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In Cultivating International Clients, Riggs Went Down a Perilous Path

By Terence O'Hara
Washington Post Staff Writer
Monday, March 21, 2005; Page E01

In the fall of 1997, 24 years after he took control of Chile in a brutal military coup, Augusto Pinochet's reputation was on the mend, at least in some quarters. In 1990, he had surrendered power to civilian, democratic rule, and Chile's economy had undergone sweeping changes that made it the darling of American financial institutions.

Including Riggs Bank.


Augusto Pinochet at a ceremony in Santiago in 2003. He resigned as president of Chile in 1990, and resigned as commander in chief of the country's military in 1998. (Martin Thomas -- AP)

_____Graphic_____
Pinochet and Riggs A look at the bank's relationship with the Chilean leader.
_____Post 200 Profile_____
Riggs National Corp.
_____Background_____
For a quick overview of Riggs Bank's legal problems, the status of various investigations and more, check out a Riggs primer compiled by washingtonpost.com.
_____Related Coverage_____
6 U.S. Banks Held Pinochet's Accounts (The Washington Post, Mar 16, 2005)
Riggs Announces Replacements (The Washington Post, Mar 10, 2005)
Allbritton Exercises Stock Options (The Washington Post, Mar 9, 2005)
Special Report: Riggs Bank
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"You have rid Chile from the threat of totalitarian government and an archaic economic system based on state-owned property and centralized planning," Riggs chairman Joe L. Allbritton wrote Pinochet on Nov. 14, 1997. "We in the United states and the rest of the Western hemisphere owe you a tremendous debt of gratitude and I am confident your legacy will have been to provide a more prosperous and safer world for your children and grandchildren."

The letter released last week by the Senate permanent subcommittee on investigations was one of several admiring notes Allbritton, his wife and another Riggs official sent to Pinochet from 1996 to 2000. The letter, in which Allbritton thanks Pinochet for their "thriving personal friendship," was part of the bank's aggressive effort to cultivate international clients.

Yet even as he wrote his November 1997 letter to the general, Allbritton's employees were taking measures to hide Pinochet's money from banking regulators. Over the next five years, ending in 2002, Riggs would undertake a series of transactions to protect Pinochet's assets from seizure. Ultimately, Riggs was forced into a merger by the scandals surrounding the bank and pleaded guilty to a felony for failing to prevent Pinochet and other international clients from laundering money. Neither the Senate report nor any evidence uncovered by Riggs's own internal investigators links Allbritton in any way with suspicious transactions by Pinochet.

Paul Clark, a spokesman for the Allbritton family, noted that Pinochet and Allbritton only met twice. "It is also worth noting that both of those meetings took place well before any criminal complaint was lodged against Mr. Pinochet," he said.

"It is unfair and preposterous to imply that two meetings and polite 'bread and butter' notes suggest any special relationship between Mr. and Mrs. Allbritton and Pinochet," Clark said in an e-mail. "Let me be clear, no such relationship ever existed, and as implied by the subcommittee's report, Mr. Allbritton at no time managed Pinochet's business at Riggs."

Like so many corporate scandals that destroy companies and careers, Riggs Bank's demise cannot be attributed to one person, not even Allbritton, who ruled Riggs with an iron fist for 20 years until he retired in 2001. Allbritton's relationship with Pinochet was but one ingredient in a destructive stew.

The Culture of Riggs

So far, no evidence has surfaced that anyone, from the board of directors to the lowest clerk who cut illegal cashiers checks for Pinochet, ever questioned the rightness, or the real financial risk, of doing business with a man many think is directly responsible for the murder of thousands of leftists in Chile and elsewhere. Those deaths include the murder of former Chilean ambassador Orlando Letelier on the streets of Washington in 1976.

"[The bank] knew that other people would think what we were doing was wrong, but we disagreed, so we hid it," said one senior bank official with knowledge of Riggs's history with Pinochet. The official spoke on the condition of anonymity because he was not authorized to speak for the company. "It's not that any one believed they were doing something wrong and did it anyway. They didn't believe it was wrong."


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