of the liquidators, said Doucet wanted to put the banks into voluntary liquidation and appointed his own liquidators from off-island. "But Vassel Johnson said ‘you can’t have a voluntary liquidation; it’s too serious,’ so it became a compulsory liquidation." Austin said the liquidation was not easy.

"No insolvency laws existed in Cayman at the time, so we adopted UK insolvency laws," he said. "But also, Sterling was not just a local bank; it had subsidiaries and all sorts of investments. It was a very complicated structure with companies all over the world."

Johnson, who was heading up Coopers & Lybrand at that time, thinks the government should have seen the collapse of Doucet’s banks coming. Coopers & Lybrand had been hired as auditors for the banks the previous year. "I gave them a qualified audit report and we were subsequently fired," said Johnson. "This was basically telling the government to close the bank down, but they didn't’t do it.

"Mr Doucet’s problem was he was investing in long-term assets and he had short-term deposits," he said. "Then there was a recession around 1973 and people started taking their money out. He ended up selling clients’ gold to shore the bank up. "I don’t think he had any intentions of ripping anyone off, but he had his back to the wall and he used someone else’s assets."He had good intentions, and he did a lot of good things for the Island."

Doucet was extradited from Monaco in May 1975, and after a six-week trial in December, he was convicted of 13 charges of fraudulent conversion and sentenced to nine months imprisonment.

Though many in the community had lost savings in Doucet’s banks, he still had supporters. "He was such a good client of Grand Old House, they used to serve him his meals in jail," said. Johnson.

Gill, who helped defend Doucet, said many people still liked him.
"Even when he was in jail, he was getting a lot of high-profile visitors, including some from government on a regular basis," he said.

When he was released from jail in June 1976, his sentence reduced by one-third for good behaviour, a much thinner Doucet took a final tour of Cayman and then boarded a flight to Miami en route to Montreal. He never returned.