BBC Caribbean

The Grenada government said on Tuesday it is taking legal action against a Miami-based publication which alleged that the island's prime minister accepted a pay-off to name a discredited individual as a diplomat for the country.

An article in the Offshore Alert newsletter claimed that Prime Minister Keith Mitchell was paid by German-born Eric Resteiner to make him a Grenadian diplomat.

Resteiner was appointed as a Trade Counsellor for Grenada in 1999 but his appointment was revoked by the Mitchell government in 2001, because of his alleged illicit activities.

However, the article in the April 30 edition of the newsletter published by KYC News, conflicts with a government statement about what actually happened in 2000.

The newsletter said that $500,000 was paid to Dr Mitchell and quotes Dr Resteiner's former director of security Timothy Lee Bass, as having made the claim in an affidavit sworn in Illinois more than a year ago.

Grenada government press secretary Nancy McGuire told BBC Caribbean Service that what actually happened had clearly been twisted to show Dr Mitchell in a bad light.

She quoted a release issued by the government on Tuesday which gave their side of the story.

"In 2000 as Trade Counsellor, Dr Resteiner offered to cover the expenses for a trip by the Prime Minister to travel to several countries in Europe as part of an investment tour to France, Austria, Liechtenstein and Switzerland as well as Kuwait.

"The matter was considered by Cabinet. Cabinet agreed that the offer should be accepted. Dr Resteiner provided the Government’s delegation with the necessary financial support to cover the expenses of the promotional visit."

The government said the expenses for the trip were far less than the $500,000 claimed in the article.

But David Marchant who owns Offshore Alert and wrote the article, told BBC Caribbean Service the evidence supported the allegations reported by his publication, which focuses on activities in the offshore banking sector.

"Between November 2003 and January 2004, 11 people belonging to three different plaintiff groups who had previously sued me unsuccessfully for libel were either convicted, arrested or had their indictments unsealed for money laundering or fraud," he said.

"If Keith Mitchell wants to take me on so be it, he will lose and I will do everything I can to have him held accountable for whatever actions he's been involved with if not in Grenada, in the United States."

Prime Minister Mitchell refused to directly address the matter but he clearly feels that his reputation is being sullied.

He is seeking redress in the courts, but Marchant, who in his article quotes Mr Mitchell as having denied the claim, remains defiant.