By Terence O'Hara
Washington Post Staff Writer
Monday, January 17, 2005
Being on the board of Riggs Bank or its holding company, Riggs National Corp., was a diverting sideline for some of Washington's old-line business figures. According to accounts of past directors and various executives with knowledge of the meetings during the 1990s, board meetings were undemanding and often amusing affairs, frequently over lunch.
The one person who made them amusing was Joe L. Allbritton, the bank's largest shareholder, who dominated nearly all aspects of the company for more than 20 years until his resignation from the board in 2004. Board meetings would be held around a 30-foot polished wood table in the main board room of Riggs's granite-hewed Corcoran Branch, across the street from the U.S. Treasury.
"One thing [Joe Allbritton] prided himself always in was his relation with foreign embassies and foreign governments," Calvin Cafritz, chairman of the Morris & Gwendolyn Cafritz Foundation, who was on the Riggs board in the 1990s, told the Style section of The Washington Post last year. "That was business he fostered himself. He flew all around the world in the Gulfstream, meeting with heads of state. He would tell people at the [board] meetings about meeting with such and such a leader in such and such a country."
But Allbritton's amusing stories about world leaders have taken on an entirely different dimension in recent months. And the people who have sat around that board table, including current and past directors, have much more to worry about than what's on the lunch menu.
In addition to Cafritz, other well-known past directors include Floretta Dukes McKenzie, former superintendent of the D.C. Public Schools, and John M. Fahey, president and chief executive of the National Geographic Society.
None of the past or current directors agreed to speak on the record for this story.
Of the current 10 members of the Riggs corporate board, seven are considered independent in the sense that they are neither major shareholders nor executives. Yet six of those seven have personal or business ties to Allbritton or Riggs, according to Securities and Exchange Commission documents and sources with knowledge of the directors' relationships with the Allbritton family. Business ties between directors and the banks they oversee are unusual in the industry. The corporate board is responsible for overall direction of the company, including corporate governance
Jack Valenti, former president and chief executive of the Motion Picture Association of America and one of Washington's best-known lobbyists, has known Allbritton for more than five decades and been a Riggs director since soon after Allbritton bought control of the company. Valenti was involved in one of Allbritton's early Texas savings-and-loan deals in 1950s Houston. The two men, now in their eighties, met as teenagers at their Houston high school and have remained close friends. Valenti "has not allowed his relationship with Mr. Allbritton to influence his duties as a director of Riggs," he said through a spokesman.
Steven B. Pfeiffer, a partner in the law firm Fulbright & Jaworski LLP, has long done legal work for Riggs and other Allbritton family interests, including Allbritton Communications Co., the family's chain of television stations. He met Joe Allbritton in 1983, when Pfeiffer ran Fulbright & Jaworski's London office. He is now chairman of the District-based law firm's executive committee, its highest post.
Pfeiffer was also involved in the creation of Riggs's now-closed international business -- the focus of the bank's money-laundering troubles -- and chairman of the Riggs executive committee. Last year he earned more than $110,000 for his work on the board and for serving as chairman and managing director of Riggs Bank Europe, according to Riggs's most recent proxy statement.
Pfeiffer did not return repeated telephone calls seeking a comment. Julie A. Tassi, a Fulbright & Jaworski spokeswoman, said in a statement that "Fulbright and Mr. Pfeiffer have at all times adhered to the highest standards of ethical conduct. In his role as a director of . . . the holding company of Riggs' bank . . . Mr. Pfeiffer has acted independently and has fulfilled his duties to Riggs National Corp. and its shareholders at all times."
Eddie N. Williams, the recently retired chief executive of the Joint Center for Political and Economic Studies, has been on Riggs's board since 1993. The center, an advocacy and research group on issues affecting minorities, has received $311,000 from Riggs over 25 years, according to disclosures by the center. Last year, the center received $2.3 million in contributions, much of it from corporations.
Robert L. Sloan, chief executive of Sibley Memorial Hospital, has been a director since 1993. Sibley has one of the bank's largest outstanding loans, according to sources at the bank. Sloan often socializes with Joe Allbritton, according to sources familiar with their relationship.
Charles A. Camalier III, a director since 2001 and a director of the company's bank subsidiary before that, is head of Wilkes Artis, Chartered, a local real estate law firm that has done business with Riggs. His father also was a board member and was once one of Riggs's largest shareholders.
William L. Walton, chief executive of Allied Capital Corp., became a Riggs corporate director in 1999, having inherited the seat as part of an informal director-sharing relationship between Allied Capital and Riggs. Several sources with knowledge of the board said Walton had no personal allegiance to Allbritton, one of the reasons he was chosen to lead a board committee that considered merger offers for the company this summer.
Only one independent director of the corporate board, Anthony Terraciano, currently has no outside business relationships with Riggs or Allbritton. Terraciano, a longtime banker, became a director earlier this year to add more banking experience to the board.
The other corporate directors are company executives with long ties to Joe Allbritton: son Robert Allbritton, Lawrence I. Hebert and J. Carter Beese Jr. Hebert, who is president and chief executive officer of Riggs Bank, is on Allied Capital's board.
Hebert, 57, has worked for Allbritton in a number of jobs for most of his career. He was described by more than one insider as "Joe's second son."
Beese met Allbritton in 1980 when Beese was a young investment banker at Alex. Brown & Sons, and worked on a Riggs stock offering in 1986. A former SEC commissioner, Beese left Alex. Brown in 1997 and the following year convinced Allbritton to set up a $100 million venture capital fund at Riggs, which Beese runs.
The nine-member board of Riggs bank is a separate body whose responsibilities include making sure the bank operates in a safe and sound manner, and dealing directly with Office of the Comptroller of the Currency examiners. In addition to Hebert and Robert Allbritton, the board includes Frederick J. Ryan, president of Allbritton Communications. Two bank board members, Robert Allbritton and lawyer Heather S. Foley, are trustees of George Washington University, whose president, Stephen J. Trachtenberg, is also on the bank board. Barbara Allbritton sat on the bank board until May, while Joe Allbritton resigned his bank board seat in 2001.
Of the 20 combined directors of the two boards of Riggs National Corp., only four, Beese, Walton, Hebert and Williams, have experience on any other public company board in the past five years.
Of all the independent directors, Pfeiffer has been most in the spotlight, both because of his close ties to Allbritton and Riggs and his knowledge of the relationship between the bank and former Riggs customer Augusto Pinochet, the former dictator of Chile.
Pfieffer, who sources close to the board said is considered the lead independent director on the corporate board, also had personal knowledge about Pinochet's accounts at Riggs long before his fellow board members did. In the spring of 2001, Raymond M. Lund, at the time Riggs's international private-client chief, asked Pfieffer directly for a evaluation of international efforts to seize Pinochet's money to compensate victims of political repression in 1970s and 1980s Chile. At the time, a Spanish judge was seeking to extradite Pinochet from England and had tried to freeze the general's assets in several countries.
In May, Pfieffer sent a two-page memo to Lund and Riggs General Counsel Joseph M. Cahill, detailing the results of an online search of newspaper stories, done over a weekend by a Fulbright & Jaworski associate, about efforts to prosecute Pinochet. Pfieffer billed Riggs $25,000 for the work, according to people familiar with the matter who spoke only on the condition that they not be identified because of ongoing investigations.
Staff writer Kathleen Day contributed to this report.