Inquiry Implicates Former Pinochet Account Managers
By Terence O'Hara
Washington Post Staff Writer
Friday, September 3, 2004; Page E01
The referrals emerged from a wide-ranging internal investigation of possible money laundering in Riggs's dealings with Pinochet and Chile going back to the mid-1980s, said the sources, who are familiar with the probe and spoke only on condition of anonymity because the investigation is still in its early stages.
Investigators retracing transactions in Pinochet's Riggs accounts also have found evidence that some of his associates and family members moved large sums of money through at least four other U.S. banks, including Citibank and Bank of America, the sources said.
The Justice Department and the U.S. attorney for the District of Columbia are investigating possible money laundering at Riggs involving Pinochet and officials of the government of Equatorial Guinea. Riggs had made a previous referral to the Justice Department related to Simon P. Kareri, Equatorial Guinea's former account manager at Riggs, who is the subject of a grand jury investigation in the District.
Riggs spokesman Mark N. Hendrix declined to comment yesterday. The company last month said it was the subject of various investigations and has previously said it was cooperating with those investigations. Riggs has hired noted white-collar criminal defense lawyer Reid H. Weingarten to represent the bank and its holding company in connection with the Justice Department inquiry, the sources said.
An investigation by the Senate permanent subcommittee on investigations released in July found that for at least eight years, Riggs helped Pinochet hide accounts with balances of between $4 million and $8 million from outside scrutiny, even helping the general hide the funds from international prosecutors seeking restitution for political killings. Specifically, the report detailed how Riggs account managers helped him set up offshore shell companies to hide his interest in the money deposited in Riggs, altered names on accounts so outsiders would not recognize the Pinochet name and concealed Pinochet's accounts from bank examiners. The Senate report said two former Riggs employees were primarily responsible for managing Pinochet's accounts.
The ongoing probe of Riggs could present problems for its pending merger with PNC Financial Services Group Inc. If the bank is prosecuted, or if it is subject to criminal fines, it could delay, materially change the terms of or even scotch the merger. The merger transaction included a provision allowing PNC to back out if any major adverse regulatory event occurs before closing. The merger is not expected to take place until the first three months of next year, at the earliest.
A PNC spokesman did not return calls seeking comment.
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