A GRENADIAN investment scheme has run into trouble and has advised local authorities that its inability to pay its investors was linked to that of its trader Olint, whose assets have been frozen in The Turks and Caicos Islands.

On Wednesday, Grenada's ministry of finance issued a public statement saying it was aware of difficulties faced by investors in SGL Holdings Inc who have been trying to get their deposits repaid.

But the ministry also sought to correct what it said was a misconception that SGL had been operating under the country's banking laws.

"The Ministry of Finance wishes to make it clear," the statement said, "that contrary to media reports, SGL Holdings does not fall under the Banking Act."

The investment scheme had, however, applied in May 2007 to the Grenada Authority for the Regulation of Financial Institutions (GARFIN) for a licence to conduct its operations.

Waiting on probe

The statement followed a meeting between the ministry and SGL Wednesday, where the company advised that it would not be able to pay customers until the authorities had concluded their investigation of Olint, which is owned by Jamaica's David Smith.

The Grenadian authorities said GARFIN immediately commenced the licensing process for SGL, which entails extensive due diligence on the principals of the company and its operations.

"Initially, the company was being considered for a money services business licence," said the finance ministry.

"However, during this process it was determined that SGL's activities may not fall under this area. Consequently, the Eastern Caribbean Securities Regulatory Commission was contacted for advice."

The commission then issued a cease-and-desist order on SGL Holdings until it acquired the necessary licence.