An internal probe of Riggs Bank's dealings with former Chilean dictator Augusto Pinochet has found that former chairman Joe L. Allbritton was more actively engaged in Pinochet's banking business than has been previously disclosed, according to sources.
On at least two occasions in the 1990s, according to the bank's investigation, Allbritton and Carol Thompson, Pinochet's personal account manager at Riggs, flew to Chile on Riggs's Gulfstream jet to meet with Pinochet, according to sources familiar with the probe. The sources spoke only on the condition of anonymity because of a criminal investigation into the bank's handling of foreign accounts.
A spokesman for Allbritton confirmed that the two men had met on two occasions but said Allbritton was not actively involved in managing Pinochet's money and would not confirm that the two had met in Chile.
The bank's investigation follows a report issued in July by the permanent subcommittee on investigations of the Senate Governmental Affairs Committee that detailed efforts by Riggs to hide the identity of account holder Pinochet from banking regulators. The Senate report also found that Riggs structured the accounts and conducted millions of dollars in transactions that appeared to be designed to hide Pinochet's money from international law enforcement officials. In May, Riggs was fined a record $25 million in civil penalties for violations of laws designed to prevent money laundering.
The Riggs internal probe, which has been shared with regulators and the Justice Department, details at least two meetings that Allbritton attended where the handling of Pinochet's accounts was discussed.
The probe also describes how those working on Pinochet's accounts tried to keep his ownership a secret, even from other employees. Employees in the Latin American banking unit headed by Thompson were instructed never to refer to Pinochet by name, but to instead use pseudonyms, including "Jose" when speaking of him, according to descriptions of the internal report.
In 1999, after a Spanish judge indicted Pinochet for murdering Spanish citizens during his 17-year rule, Riggs arranged for Pinochet to cancel without penalty a $1.6 million CD in its London office and transfer the money to Washington. At the time, Pinochet was facing extradition proceedings in England.
The transfer was done under his name. But according to the findings of Riggs's internal probe, bank employees then sought to reverse the transfer so that the owner of the funds couldn't be tracked: The funds were transferred into a Riggs account, known variously as a suspense or concentration account, that mingled the money with assets from other customers. The money then was wired out of this account into another for Pinochet, thus masking its having come from London.
The 2001 Patriot Act gave the Bush administration the authority to ban the use of concentration accounts by banks to hide transactions for their customers. So far the Treasury has failed to issue such regulations.
According to the Riggs internal report, all of Pinochet's money at Riggs was transferred in from other banks, such as Bank of America Corp., Citigroup Inc., and several other large U.S. and Latin American banks. None of the funds came directly from an identifiable source of income, a red flag that is often a feature of money laundering, according to financial experts.
Riggs recently hired Reid H. Weingarten, one of the country's top white-collar criminal defense lawyers. A spokesman for Allbritton said the retired banker has received no notification that either he or the bank is the subject of any criminal investigation. Allbritton resigned from Riggs National Corp.'s board in May. A spokesman for the U.S. attorney's office in the District, which is handling the investigation along with lawyers in the main Department of Justice, declined to comment.
Thompson, who as director of the Latin American banking group at Riggs had direct responsibility over Pinochet's accounts, left Riggs last year. She declined to comment. According to sources, she also declined to be interviewed by Riggs for the internal report.