In Cultivating International Clients, Riggs Went Down a Perilous Path

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)

Riggs's targets were both Pinochet and the Chilean military. The sales pitch was successful, and by 2002, Riggs had combined deposits and loans in Chile of more than $100 million.

Riggs conducted the Chilean campaign mostly by personal meetings in Chile and through correspondence, according to bank documents. Delegations of senior managers made seven trips to Santiago, in 1994, 1996, 1997, 1998, 1999, 2000 and 2002. Allbritton -- often accompanied by his wife Barbara, also a Riggs Bank director -- led the delegations in 1996, 1997, 2000 and 2002, and met Pinochet at two of them, in 1996 and 1997.

Robert L. Allbritton, Joe's son and chairman of Riggs Bank after his father's retirement in 2001, accompanied Riggs executives on the 2002 trip, and, while his father and subordinates conducted a series of business and social meetings with senior military officials, Robert spent a few days touring Antarctica as a guest of the Chilean military. That trip to Antarctica appears to be the most interaction Robert had with any of Riggs's Chilean clients.

After these trips, Joe Allbritton, his wife and Coughlin wrote letters to Pinochet and other senior military leaders. Electronic drafts of the letters were recovered from a computer in Riggs's executive offices. In a Feb. 14, 1996, letter Allbritton wrote to Pinochet, he thanked the general for an invitation to a Chilean horse race and a reception afterward where cadets from the Army Calvary School in Quillota put on a demonstration.

His wife also wrote to Pinochet. "The elegant lapis lazuli (a kind of gemstone) box you so kindly gave to me shall be used and displayed with a great deal of pride and pleasure," she wrote in an Oct. 31, 1997, letter addressed to "My dear General Pinochet." "It shall be a reminder of this special time we spent with you during our trip to Santiago."

Coughlin, at the time president of Riggs's holding company, wrote a letter dated Nov. 10, 1997, to Pinochet, again thanking the general for his hospitality and gifts during the recent Riggs delegation to Chile. He particularly thanked Pinochet for a book, "The Crucial Day," a sympathetic account of the Pinochet-led military coup in September 1973 that featured extensive interviews with Pinochet.

"I am just finishing my reading of 'The Crucial Day.' The factual objectivity with which you tell the story of Chile in the early 1970s is both fascinating and instructive. History provides for fair and proper judgment only when the true facts are known."

A Feb. 25-March 4, 2000, Riggs delegation to Chile coincided with Pinochet's triumphal return after two years of house arrest in London. He arrived in Santiago on March 3. Memoranda of the trip make it clear no Riggs officials met with Pinochet.

"Where do I begin to thank you?" Allbritton wrote to another Chilean general when Allbritton had returned to Washington. "You graced our suite with the sweet smell of beautiful flowers and Chilean wine. You gave us your time on the very eve of the General's return."

By then, however, the legal system was catching up with Pinochet. In early 2000, more than 60 human rights cases had been filed against Pinochet in Chile, and by the end of that summer, Pinochet had been stripped of his parliamentary immunity in the infamous "Caravan of Death" case, which refers to a special military squad that traveled the Chilean countryside in September 1973 hunting down and often killing people known to oppose Pinochet's coup.

Accounts Closed

Virtually every Riggs employee associated with the Pinochet accounts has since resigned or been fired. Joe and Barbara Allbritton resigned their board seats in April; Coughlin quit in May, and Robert Allbritton two weeks ago quit as chairman and chief executive of Riggs holding company and as chairman of the bank. Coughlin, who works at a local money-management firm, did not return phone calls and an e-mail requesting comment.

Riggs was forced by the Office of the Comptroller of the Currency to close its Pinochet accounts in 2002 after the regulator discovered several suspicious transactions. Allbritton, according to bank records, vehemently objected to having to close the accounts.

Yet the relationship, as well as the illegal acts of the bank, remained a secret known only to a few OCC examiners, Riggs executives and directors until July, when the Senate subcommittee released the details of the Pinochet transactions.

Though Riggs has paid more than $50 million in fines and settlements to shareholders and prosecutors in the United States and Spain, including $8 million from the bank and $1 million from the Allbrittons into a fund to benefit Pinochet's victims, in eight months since that July report, no Riggs executive or board member, past or present, has offered any public statement of regret. Contrary to nearly every other major scandal at a public company in recent years, Riggs has offered no public accounting of the events surrounding the company's hiding of Pinochet's money or of the broader failures of its international division that caused Riggs's downfall.

That is not likely to change. Riggs on May 13 will be merged into Pittsburgh's PNC Financial Services Group Inc. Riggs's board will disband, and a more than 160-year-old institution steeped in the early financial history of the United States will cease to exist. At least several hundred Riggs employees are expected to lose their jobs.

Riggs spokesman Mark N. Hendrix said: "People at Riggs have worked tirelessly to work with every investigation in the last year so the government has the information it needs to respond appropriately to the important issues at stake. Riggs has publicly acknowledged its past compliance failures and is focused on moving forward to completing its merger with PNC."