"I Knew This Would Come Back to Riggs Bank"

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June 10, 2007

I Knew This Would Come Back to Riggs Bank

by emptywheel

The whole BAE thing blew up again last week while I was visiting. The short version is that Bandar Bush bin Sultan got caught with his hand in a very large cookie jar--to the tune of billions. But you'll recall that I suggested we'd be hearing more about this scandal back back in December. Today, Isikoff and Hosenball reveal that this may relate to the Riggs Bank scandal from a few years back (though keep in mind--it's Isikoff, so all the usual caveats about misleading half-truths apply).

Hundreds of pages of confidential U.S. bank records may be the missing link in illuminating new allegations that a major British arms contractor funneled up to $2 billion in questionable payments to Saudi Prince Bandar bin Sultan. The BBC and Guardian newspaper reported last week that BAE Systems made "secret" payments to a Washington, D.C., bank account controlled by Bandar, the longtime Saudi ambassador to the United States who is now the kingdom's national-security adviser. The payments are alleged to be part of an $80 billion military-aircraft deal between London and Riyadh. Last week British Prime Minister Tony Blair acknowledged that his government shut down an investigation into the payments, in part because it could have led to the "complete wreckage" of Britain's "vital strategic relationship" with Saudi Arabia. Before the U.K. closed the inquiry, British investigators contacted the U.S. Justice Department seeking access to records related to the Saudi bank accounts.

And you remember the Riggs bank scandal, don't you? Where Bush crony Joe Allbritton and uncle Jonathan Bush oversaw a bank that was laundering money for Augusto Pinochet, Equatorial Guinea, and ... the Saudis? Or rather, Bandar Bush bin Sultan? Riggs was a regular old BCCI, it turns out, only no one really bothered to investigate why it was laundering money for some of the biggest creeps in the world.

So let me just throw out a few more datapoints:

• Riggs leads to Equatorial Guinea, the same place where Margaret Thatcher's son--one of the main beneficiaries of the BAE bribery--sponsored a coup ... now where do you suppose he got the money to sponsor that coup?

• Cheney and Bandar have been freelancing on foreign policy of late. Of course, Congress is not paying for that free-lancing.

Some of the core tactics of the redirection are not public, however. The clandestine operations have been kept secret, in some cases, by leaving the execution or the funding to the Saudis, or by finding other ways to work around the normal congressional appropriations process, current and former officials close to the Administration said.

So where do you think Cheney and Bandar are getting the money?

more

Financial

PNC Buys Riggs, Wipes Slate Clean

Paul Maidment, 07.16.04, 4:05 PM ET

NEW YORK - Out of sight, out of mind? The name Riggs National has been familiar to upper-crust Washingtonians and diplomats for 165 years. Now it is infamous for a record $25 million fine amid allegations of possible violations of U.S. money laundering laws. Early next year, it will disappear, following Riggs' $779 million cash and stock takeover by Pittsburgh's PNC Financial Services.

Riggs (nasdaq: RIGS - news - people ) has long been known as the banker to presidents and diplomats. It serves most foreign embassies and missions in the U.S. capital. But, even setting its latest embarrassments aside, its embassy and international businesses have not been money-making affairs. Riggs failed until recently to invest in the potentially most profitable part of its franchise--retail and small- and middle-market business banking. And it never reined in overhead that its new owner, PNC (nyse: PNC - news - people ) Chairman and Chief Executive, James E. Rohr, describes as "remarkable; remarkably high."

Rohr will dump the tainted international and embassy business and concentrate on the regional-bank rump of Riggs, which would still have $3 billion in deposits (see table). He would integrate it into PNC's fast-growing East Coast expansion, building on last year's takeover of United National in New Jersey. "The Riggs we will acquire when we close next year will not be the Riggs you know today," says Rohr.

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The deal is expected to close during the first quarter of 2005, subject to approval from regulators and Riggs shareholders. PNC has an option to walk away if Riggs doesn't get out of its international and embassy businesses cleanly, though Rohr's expectation is that all the issues surrounding that will be resolved before closing.

Those issues are ugly. Two days ago, U.S. lawmakers lambasted Riggs for failing to inform bank regulators that it was handling accounts worth tens of millions of dollars for Augusto Pinochet, the former Chilean dictator, and for top officials in the African dictatorship of Equatorial Guinea, a country accused by the U.S. of human rights abuses.

A report by Senate investigators said that Riggs maintained large accounts for Pinochet long after a Spanish court in 1998 asked that such accounts be frozen, having issued an international arrest warrant for Pinochet alleging murder, torture and genocide. The investigation found that Riggs helped Pinochet conceal his funds in the bank.

The inquiry also raised questions about payments from large oil companies, including Exxon Mobil (nyse: XOM - news - people ) and Marathon Oil (nyse: MRO - news - people ), to private accounts controlled by the leaders of Equatorial Guinea. The country was Riggs' largest single customer with deposits and loans worth nearly $700 million until the accounts were recently closed.

Investigators found that between 2000 and 2002, more than $11.5 million in cash arrived in suitcases and was deposited in an account controlled through an offshore corporation established in the Bahamas, with Riggs' help. The bank did not report those transactions accurately to U.S. regulators.

The report says that senior officials at the bank, including Joe Allbritton, the former Riggs chairman who headed the family-controlled bank for two decades and who remains its biggest shareholder with 24.6% of the stock, were aware of the accounts. It was, the report says, "a sordid story of a bank with a distinguished name, which blatantly ignored its obligations under anti-money-laundering laws".

The PNC deal wipes the slate clean.

link

Letter to the President on Saudi Arabia's Alleged Money Laundering

Author:
John F. Kerry

May 21, 2003
Foreign Affairs

Senator John Kerry, D-Mass.
May 21, 2003

Dear Mr. President:

I am writing to request that you instruct the Secretary of the Treasury to identify Saudi Arabia as a primary money laundering concern under the authority provided in Section 311 of the USA PATRIOT Act (P.L. 107-56).

I also request that U.S. financial institutions be required to provide enhanced scrutiny of financial transactions from Saudi Arabia, with particular focus on international charity organizations in Saudi Arabia. Specifically, the Department of Treasury should immediately issue regulations requiring U.S. financial institutions to impose enhanced due diligence on financial transactions involving Saudi Arabian financial institutions, charities and high net-worth individuals to determine whether any transactions pose an unacceptable risk of being related to the finance of terrorism. I believe this will help ensure that funds designated to assist al-Qaida, Hizballah, Hamas or other international terrorist groups do not originate from or pass through Saudi Arabian financial institutions on their way to the United States. It will also help persuade the Saudi Arabian government to crack down on the flow of funds from their country to international terrorist organizations.

Saudi Arabia is a growing financial center in the Gulf Region of the Middle East and should be credited for its increased vigilance in the fight against money laundering since the terrorist attacks on September 11, 2001. The Saudi Arabian government has frozen accounts of individuals and organizations in response to information provided by the United States and is currently considering a proposal to develop specific laws dealing with money laundering offenses.

I remain concerned that a number of charity organizations headquartered within in Saudi Arabia and with operations and office around the world are being used as conduits to provide funds for terrorist organizations. There has been a series of published reports alleging Saudi Arabian charities and individual Saudi Arabians have been providing funds to organizations both in the United States and elsewhere which have direct links to terrorist organizations. Last year, an independent task force sponsored by the Council of Foreign Relations released a report on terrorist financing focusing on the connection between Saudi Arabia and al-Qa’ida which stated “... it is worth stating clearly and unambiguously what official U.S. government spokespersons have not: For years, individuals and charities based in Saudi Arabia have been the most important source of funds for al-Qa’ida; and for years, Saudi officials have turned a blind eye to the problem.”

As long as al-Qa’ida retains access to a viable financial network, it remains a lethal threat to the United States. That is why I believe the United States must take any and all necessary measures to stop Saudi Arabian charity organizations from providing any additional funds to international terrorist organizations -- such as al-Qa’ida, Hamas and Hizballah – that could be used to attack either the United States or United States interests abroad.

While the Saudi Arabian government has introduced some controls to limit the transfer of funds to terrorist organizations, I am concerned that their efforts have not gone far enough to stop international terrorist organizations from receiving funding to carry out attacks against the United States or United States’ interests around the world. The tragic bombing in Riyadh this month demonstrates the lethal ability of terrorists to operate within Saudi Arabia and raises serious concerns over the Saudi government’s ability to incapacitate terrorist networks.

The Department of State reports through the International Narcotics Control Strategy Report that some funds from Saudi Arabian charities have been channeled to terrorist organizations. For this reason, your Administration has classified Saudi Arabia as a country to be monitored for potential money laundering.

The United States has the largest and most accessible economic marketplace in the world. Foreign financial institutions and jurisdictions must have unfettered access to markets to effectively work within the international economic system. In 2000, I introduced legislation that became Section 311 of the USA PATRIOT Act to provide the federal government with the authority to leverage the power of United States financial markets to encourage countries like Saudi Arabia to reform and enforce their counter-money laundering and counter-terrorist financing laws. As you are aware, it provides measures that are graduated, discretionary, and targeted, focusing on international transactions involving criminal proceeds, while allowing legitimate international commerce to continue unimpeded.

If we are to lead the world in the fight against terror and increase the security of the American people, we must effectively use our own laws to cut off the flow of laundered funds from terrorist groups through the international financial system. The measured use of Section 311 authority against Saudi Arabia provides the United States an opportunity to demonstrate leadership in the fight against international terrorism and money laundering.

I believe the U.S. must press for action by other nations against those Saudi persons and institutions about which there is substantial reason to believe have supported terrorism. This can be done immediately within the framework of the Financial Action Task Force (FATF). I urge you to discuss this issue in your upcoming meetings with the European Union, the G-8, and other multilateral forums. Thank you in advance for your consideration of my request.

Sincerely,

John F. Kerry

Proof that ignoring crime and criminals, sweeping these issues under the rug, doesn't make them go away.