Bank of The Bahamas (BOB) Managing Director Paul McWeeney has engaged local and UK-based attorneys to sue The Punch newspaper and its owner Ivan Johnson after he said the daily published an "outlandish" and "defamatory" story regarding a defaulted loan.

In a statement, McWeeney said the bank has remained quiet throughout the "barrage of attacks" by the bi- weekly tabloid in an attempt to take the "high road and maintain the dignity that the financial services industry deems appropriate".

However, he said, "Our customers, shareholders and staff deserve to know the truth and they deserve to have their investment protected from further damage by irresponsible journalists with their own agenda," McWeeney said.

McWeeney was referring to a story in yesterday's Punch, which alleged that the bank was in a bid to pull off an $8 million loan fraud.

McWeeney accused the paper of publishing a combination of "falsehoods and inaccuracies" and said its owner, Ivan Johnson, must be made accountable for the "onslaught of damaging reports". "The loan to which the tabloid referred was in default; that much is accurate," he said.

"However, that is the only part of the story which is accurate. The bank recovered the asset by taking possession of the property.

"And we did so with the full knowledge and consent of the customer and the formal permission of The Central Bank. "Throughout the transaction we were advised by McKinney Bancroft and Hughes, who confirmed its complete legality."

BOB also took exception to the allegation that it paid a law firm (Graham Thompson) $1 million in legal fees annually.

In a statement, Graham Thompson said it was just one of many law firms BOB engages, and it has never received anywhere close to $1 million annually in legal fees. The firm called the allegation "preposterous".

Graham Thompson said the assertion by the newspaper that the firm's relationship with BOB was linked to Sean McWeeney's -- one of the firm's partners -- relation to Paul McWeeney is false.

The two are brothers. The firm said BOB engaged it in 1983, well before Sean McWeeney joined Graham Thompson and years before Paul McWeeney joined the bank.

"Any suggestion, therefore, that the Bank of The Bahamas came to Graham Thompson because of the relationship between Paul McWeeney and Sean McWeeney is completely false," the firm said.

Paul McWeeney said the bank's greatest concern amid the accusations has been the breach of confidentiality, allegedly perpetrated by the newspaper.

"Every Bahamian should be concerned about this because it has the potential to jeopardize the very cornerstone of the industry," read the statement.

"The bank has taken the action to call in the appropriate authorities to determine how the breach occurred, who is responsible and allow the law to take its course.

"Both the data commissioner and the Royal Bahamas Police Force are actively investigating." While there has been some public concern surrounding the financial stability of BOB, the government has repeated that the money held in BOB is "safe and secure".

"Indeed, there is no greater support that any bank can have than the backing of the sovereign government of the country," read a recent Cabinet Office statement.

The statement was the latest in a series of releases from the government affirming its support of the bank. In January, Prime Minister Perry Christie said the bank's capital position and "other fundamentals remain strong".

He said the government is satisfied the bank continues to take all necessary steps to ensure the institution "remains in full compliance with all regulatory requirements and prudential banking standards," Christie said.

The affirmations came amidst media reports, which suggested the bank granted loans based on political favoritism or political involvement. The bank has said these claims are "simply untrue".

The bank said it recorded its first loss last year, of $3.5 million, after 20 years of profitability.

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