It's one of the world's quieter capitals: a town of 7,500, modest buildings perched on hillsides surrounding the bright blue anchorage.
But St. George's was headquarters to one of the most outlandish banking frauds, in which US and Canadian retirees were defrauded of millions while local officials looked the other way.
Now Grenada is preparing to reopen its offshore financial services sector six years after it collapsed in a wave of international criminal investigations, trials, and allegations of government collusion.
The country has replaced its fractured regulatory regime with a single organization to oversee all offshore financial activities, from insurance companies to credit services. The head of the new institution said this week that amended finance laws will allow the attorney general authority to take immediate court action against any offshore entity suspected of fraud.
Angus Smith, executive director of the Grenada Authority for the Regulation of Financial Institutions, says it will be several months before the sector restarts and that he is meeting with consultants to determine whether to focus on banking or other offshore financial services such as mutual funds or trusts. "We're putting things in place," he says. "We're not going to rush into it this time."
Critics fear little has changed since an American with no money, no experience, and a passport from a fictitious country was allowed to capitalize a bank, defrauding investors of $170 million.
"The government of Grenada is run as a crime syndicate," says attorney and former opposition senator Anselm Clouden. "They have not put into place the stringent regulatory measures that are needed. They are just changing the window dressing."
"Nothing's changed," says David Marchant, publisher of OffshoreAlert, the Miami-based newsletter that first exposed the most flagrant fraud, involving the First International Bank of Grenada (FIBG). "The same people are in power now that were in power then, and they knowingly, willingly, and gleefully entered into a criminal partnership with dubious individuals to defraud foreigners."
Public officials say nothing could be further from the truth. "We are trying to make sure that what happened last time does not happen again," says Mr. Smith. "Our reputation was harmed and we cannot afford to have that happen again."
The offshore banking scandals began emerging shortly after Grenada licensed its first offshore bank in 1997. Such banks cater to depositors from abroad, sometimes attracted by the possibility of sheltering assets from taxation or review by their home governments or law enforcement.
Grenada licensed more than 40 banks, most of which had collapsed by 2003, according to Mr. Marchant. FIBG was the most infamous, offering interest rates to North American depositors as high as 300 percent annually. Backed by a photograph of a 10,000-carat ruby, at one point it claimed assets in excess of $26 billion.
In reality, it was a Ponzi scheme concocted by its founder, Gilbert Ziegler (aka Van A. Brink), an American who held a passport from the fictitious Dominion of Melchizedek, but did not own the giant ruby in question. Most of the bank's assets "were nothing more than pieces of paper traded among like-minded con men," according to court documents later prepared by federal prosecutors in Oregon.
Evidence submitted at the Oregon trial – where four bank officers were sentenced to prison – suggested Prime Minster Keith Mitchell's government had protected the bank. In 1999, early in the fraud, the bank's auditor, Lauriston Wilson, contacted Mr. Mitchell directly to alert him to the fraud; he was fired the same day.
Michael Creft, then Grenada's chief regulator for offshore banks, testified that his failure to crack down on FIBG was influenced by the flow of cash from the bank to government officials and the ruling party. He said he had personally delivered $50,000 in FIBG cash to Mitchell.
Mitchell, who is still prime minister, has denied the allegations.
"The only businessmen who went to Grenada to do offshore banking were crooks," says Marchant. "If Grenada tries to restart its offshore industry, it will go nowhere. Their reputation as a pariah country is well earned."
Mitchell's spokesman, Barry Collymore, referred questions to Smith, who declined to comment on the corruption allegations.
Grenada is also in the midst of a scandal involving a failed commercial bank, Capital Bank International, which owes customers an estimated $15 million, and the bank was allowed to operate for years without proper registration or the oversight, according to Mr. Clouden, who is representing 20 depositors.
"The bank was operating like a Ponzi scheme, just like the offshore banks," he says. "There's still a propensity for fraud and undue government influence here."
But not everyone is so pessimistic. Mr. Wilson, the auditor fired after trying to blow the whistle on FIBG, says the government is making the necessary reforms.
"We need to have people of integrity running these institutions, and [Angus] Smith is such a person," he says. "I am hopeful everything will be all right."