Riggs National Corp. and PNC Financial Services Group Inc. agreed to pay $2.7 million to shareholders to settle a class-action lawsuit against Riggs directors for failing to comply with anti-money-laundering laws.
Pittsburgh-based PNC plans to complete its acquisition of Riggs by the end of May. Once the merger is complete, PNC will pay the money to a fund to benefit all shareholders except the current and former directors named as defendants, including Riggs chairman and chief executive Robert L. Allbritton and his parents, former directors Joe L. and Barbara Allbritton.
The lawsuit was filed in Delaware Court of Chancery last April after regulators fined District-based Riggs $25 million for not complying with anti-money-laundering laws. A subsequent report by the Senate Governmental Affairs Committee's permanent subcommittee on investigations, which detailed Riggs Bank's handling of money for Equatorial Guinea and former Chilean dictator Augusto Pinochet, led to a $16 million fine and a felony guilty plea by the bank for failing to prevent possible money laundering.
The plaintiffs' lawyers in the shareholder lawsuit will ask the court for $1.1 million more, for legal fees and expenses, to be paid by PNC, the company said.
PNC and Riggs have been trying to settle Riggs's legal entanglements arising from its anti-money-laundering problems in advance of the merger. To settle a Spanish criminal action against its directors and executives, Riggs agreed last Friday to pay $8 million to a fund for survivors of Pinochet's repressive 17-year regime in Chile, which ended in 1990. Robert and Joe Allbritton paid an additional $1 million in the Spanish settlement. Survivors of the Sept. 11, 2001, terrorist attacks also have sued Riggs, claiming that the bank's anti-money-laundering lapses led indirectly to one of the hijackers receiving money. A separate shareholder lawsuit also is pending in federal court in Washington.
"This is part of putting the past in the past and moving forward to completing our merger with PNC," said Mark N. Hendrix, a Riggs spokesman.