Riggs Bank Hid Assets Of Pinochet, Report Says


http://www.washingtonpost.com/ac2/wp-dyn/A50222-2004Jul14?language=printer


"Denver, Colo.:

Why is Jonathan J. Bush never mention in relation to Riggs Bank. The
President's uncle was named President, CEO, and Director of the bank on
5/31/2000."

http://www.washingtonpost.com/wp-dyn/articles/A52591-2004Jul15.html

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washingtonpost.com
Riggs Bank Hid Assets Of Pinochet, Report Says
Senate Probe Cites Former U.S. Examiner
By Terence O'Hara and Kathleen Day
Washington Post Staff Writers
Thursday, July 15, 2004; Page A01


Riggs Bank courted business from former Chilean dictator Augusto
Pinochet and helped him hide millions of dollars in assets from
international prosecutors while he was under house arrest in Britain,
according to a report by Senate investigators.

The report also says the top federal bank examiner in charge of
supervising the District's largest bank kept details about Riggs's
relationship with Pinochet out of the Riggs case file. That happened a
few months before the examiner retired from the government and joined
Riggs as a senior executive. The examiner, R. Ashley Lee, denied the
allegations to Senate investigators.

The Senate report also said Lee recommended, while still working for
the government, that the bank not be punished for failing to take steps
designed to prevent money laundering.

The report, which includes the first account of Riggs's dealings with
Pinochet, is the latest blow to an institution that once billed itself
as "the most important bank in the most important city in the world."
In May the bank agreed to pay $25 million in civil penalties for what
federal regulators called "willful, systemic" violation of
anti-money-laundering laws in its dealings with the embassies of Saudi
Arabia and Equatorial Guinea. Several other federal investigations
continue into the bank's activities, and Riggs has hired investment
bankers to explore a sale of the company.

Senate investigators, who spent more than a year looking into Riggs,
found that the bank attempted to use offshore and other accounts that
were misleadingly named to obscure their connection to Pinochet. In
documents required by federal regulators, for example, the bank
referred to Pinochet not by name but as "a retired professional" who
held a "high paying position in public sector for many years."

Senior bank officials, including former chairman and chief executive
Joseph L. Allbritton, were part of an effort to win Pinochet's business
and were familiar with the activities in his accounts, the former
dictator's legal status and efforts to seize his assets around the
world, the Senate report says.

In addition to its account of Riggs's relationship with Pinochet, who
was held in Britain after an indictment in Spain on charges of "crimes
against humanity," the Senate report provides new details about Riggs's
dealings with Teodoro Obiang Nguema, the dictator of Equatorial Guinea.

"It's a sordid story of a bank with a prestigious name that blatantly
ignored its obligations under anti-money-laundering laws," said Sen.
Carl M. Levin (D-Mich.), the ranking minority member of the
subcommittee whose staff oversaw the investigation. "And it took our
regulators five years to act in any substantive way. . . . They
tolerated Riggs failures and tolerated their dysfunctional AML
[anti-money-laundering] program."

Riggs officials declined to discuss the Pinochet allegations. The bank
said a written statement that it has taken steps to improve its
compliance with federal bank regulations. "It is clear that Riggs did
not accomplish all that it needed to," Riggs said. "Specifically, with
respect to the improvements that were outlined by our regulators, we
regret that we did not more swiftly and more thoroughly complete the
work necessary to fully meet the expectations of our regulators. For
this, the Bank accepts full responsibility."

The report raised the possibility of further legal and regulatory
problems for Riggs. But a former federal banking enforcement lawyer,
speaking on the condition of anonymity because he did not have access
to the examination reports and other source materials for the
subcommittee's report, said such cases can be difficult for prosecutors
because to be found guilty of criminal wrongdoing, a bank has to have
known that a customer was using an account for illicit activity.

The report by the Democratic minority staff of the permanent
subcommittee on investigations provides new information about Lee's
role as a federal examiner, which is already under investigation by the
Treasury Department's inspector general.

In interviews with subcommittee investigators, Lee denied that he
prevented information about Riggs's relationship with Pinochet from
being included in bank examination reports. Lee did not respond to
requests for comment that were made through Riggs. Lee's lawyer,
Gilbert Schwartz, who specializes in banking issues, declined through a
spokesman to comment yesterday.

But based on interviews with others, the report concludes that the top
federal bank examiner at Riggs might have become "too close" to the
bank to be an effective watchdog during his four years overseeing the
bank, from 1998 to 2002, when Riggs was repeatedly failing to take
steps required by laws designed to prevent money laundering.

Yesterday a source with knowledge of the matter who spoke on the
condition of anonymity said that the inspector general has subpoenaed
the bank's phone and meeting logs in an effort to determine, among
other things, whether Lee attended meetings with his former agency
since he joined Riggs -- which could be a violation of government
ethics rules.

The report found that Pinochet's deposits at Riggs varied from $4
million to $8 million, held in several personal and corporate accounts.
A "senior delegation" of bank officials traveled to South America in
1996 to solicit business, including Pinochet's, the report said.

Pinochet has been linked to corruption, illegal arms and drug
trafficking, and the disappearance or murder of thousands of political
opponents during his reign, which began with a 1973 coup and ended in
1990. Pinochet was found unfit to be extradited to stand trial in Spain
in 2000 and was allowed to return to Chile, where he still lives.

According to the report, in July 1996, about 18 months after opening a
personal account at Riggs, Pinochet was indicted by Spain on charges of
genocide, terrorism and torture against Spanish citizens during his
rule. A Riggs subsidiary in the Bahamas then established two companies,
Ashburton Co. Ltd. and Althorp Investment Co. Ltd., both putatively
owned by trusts set up by Riggs.

Nowhere on the trust or company documentation does Pinochet's name
appear, though he and his family were the ultimate beneficiaries,
according to investigators. Ashburton held the most Pinochet money; it
had a $4.5 million balance when it was closed in 2002, the report said.

The report said Riggs concealed its relationship with Pinochet from
regulators. In 2000, when the Office of the Comptroller of the Currency
asked for a list of clients' accounts controlled by foreign political
figures, Pinochet's was not on the list. In 2001, an OCC examiner
happened upon a report about Althorp and asked about the beneficial
owner. The examiner was told, according to his notes from the time,
that the account was for a "publicly known figure" and added that
Riggs's chairman, Allbritton, "knows" the customer. Pinochet's name was
never offered. Not until spring 2002 did the OCC discover the Pinochet
accounts, when an examiner demanded an explanation for coded references
to cashier's checks that had been mailed or delivered to Pinochet.

The report states that Pinochet's account manager, Carol Thompson,
sometimes spoke directly with Allbritton about Pinochet's accounts.
According to OCC documents cited in the report, a Riggs officer told
OCC examiners that "Mr. Pinochet has a relationship with the Chairman
of Riggs."

According to the report, Lee recommended to his superiors at the OCC
that it not take action against Riggs in 2001, despite three successive
examinations that detailed deficiencies in Riggs's adherence to rules
designed to detect money laundering. Lee said that Riggs officers had
promised to remedy the problems, but the report concludes that he did
little to ensure that corrective actions were carried out.

Two other bank examiners told Senate investigators that in 2002, a
month before Lee was approached by Riggs about a job, he "specifically
instructed" them not to include the Pinochet findings in the OCC's
electronic database. Lee told the investigators that the examiners
under him may have been "confused" about his instruction to ensure the
privacy of the Pinochet matter. The examiners disputed that, saying
Lee's instructions were "clear," the report says.

The subcommittee report also laid out new details of Riggs's
relationship with Equatorial Guinea and of transfers into the accounts
controlled by the country's dictator of millions of dollars of deposits
made by U.S. oil companies. The West African country's government has
been cited by the State Department and various nongovernmental and
human rights groups as one of the most corrupt in the world.

A spokesman for Sen. Norm Coleman (R-Minn.), chairman of the
investigations subcommittee, said Coleman agrees with the findings of
the report but not a recommendation that oil companies be required to
publicly disclose all payments to foreign companies or individuals. The
spokesman said Coleman wants to hear from oil companies before
endorsing that suggestion and therefore withheld his signature from the
report.

Coleman spokesman Tom Steward said, "We agree with 99.9 percent of the
report."

In addition to the Pinochet and Equatorial Guinea accounts, the
subcommittee found others "equally troubling," including more than 150
Saudia Arabian accounts. The full Senate Governmental Affairs
Committee, as part of a larger look into terrorist funding, is probing
those accounts and has subpoenaed records from both the OCC and from
Riggs.



© 2004 The Washington Post Company

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