Riggs's two-tiered board structure is unusual. All chartered financial institutions, including banks, must have their own boards, but at most major bank holding companies the bank board and the holding company board are the same. At Riggs, only three people were on both boards -- Joe and Barbara Allbritton and Riggs President Lawrence I. Hebert.
The bank board's primary responsibility is to make sure the bank operates in a safe and sound manner, and it is answerable to the OCC. Broader corporate issues such as executive compensation, internal controls, audit oversight and fiduciary responsibility -- and accountability -- are shared by both Riggs boards.
Riggs Bank Chairman Joe L. Allbritton in an exchange with a stockholder at the company's annual meeting in 1992. Allbritton resigned as chairman in 2001.
(Bill Snead -- The Washington Post)
Several Riggs executives and advisers said that may have been part of Riggs's oversight problem. For example, the corporate board did not necessarily directly receive information about OCC examinations. According to minutes of board meetings, several directors of Riggs's corporate board felt they had been left out of the loop when they learned of the OCC's findings about Riggs's money-laundering lapses in 2002. Several corporate board members expressed surprise upon learning, in July 2004, that Pinochet had been a client of the bank, despite the bank board having been briefed on an OCC examination of the Pinochet accounts in late 2002 and early 2003, according to sources.
Since Allbritton took over in 1981, and even after he stepped down as chairman and chief executive in 2001, he has dominated the company and its boards. Of the 19 combined directors of Riggs National Corp. and Riggs Bank, only a few have no personal or business ties to the company or Allbritton.
Several sources familiar with the workings of the board, including advisers to the board, said its members have worked "diligently" to do what's best for the company during a trying period. Those sources said they have never seen a board member act in a way that benefited the Allbritton family at the expense of the company during the crisis of the past year.
Still, in the boardroom, a director who differed with Joe Allbritton rarely expressed it directly. A transcript of a tape of an April 11, 2000, meeting of Riggs Bank board of directors, chaired by Allbritton, includes an exchange in which he asks Riggs's head of compliance at the time, Steve Marshall, about a management committee that had been asked to write policies for compliance with anti-money-laundering laws.
"Mr. Marshall, what does the laundry committee do?" Allbritton asked.
Laughter can then be heard on the tape as the compliance chief likened the committee to a popular brand of detergent.
"The appropriate acronym is the Tide committee," Marshall answered. Marshall then said, "The money-laundering deterrence committee has the unique pleasure of ensuring we have appropriate controls are [sic] in place to make sure we are not dealing with inappropriate individuals using the bank inappropriately for money laundering."
Allbritton replied, "Well, that's interesting. We have all kinds of committees that have come into banking since I started this life."