washingtonpost.com  > Business > Special Reports > Riggs Bank
Page 3 of 4  < Back     Next >

In Cultivating International Clients, Riggs Went Down a Perilous Path

Wooing Chilean business

Letelier's murder shook the Washington diplomatic community to its core, and even 15 years afterwards Riggs's embassy banking department could hardly have been unaware of the public-relations risk associated with having Pinochet as a client. Indeed, an August 2000 memo by Michael Cantacuzene, then a member of Riggs's international banking group, details the possible damage to the reputation of the institution should the relationship become publicly known.

Cantacuzene, who no longer works for Riggs, declined to comment.

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)

Pinochet and Riggs A look at the bank's relationship with the Chilean leader.
_____Post 200 Profile_____
Riggs National Corp.
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
_____Special Report_____
Metro Business: Coverage of Washington area businesses and the local economy.

This fear of exposure was coupled with senior management's attitude toward providing banking service for politically controversial world figures. A transcript of a January 2000 meeting of Riggs Bank's board, portions of which were read to a reporter, shows that the board discussed the Pinochet relationship. Allbritton told fellow board members that Riggs would take "anybody's business," regardless of their political leanings, and that it wasn't the bank's job to base its relationships on a client's political persuasion.

Pinochet seized power in a 1973 military coup that included the death of leftist president Salvador Allende. He resigned as president of Chile in 1990, and resigned as commander in chief of the country's military in 1998. During a trip to London that year, he was put under house arrest pending his extradition to Spain to face charges of torture against Spanish citizens in Chile during the 1980s. A Spanish court also issued a freeze order on Pinochet's assets around the world, though institutions outside Spain that held Pinochet money, including Riggs, widely ignored the order because it wasn't properly served. In 2000, the British government rejected Spain's extradition request, and Pinochet was allowed to return to Chile.

The Pinochet accounts at the crux of the Riggs scandal can be traced to a Nov. 3, 1994, internal memo from Thompson, head of Riggs's Latin American banking.

The memo is typical internal corporate scratch, a mid-level manager reporting to her superiors about a client call. In this case, the client was Pinochet. Thompson describes an October 1994 trip that she and two other senior Riggs executives, Timothy Coughlin and Paul Cushman, took to Chile to thank that country's military for recently returning its "official" accounts to Riggs from a Canadian bank after more than 15 years. Thompson said the military had moved its money to Canada in the 1970s, "directly related to the assassination of Chilean Ambassador Letelier in 1976. In July 1994, the official accounts were brought back to Riggs."

Thompson then wrote, "We also offered our personal banking services to General Pinochet and stated we would also be pleased to make our services available to officers of the Chilean military."

What many executives inside Riggs, including Allbritton and Thompson, apparently did not know was that Pinochet had had money at Riggs since at least 1981, under aliases and using other military officers as fronts, at the bank's international banking operation in Miami. In fact, in 1994 only a handful of bank executives knew that Pinochet was already a longstanding client, using names such as "Daniel Lopez" or "Jose Ramon Ugarte."

Thompson joined Riggs in January 1994, when Chile's military was not an official client of Riggs. She soon changed that. Described by other Riggs executives as a hard-charging and competitive banker who quickly gained the favor of Allbritton, Thompson spearheaded an effort that would make Pinochet and the Chilean military one of the biggest clients in Riggs's international division.

Thompson's 1994 memo marks the beginning of an all-out charm offensive by the company and its senior executives to keep Pinochet and his senior officers happy. Allbritton, also Riggs's largest shareholder, was a star player in this effort. At Allbritton's level, it took the form of admiring personal letters and swank international meetings. It was part of a concerted effort to boost the bank's international business after the company was badly wounded by the local commercial real estate market in the early 1990s.

< Back  1 2 3 4    Next >

© 2005 The Washington Post Company