Billions of dollars? worth of client accounts were frozen at the international brokerage firm in October last year ? a mere two months after Refco had gone public on the New York Stock Exchange.

But former Finance Minister Grant Gibbons said the island had taken ?too big a hit? from the and said Bermuda was simply used as an offshore vehicle by the company.

Ongoing federal bankruptcy court hearings in Manhattan over the past few months have revealed details of how Refco allegedly tried to hide hundreds of millions of dollars of debt and collapsed so spectacularly. The s report is clearly pinning the lion?s share of the blame on Bermuda.

The influential newspaper cited a total lack of regulation of Refco by the Bermuda financial authorities that allowed ?unusual business practices? to take place which led to the company?s rapid growth and its collapse.

The front-page headline of its Monday edition declares: ?Behind Big Wall Street Failure: An Unregulated Bermuda Unit?.

Thousands of investors, large and small, are now trying to recover around $1.8 billion that has gone missing from client accounts.

?I think the has targeted Bermuda as being responsible for this to an unfair degree,? Dr. Gibbons said. ?Once more we?re seeing a negative story which is not good for our reputation as an international business jurisdiction.

?Firstly, Refco went public in the US last year, but just six weeks after the share offering, it collapsed. Gengenerally in a case like that, the SEC (US Securities and Exchange Commission) and investment bankers would clearly have some liability for not doing due diligence ahead of the IPO (initial public offering).

?This was an SEC-regulated company. It was pretty clear that Bermuda was simply used as a vehicle to allow Refco to carry out offshore transactions.

?Secondly, I understand that Thomas H. Lee Partners (a Boston-based private equity firm) did $10 million worth of diligence on Refco and they did not see the issues concerned here.

?Also I don?t know whether Refco was licensed in Bermuda as an investment company, or just as a plain exempt company. So if it was not set up to perform brokerage work, then Bermuda would not have regulated it.?

Dr. Gibbons added: ?I think we are taking too big a hit here. The blame is being pushed onto Bermuda.?

Finance Minister Paula Cox was unavailable for comment yesterday, as was Susan Attride Stirling, acting chief executive officer of the Bermuda International Business Association (BIBA).

Refco went public on August 11 last year at $22 a share. When the firm disclosed transactions that could have been used to hide debt on October 10, its share price plummeted by 45 per cent. The next day US federal authorities arrested Refco chief executive officer Phillip R. Bennett on fraud charges. Within days, client accounts were frozen and Refco sought bankruptcy protection.

?Refco, one of the world?s largest commodities brokerages, was a global trading hub for corporations, government agencies, individual clients and hedge funds,? the reported. ?And yet its spectacular collapse came out of nowhere.?

It was one of the largest and swiftest failures in recent Wall Street history.

The reported: ?Court proceedings have uncovered a host of unusual practices by the Bermuda unit that appear to have contributed both to Refco?s rapid growth and to its catastrophic fall.

?In the US, brokerage firms must maintain separate accounts for clients. But at Refco?s unregulated Bermuda unit, client and company money was all tossed into a single unsegregated pool, the court proceedings have revealed. Refco routinely used this money for corporate purposes, and the commingled funds flowed freely between the Bermuda entity and New York units and throughout Refco, according to court testimony by employees and clients.

?Refco Capital Markets also made big loans to customers to finance high-risk investments. When these clients were unable to cover trading losses, the unit helped hide the bad loans, the civil and criminal actions allege.

?Refco Capital Markets was incorporated in Bermuda as an ?exempt? company, which meant it could do business anywhere except Bermuda. In fact, it employed no one at all at its headquarters address in Bermuda. New York-based employees ran the unit. In effect, it was unregulated: Neither Bermudian nor American regulators had any duty to watch over it.

?A spokeswoman for the Bermuda Monetary Authority, the nation?s financial regulator, says its main role is to protect ?retail and unsophisticated? investors. Firms such as Refco Capital Markets, which cater to sophisticated investors, are entitled to exemptions from Bermuda regulation, she says.?

On Wednesday, the news agency Reuters reported that 50 creditors had agreed a deal with Refco Capital Markets that would recover $2.3 billion of what they were owed.

However, one major creditor, commodities investor Jim Rogers, who claims his funds are owed $362 million by Refco, was holding out on the deal.