BERMUDA is completely powerless to defend itself against dangerous white-collar crimes and financial frauds like that allegedly perpetrated by Bernard Madoff.

This is the view of a former Bermuda International Business Association director, who is calling on the Bermuda Monetary Authority (BMA) to crack down on companies using the island for criminal activity – especially in light of news that the Bermuda-based Fairfield Greenwich Group had $7.5 billion invested with Madoff.

Michael Hardy, a long-time accountant and past president of both Liberty Mutual Management and the Bermuda Insurance Management Association, called the BMA an "enabler" of fraud as the regulatory body takes no responsibility for investigating corporate crime.

"The BMA is supposed to be the mainstay of keeping criminals out of Bermuda," Mr. Hardy (pictured), also a one-time member of the Government's Insurance Advisory Committee, told the Mid-Ocean News.

Mr. Hardy's words of warning come as the FBI's New York office reallocates its manpower, moving agents from its anti-terrorism squad to deal with financial crimes like Madoff's alleged $50-billion 'Ponzi' scheme.

In an interview with Bloomberg News, FBI official David Cardona said the agency had to "work those cases which we think pose the greatest threat".

"In this case, it's a threat to the financial system and Wall Street," he explained.

Special agents who were at one time tracing Al-Qaeda's financing are now investigating crimes like mortgage fraud.

Meanwhile, according to one-time auditor Mr. Hardy, Bermuda is doing nothing to tackle such crime despite the island's connection to a host of recent high-profile cases.

He wrote to BMA chief executive Matthew Elderfield this week in reference to the bankrupt Brooke Corporation, an insurance services firm with captives in Bermuda. The FBI is investigating Brooke Corp following allegations that its top executives moved millions of dollars for their own benefit and then attempted to destroy the evidence.

Mr. Hardy believes companies with Bermuda connections, such as Brooke Corp, are getting away with heinous crimes such as money-laundering and fraud because the BMA refuses to investigate – instead, relying on the Bermuda Police Service.

Another long-time reinsurance CEO who has had dealings with the BMA called the regulatory body's reliance on the police to investigate corporate crime "laughable".

He spoke to the Mid-Ocean News on the condition of anonymity, claiming that Bermuda remains dangerously exposed to Madoff-level fraud unless the BMA assumes a role similar to that of the FCC in America: a financial gatekeeper.

"What they'll say is that Bermuda's gate keeping is so good, the bad guys don't get in, which is rubbish," he said.

"Look at Fairfield, the company with ties to Madoff. The BMA should have spotted these folks – I'll bet they never used a proper auditor over here. Is the BMA aware if a company is using some 70-year-old auditor in a 12-foot by 12-foot back room in Florida?"

He called the BMA "literally worse than useless", adding: "If they don't have the power to investigate, what do they do that is any use?

"They'll probably say that have some compliance function, checking companies on the way in. But if someone starts a company they haven't started to steal yet! Their claim that they work with the Bermuda Police Service is pathetic.

"Who at the police has the ability to investigate these sorts of frauds? This just confirms Bermuda's Third World status to me; it is all façade and no substance. The idea of the police being an oversight force for the financial sector is laughable. If Bermuda has not been exposed to a Madoff-type disaster, it will come."

Mr. Hardy agreed that police should not be relied upon to investigate financial crimes.

"They have no resources for that," he said.

He called this month's Proceeds of Crime Regulations Act, allowing the BMA to impose $500,000 fines on firms that flout rules, "an improvement", but added that without investigation, these new regulations will fall short of stopping white-collar crime.

The BMA did not respond to the Mid-Ocean News' request for comment.

Earlier this year, in a Royal Gazette interview, the body's director of Legal Services and Enforcement, William Kattan, said "the function of investigating and obtaining evidence for a criminal prosecution is primarily a matter for the police and not the Authority albeit that it is done with the cooperation of the Authority".

Mr. Hardy has submitted an official complaint against the BMA to the Ombudsman, Arlene Brock, but has yet to get a response.