After the terrorist attacks of Sept. 11, 2001, bank regulators and the FBI began a detailed probe of Riggs Bank's long-standing relationship with officials at the Saudi Embassy. That evolved into multiple federal investigations, including one by the Justice Department, of the bank's relationship with other foreign customers, including inquiries into deposits by major U.S. oil companies into accounts controlled by Equatorial Guinea's president, Teodoro Obiang Nguema.
In May bank regulators at the Treasury Department fined Riggs $25 million for violations of the Bank Secrecy Act, which has been in effect since the 1970s but was strengthened in the fall of 2001 to bolster efforts to interrupt financing of terrorist operations.
Joe L. Allbritton, former chairman of Riggs, had all board meetings recorded.
(Riggs National Corp.)
Earlier this summer, the Senate subcommittee held a hearing on Riggs that publicized for the first time what investigators called evidence that the bank helped Pinochet hide millions of dollars from international prosecutors over the past decade. Prosecutors in Spain and Chile have sought information about that money as possible restitution for families of thousands of victims Pinochet is alleged to have tortured and killed while president of Chile.
The connection with Pinochet touched off wider investigations by bank regulators and Justice Department prosecutors.
Federal bank regulators asked in May for all records concerning Joe Allbritton and the bank, a request that within weeks was joined by the Justice Department as part of a criminal investigation.
When Allbritton's employee found the tapes, the employee notified the bank's general counsel, Joseph M. Cahill, who in turn notified the bank's outside counsel at the New York law firm of Sullivan & Cromwell LLP, sources said.
Those lawyers then notified federal officials, asking for time to get the tapes organized and transferred to CDs before turning them over to the government, which the bank began to do Aug. 10. When Riggs's attorneys last month briefed the Senate subcommittee investigators about an internal Riggs probe of its Pinochet connection, they disclosed the existence and content of the tapes, sources said.
In a related matter, yesterday the ranking members of the Senate subcommittee, Carl M. Levin (D-Mich.) and Norm Coleman (R-Minn.), said they would introduce legislation Monday to require a "cooling off" period for senior bank examiners, barring them from working for banks they directly regulate for one year after they leave their government jobs.
In their July hearings on Riggs, Levin and Coleman were sharply critical of R. Ashley Lee, Riggs's former chief federal bank examiner, for going to work as a senior executive at Riggs a few days after retiring from the Office of the Comptroller of the Currency. Last month Comptroller John D. Hawke Jr. called for such legislation.