Riggs Bank Senate Investigation

Senate Probe Investigation

Senate investigators report that Riggs Bank courted business from the former Chilean dictator Augusto Pinochet and helped him hide millions of dollars in assets from international prosecutors. Investigators say the top federal bank examiner in charge of supervising the District's largest bank kept details about the relationship hidden and aided Pinochet while he was under house arrest in Britain.

Post staff writer Terence O'Hara was online Friday, July 16, at 11 a.m. ET to discuss the Senate probe of Riggs Bank and its involvement with Chilean dictator Augusto Pinochet.

Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.

________________________________________________

Terence O'Hara: Hello. I'm Terry O'Hara from the business section staff of the Post, here to answer questions and get your input into the amazing story unfolding at Riggs. Just this morning, after two days of new revelations about Riggs' dealings with dictators Augusto Pinochet, the erstwhile strongman of Chile, and Teodor Obiang of Equatorial Guinea, Riggs announced it would be bought by PNC Financial out of Pittsburgh. Let's get straight to it.

_______________________

Pittsburgh, Pa.: Mr. O'Hara,

Will PNC Bank's announcement this morning that it intends to purchase Riggs have any effect on the investigation? Do you think the timing a bit odd?

washingtonpost.com: Riggs Bank Sold to PNC Financial Services Group (Post, July 16)

Terence O'Hara: The PNC offer is not expected to close for at least six months; more likely it will be nine months. A lot can happen in that time. PNC's officials said this morning they did exhaustive due diligence on Riggs and are satisfied all the problems have already surfaced. One thing PNC may not have considered is the growing political risk surrounding Riggs: there may be an outcry on The Hill or elsewhere for strong criminal actions against the bank as well as officers and employees. This aspect of the story is not yet ripe, so it's impossible to tell how it will all play out. That's why PNC wanted a long window between reaching deal ande actually closing it. As far as timing, it is odd, though I know negotiations had been underway for several weeks. Riggs directors may have been highly motivated, given the events of recent days, to reach a deal quickly. But that's just speculation on my part. This is a question we'll be exploring in our coverage.

_______________________

Potomac, Md.: Is there any chance that the Pinochet transactions were done with a back room request and or approval of the U.S. government?

Terence O'Hara: I suppose there is a chance, but I have no information to suggest it. No, in fact, Riggs actively hid aspects of the relationship from its government regulator. Maybe Eleanor can paste a link here to the Pinochet story we published two days ago for any one wanting background.

_______________________

washingtonpost.com: Riggs Bank Hid Assets Of Pinochet, Report Says (Post, July 15)

_______________________

Rockville, Md.: Aside from commenting that it really sounds like Riggs management was not only irresponsible, it was actually engaged in criminal activity at the highest level, I would like to ask if anyone has said how long this has been going on? Although it is early yet in these disclosures, does it appear that anyone in senior management will be criminally prosecuted?

Terence O'Hara: Riggs anti-money launding deficiencies go back at least to 1997. The bank's relationship with Pinochet goes back to 1994, and its relationship with Equatorial Guinea goes back to 1995. It's relationship with Saudi Arabia, another focal point of congressional investigation at the moment, goes back at least 10 years. Former chairman Joe L. Allbritton was involved in courting and overseeing all three of these relationships, according to the congressional report released yesterday. We know there is a grand jury empaneled in the District looking into the Riggs matter. Where that will go is anyone's guess.

_______________________

washingtonpost.com: Ex-Riggs Manager Won't Testify About Accounts (Post, July 16)

_______________________

Alexandria, Va.: Is Riggs just the tip of the iceberg? Will other brand name banks be exposed for doing similar things?

Terence O'Hara: There is evidence that bank regualtory enforcement of anti-money laundering laws at U.S. banks hasn't been up to snuff. And there have been several instances in recent years of money laundering at bank's big and small. The problem is this: no one has much good data on the scope of the money laundering problem in the U.S. Perhaps Eleanor could insert a link to our July 14 story on shortcomings in money laundering enforcment.

_______________________

Washington, D.C.: I don't understand how Riggs could get away with not reporting the big deposits it was getting from the Equatorial Guinea folks. Don't federal regulators monitor banks closely? Wouldn't they have seen that happening?

Terence O'Hara: Both Riggs and its regulator, the Office of the Comptroller of the Currency, have admitted they failed profoundly in this regard.

_______________________

Washington, D.C.: What role did Raymond Lund, pictured on today's front page, have in the scam?

washingtonpost.com: Ex-Riggs Manager Won't Testify About Accounts (Post, July 16)

Terence O'Hara: Lund is the former manager of Riggs international division. He opened the accounts for Pinochet and was involved in servicing them as a supervisor for Pinochet's account managers. Lund said a few clarifying remarks in the Senate hearing yesterday, but did not come under intense questioning. He declined my request for an interview afterwards.

_______________________

Arlington, Va.: I have had a Riggs bank account for about 25 years (actually, I inherited them when the National Bank of Washington died). I'm about to pull all my money out of Riggs because of their involvement with Pinochet - I feel that strongly about it. This will hardly rock the financial foundations of D.C. as I am no Bill Gates, but I'd really like to make a point. Do you think there are many others out there like me? (And anyway, I never did like the fact that I had to pay for their online banking when I'm saving them money by doing that!; And their endless "miscellaneous charges" at the end of every bank statement...)

Terence O'Hara: I'm sure there are others like you. Complaining about your bank's service, bet it Riggs or any other institution, has become one of the country's great unifying themes, in my opinion.

_______________________

Santiago, Chile: Where may now be the money of Pinochet's accounts?

Terence O'Hara: Riggs sent it all back to Pinochet, in sequentially numbered cashier's checks made out in such a way as to disguise the origin of the funds. They then couriered, mailed or personally delivered to him before closing out his accounts, under pressure from the OCC, in 2002. This is all according to the Senate report out two days ago, which perhaps Eleanor could paste in a link to.

_______________________

Washington, D.C.: What is your assessment of Saudi cooperation re: questions about their Riggs accounts? I understand that their relationship collapsed after Prince Bandar refused to answer questions about some puzzling December transactions - has this changed?

Terence O'Hara: There's still a great deal we don't know about the Saudis, mostly because their business was kept very private. The Saudi embassy had repeatedly said they have cooperated in every way with the investigation.

_______________________

Denver, Colo.:
Why is Jonathan J. Bush never mention in relation to Riggs Bank. The President's uncle was named President, CEO, and Director of the bank on 5/31/2000.

Terence O'Hara: Perhaps Eleanor could paste in a link to our story of May 27. He was never president and CEO of the bank, though he was chief executive of an investment management subsidiary the bank bought.

_______________________

washingtonpost.com: A Shift in Strategy for Riggs (Post, May 27)

_______________________

Washington, D.C.: Terence,
I have read the entire Senate report and know that there are many factual errors regarding EG relationship with Riggs Bank, things that are inaccurate or untrue. It seems that with such an important investigation the panel should at least have accurate information with witch to judge the situation. Additionally, while Riggs never filed suspicious activity reports as they should have for the large cash deposits, this does not in itself constitute corruption. I find it ironic that our government representatives on one hand can question how unbelivable it is that Riggs Bank would do business with a corrupt dictator from Equatorial Guinea, and then on the other hand, recently open both diplomatic relations and a U.S. embassy in the capital city of E.G. It seems a little bit hypocritical. Please comment.

Terence O'Hara: Neither Riggs officials, nor E.G. officials, nor Simon Kareri, the former manager of the E.G. accounts, have offered anything close to a full accounting or response to the matters raised in the Senate report, so I can't really comment on that aspect. If you have personal knowledge of the matter, I encourage you to get in touch with me at oharat@washpost.com.

_______________________

Arlington, Va.: I worked with Simon Kareri many years ago at Perpetual Savings Bank, and I find the notion that both Riggs and the OCC failed to catch money laundering activities in a timely manner absolutely ridiculous. Overlooking what were obviously many $10,000-plus cash transactions takes a dedication to ignorance (read "corruption") not simple oversight.

Terence O'Hara: Perpetual! Your assessment is shared by Senate investigators.

_______________________

Terence O'Hara: I'm going to have to end it here. It's a pleasure hearing your thoughts and answering your questions. This story isn't close to going away yet, so I'm sure we'll have the opportunity for more online chats in the future. Thank you!

_______________________