Riggs Bank
Encyclopedia
Riggs Bank was a Washington, D.C.
-based commercial bank with branches located in the surrounding metropolitan area and offices around the world. For most of its history, it was the largest bank in the nation's capital. Riggs had been controlled by the Albritton family since the 1980s, but they lost control after various corporate scandal
s and management problems. On May 16, 2005, the bank merged with PNC Financial Services
.
opened a small brokerage house. In 1840, Corcoran and George Washington Riggs
, the son of a neighbor, formed "Corcoran & Riggs", which offered checking and depositing services. The bank got a major boost in 1844, when the U.S. Government assigned Corcoran & Riggs to be the only federal depository in Washington. Corcoran & Riggs financed Samuel Morse's invention of the telegraph in 1845, one of several notable backings in its history. The bank also lent $16 million to the U.S. government to pay for the Mexican-American War in 1847 and in 1868, provided $7.2 million in gold towards the purchase of Alaska
. Other notable financing included the Robert Peary’s first expedition to the North Pole and the expansion of the Capitol Building in the 1860s.
In 1854 Corcoran retired and George Washington Riggs re-assumed leadership, resulting in the bank changing its name to "Riggs & Co." After accepting a government charter, "Riggs National Bank" was born in 1896. By 1900, Riggs was twice as large as any other bank in the capital. In 1909, Riggs' president formally presented to the U.S. Congress
a plan for economic relief. Many financial reforms were implemented as a result of this plan, including the establishment of the Federal Reserve in 1913.
Throughout the early 20th century, the bank continued to flourish. During World War I, Riggs National Bank participated in a high profile Liberty Loan Drive. After the War in the 1920s, the bank established a new savings deposit system as a result of the large deposit boom during the previous decade. Throughout the Great Depression, Riggs Director, Robert V. Fleming, also acted as adviser to President Franklin D. Roosevelt
. While all of these things were occurring, the bank was also strategically expanding its clientele by opening branches in different areas of Washington, D.C.
Beginning in the early 20th century, the bank embarked on a successful project to become known as the bank of embassies and diplomat
s, and by 1950 most embassies in Washington were customers. Many branches thereafter opened within embassies in Washington D.C. and London
.
In 2002, Joseph L. Allbritton, the Chairman of the Board, was inducted into the Washington Business Hall of Fame.
Through its history Riggs Bank served many notable personalities. Twenty-three U.S. Presidents or their families banked at Riggs, including Martin Van Buren
, John Tyler
, Abraham Lincoln
, Ulysses S. Grant
, Dwight D. Eisenhower
, and Richard Nixon
. Accounts were also held by Senators
Henry Clay
, John C. Calhoun
and Daniel Webster
, Confederate president Jefferson Davis
, American Red Cross
founder Clara Barton
, suffragist Susan B. Anthony
, and generals William Tecumseh Sherman
and Douglas MacArthur
.
A Saudi named Omar al-Bayoumi
housed and opened bank accounts for two of the 9/11
hijackers. About two weeks after the assistance began, al-Bayoumi's wife began receiving monthly payments totaling tens of thousands of dollars from Princess Haifa bint Faisal, the wife of Saudi
ambassador
and Bush family confidant, Prince Bandar bin Sultan
, through a Riggs bank account. http://www.msnbc.com/avantgo/839269.htm (Jonathan Bush
, uncle of President George W. Bush, was an executive at Riggs Bank during this period.)
Upon discovery of these transactions, the FBI
began investigating the bank for possible money-laundering and terrorist financing
. Although the FBI and later the 9/11 Commission
ultimately stated that the money was not intentionally being routed to fund terrorists, investigators were surprised to see how lax the safeguards at Riggs Bank were. Several Saudi accounts were discovered to have financial improprieties, including a lack of required background checks and a consistent failure to alert regulators to large transactions, in violation of federal banking laws.
Many of these transactions involved Prince Bandar personally, often transferring over $1 million at a time. According to British investigations on the Al Yamamah
deal, reported by The Guardian, Bandar would have received over $ 1.5 billion in bribery from BAE Systems
, laundered through the Riggs Bank.
, the former dictator of Chile
, has been widely accused since 1973 of corruption, illegal arms sales, and torture
. In 1994, Riggs officials invited Pinochet to open an account at Riggs Bank. Pinochet was arrested in 1998 in Britain
for possible extradition to Spain
, and his accounts were ordered frozen by court orders. A recent U.S. Senate
report has revealed that Riggs executives helped Pinochet disguise millions of dollars. By using shell companies and hiding accounts from federal regulators, Riggs illegally allowed Pinochet to retain access to much of his fortune.
The Senate report also indicated that regulators were negligent in holding the bank accountable. Although Pinochet's accounts at Riggs had been reported in U.S. and British newspapers, and although these accounts were largely unreported to regulators, those same regulators never made a serious effort to investigate. The bank examiner from the Office of the Comptroller of the Currency
tasked with investigating Riggs in 2002, R. Ashley Lee, was later given an executive position at Riggs. In 2004, Lee was placed on paid leave by the bank pending a Justice Department investigation on whether he violated government ethics rules.
The disclosure of the Riggs accounts reignited the case against General Pinochet, and a ruling that he was not mentally competent to stand trial was overturned when it was proven that the general himself had orchestrated some of the huge transactions. In 2004, he was ordered to stand trial for crimes against humanity, and additional claims of mental and physical incompetence have been overruled. Pinochet died, however, in December 2006 before being judged. However, in September 2007, Pinochet's widow and five children were indicted by a Chilean court on charges including embezzlement.
and the Financial Crimes Enforcement Network
for violations of money-laundering laws. A long running Justice Department investigation was wrapped up quickly in February 2005 with Riggs pleading guilty and paying a $16 million fine for violations for the U.S. Bank Secrecy Act after a Wall Street Journal article reported December 31, 2004, that Riggs had extensive ties to the CIA, including that several bank officials held security clearances. Also in February 2005, the bank and Allbritton family agreed to pay $9 million to Pinochet victims for concealing and illegally facilitating movement of Pinochet money out of Britain. No similar payment has been made with regard to Equatorial Guinea, as reported in this weekly Anti-Money Laundering Report from the Fair Finance Watch The abuses at Riggs led Congress to consider forming a single agency with greater authority to enforce money laundering and currency control laws. Daniel E. Stipano, deputy chief counsel for the Office of the Comptroller of the Currency
, said, "What happened with Riggs is unacceptable. It cannot be repeated."
Riggs and its executives denied any wrong-doing, although some executives may now face criminal trials. Members of the Albritton family resigned from the bank board. The operation was acquired by PNC, which phased out the scandal-plagued embassy business. On February 10, 2005 PNC Financial Services
agreed to acquire Riggs, and on May 16, 2005, the Riggs name was officially retired and all Riggs branches opened as PNC Bank branches.
Washington, D.C.
Washington, D.C., formally the District of Columbia and commonly referred to as Washington, "the District", or simply D.C., is the capital of the United States. On July 16, 1790, the United States Congress approved the creation of a permanent national capital as permitted by the U.S. Constitution....
-based commercial bank with branches located in the surrounding metropolitan area and offices around the world. For most of its history, it was the largest bank in the nation's capital. Riggs had been controlled by the Albritton family since the 1980s, but they lost control after various corporate scandal
Corporate scandal
A corporate scandal is a scandal involving allegations of unethical behavior by people acting within or on behalf of a corporation. A corporate scandal sometimes involves accounting fraud of some sort...
s and management problems. On May 16, 2005, the bank merged with PNC Financial Services
PNC Financial Services
PNC Financial Services Group, Inc. is a U.S.-based financial services corporation, with assets of approximately $264.3 billion...
.
History
The earliest incarnation of Riggs Bank was formed in 1836 when William Wilson CorcoranWilliam Wilson Corcoran
William Wilson Corcoran was an American banker, philanthropist, and art collector.-Early life:Corcoran was born in Georgetown in the District of Columbia, the son of a well-to-do father whom the electors of Georgetown twice chose as mayor. His father, Thomas Corcoran, came to Georgetown in 1788...
opened a small brokerage house. In 1840, Corcoran and George Washington Riggs
George Washington Riggs
George Washington Riggs was an American businessman and banker. He was known as "The President's Banker."- Life and work :...
, the son of a neighbor, formed "Corcoran & Riggs", which offered checking and depositing services. The bank got a major boost in 1844, when the U.S. Government assigned Corcoran & Riggs to be the only federal depository in Washington. Corcoran & Riggs financed Samuel Morse's invention of the telegraph in 1845, one of several notable backings in its history. The bank also lent $16 million to the U.S. government to pay for the Mexican-American War in 1847 and in 1868, provided $7.2 million in gold towards the purchase of Alaska
Alaska
Alaska is the largest state in the United States by area. It is situated in the northwest extremity of the North American continent, with Canada to the east, the Arctic Ocean to the north, and the Pacific Ocean to the west and south, with Russia further west across the Bering Strait...
. Other notable financing included the Robert Peary’s first expedition to the North Pole and the expansion of the Capitol Building in the 1860s.
In 1854 Corcoran retired and George Washington Riggs re-assumed leadership, resulting in the bank changing its name to "Riggs & Co." After accepting a government charter, "Riggs National Bank" was born in 1896. By 1900, Riggs was twice as large as any other bank in the capital. In 1909, Riggs' president formally presented to the U.S. Congress
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
a plan for economic relief. Many financial reforms were implemented as a result of this plan, including the establishment of the Federal Reserve in 1913.
Throughout the early 20th century, the bank continued to flourish. During World War I, Riggs National Bank participated in a high profile Liberty Loan Drive. After the War in the 1920s, the bank established a new savings deposit system as a result of the large deposit boom during the previous decade. Throughout the Great Depression, Riggs Director, Robert V. Fleming, also acted as adviser to President Franklin D. Roosevelt
Franklin D. Roosevelt
Franklin Delano Roosevelt , also known by his initials, FDR, was the 32nd President of the United States and a central figure in world events during the mid-20th century, leading the United States during a time of worldwide economic crisis and world war...
. While all of these things were occurring, the bank was also strategically expanding its clientele by opening branches in different areas of Washington, D.C.
Beginning in the early 20th century, the bank embarked on a successful project to become known as the bank of embassies and diplomat
Diplomat
A diplomat is a person appointed by a state to conduct diplomacy with another state or international organization. The main functions of diplomats revolve around the representation and protection of the interests and nationals of the sending state, as well as the promotion of information and...
s, and by 1950 most embassies in Washington were customers. Many branches thereafter opened within embassies in Washington D.C. and London
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
.
In 2002, Joseph L. Allbritton, the Chairman of the Board, was inducted into the Washington Business Hall of Fame.
Through its history Riggs Bank served many notable personalities. Twenty-three U.S. Presidents or their families banked at Riggs, including Martin Van Buren
Martin Van Buren
Martin Van Buren was the eighth President of the United States . Before his presidency, he was the eighth Vice President and the tenth Secretary of State, under Andrew Jackson ....
, John Tyler
John Tyler
John Tyler was the tenth President of the United States . A native of Virginia, Tyler served as a state legislator, governor, U.S. representative, and U.S. senator before being elected Vice President . He was the first to succeed to the office of President following the death of a predecessor...
, Abraham Lincoln
Abraham Lincoln
Abraham Lincoln was the 16th President of the United States, serving from March 1861 until his assassination in April 1865. He successfully led his country through a great constitutional, military and moral crisis – the American Civil War – preserving the Union, while ending slavery, and...
, Ulysses S. Grant
Ulysses S. Grant
Ulysses S. Grant was the 18th President of the United States as well as military commander during the Civil War and post-war Reconstruction periods. Under Grant's command, the Union Army defeated the Confederate military and ended the Confederate States of America...
, Dwight D. Eisenhower
Dwight D. Eisenhower
Dwight David "Ike" Eisenhower was the 34th President of the United States, from 1953 until 1961. He was a five-star general in the United States Army...
, and Richard Nixon
Richard Nixon
Richard Milhous Nixon was the 37th President of the United States, serving from 1969 to 1974. The only president to resign the office, Nixon had previously served as a US representative and senator from California and as the 36th Vice President of the United States from 1953 to 1961 under...
. Accounts were also held by Senators
United States Senate
The United States Senate is the upper house of the bicameral legislature of the United States, and together with the United States House of Representatives comprises the United States Congress. The composition and powers of the Senate are established in Article One of the U.S. Constitution. Each...
Henry Clay
Henry Clay
Henry Clay, Sr. , was a lawyer, politician and skilled orator who represented Kentucky separately in both the Senate and in the House of Representatives...
, John C. Calhoun
John C. Calhoun
John Caldwell Calhoun was a leading politician and political theorist from South Carolina during the first half of the 19th century. Calhoun eloquently spoke out on every issue of his day, but often changed positions. Calhoun began his political career as a nationalist, modernizer, and proponent...
and Daniel Webster
Daniel Webster
Daniel Webster was a leading American statesman and senator from Massachusetts during the period leading up to the Civil War. He first rose to regional prominence through his defense of New England shipping interests...
, Confederate president Jefferson Davis
Jefferson Davis
Jefferson Finis Davis , also known as Jeff Davis, was an American statesman and leader of the Confederacy during the American Civil War, serving as President for its entire history. He was born in Kentucky to Samuel and Jane Davis...
, American Red Cross
American Red Cross
The American Red Cross , also known as the American National Red Cross, is a volunteer-led, humanitarian organization that provides emergency assistance, disaster relief and education inside the United States. It is the designated U.S...
founder Clara Barton
Clara Barton
Clarissa Harlowe "Clara" Barton was a pioneer American teacher, patent clerk, nurse, and humanitarian. She is best remembered for organizing the American Red Cross.-Youth, education, and family nursing:...
, suffragist Susan B. Anthony
Susan B. Anthony
Susan Brownell Anthony was a prominent American civil rights leader who played a pivotal role in the 19th century women's rights movement to introduce women's suffrage into the United States. She was co-founder of the first Women's Temperance Movement with Elizabeth Cady Stanton as President...
, and generals William Tecumseh Sherman
William Tecumseh Sherman
William Tecumseh Sherman was an American soldier, businessman, educator and author. He served as a General in the Union Army during the American Civil War , for which he received recognition for his outstanding command of military strategy as well as criticism for the harshness of the "scorched...
and Douglas MacArthur
Douglas MacArthur
General of the Army Douglas MacArthur was an American general and field marshal of the Philippine Army. He was a Chief of Staff of the United States Army during the 1930s and played a prominent role in the Pacific theater during World War II. He received the Medal of Honor for his service in the...
.
Saudi money transfers
In the mid-1970s members of the Saudi royal family set up covert accounts at the Riggs Bank in Washington amounting to tens of millions of dollars; this money was used by the so-called "Safari Club" to run intelligence operations at a time when American intelligence was paralyzed by investigations in the aftermath of Watergate.A Saudi named Omar al-Bayoumi
Omar al-Bayoumi
Omar al-Bayoumi is a Saudi national who befriended two of the 9/11 hijackers in the United States.Some people suspect he was a Saudi agent and an accessory to the attacks...
housed and opened bank accounts for two of the 9/11
September 11, 2001 attacks
The September 11 attacks The September 11 attacks The September 11 attacks (also referred to as September 11, September 11th or 9/119/11 is pronounced "nine eleven". The slash is not part of the pronunciation...
hijackers. About two weeks after the assistance began, al-Bayoumi's wife began receiving monthly payments totaling tens of thousands of dollars from Princess Haifa bint Faisal, the wife of Saudi
Saudi Arabia
The Kingdom of Saudi Arabia , commonly known in British English as Saudi Arabia and in Arabic as as-Sa‘ūdiyyah , is the largest state in Western Asia by land area, constituting the bulk of the Arabian Peninsula, and the second-largest in the Arab World...
ambassador
Ambassador
An ambassador is the highest ranking diplomat who represents a nation and is usually accredited to a foreign sovereign or government, or to an international organization....
and Bush family confidant, Prince Bandar bin Sultan
Bandar bin Sultan
Bandar bin Sultan bin Abdul-Aziz Al Saud is a prince of the Saudi royal family and was Saudi Arabia's ambassador to the United States from 1983 to 2005. He was appointed Secretary-General of the National Security Council by King Abdullah on 16 October 2005...
, through a Riggs bank account. http://www.msnbc.com/avantgo/839269.htm (Jonathan Bush
Jonathan Bush
Jonathan James Bush , is an American banker and former Republican Party fundraiser.-Education and family:Jonathan Bush graduated from The Hotchkiss School and Yale University, where he was a member of Skull and Bones. He is the fourth child of Prescott Sheldon Bush and Dorothy Walker Bush and is...
, uncle of President George W. Bush, was an executive at Riggs Bank during this period.)
Upon discovery of these transactions, the FBI
Federal Bureau of Investigation
The Federal Bureau of Investigation is an agency of the United States Department of Justice that serves as both a federal criminal investigative body and an internal intelligence agency . The FBI has investigative jurisdiction over violations of more than 200 categories of federal crime...
began investigating the bank for possible money-laundering and terrorist financing
Terrorist Financing
Terrorist financing came into limelight after the events of terrorism on 9/11. The US passed the USA PATRIOT Act to, among other reasons, attempt thwarting the financing of terrorism and anti-money laundering making sure these were given some sort of adequate focus by US financial institutions...
. Although the FBI and later the 9/11 Commission
9/11 Commission
The National Commission on Terrorist Attacks Upon the United States, also known as the 9/11 Commission, was set up on November 27, 2002, "to prepare a full and complete account of the circumstances surrounding the September 11, 2001 attacks", including preparedness for and the immediate response to...
ultimately stated that the money was not intentionally being routed to fund terrorists, investigators were surprised to see how lax the safeguards at Riggs Bank were. Several Saudi accounts were discovered to have financial improprieties, including a lack of required background checks and a consistent failure to alert regulators to large transactions, in violation of federal banking laws.
Many of these transactions involved Prince Bandar personally, often transferring over $1 million at a time. According to British investigations on the Al Yamamah
Al Yamamah
Al Yamamah is the name of a series of a record arms sales by the United Kingdom to Saudi Arabia, which have been paid for by the delivery of up to of crude oil per day to the UK government. The prime contractor has been BAE Systems and its predecessor British Aerospace...
deal, reported by The Guardian, Bandar would have received over $ 1.5 billion in bribery from BAE Systems
BAE Systems
BAE Systems plc is a British multinational defence, security and aerospace company headquartered in London, United Kingdom, that has global interests, particularly in North America through its subsidiary BAE Systems Inc. BAE is among the world's largest military contractors; in 2009 it was the...
, laundered through the Riggs Bank.
Pinochet's frozen funds
Augusto PinochetAugusto Pinochet
Augusto José Ramón Pinochet Ugarte, more commonly known as Augusto Pinochet , was a Chilean army general and dictator who assumed power in a coup d'état on 11 September 1973...
, the former dictator of Chile
Chile
Chile ,officially the Republic of Chile , is a country in South America occupying a long, narrow coastal strip between the Andes mountains to the east and the Pacific Ocean to the west. It borders Peru to the north, Bolivia to the northeast, Argentina to the east, and the Drake Passage in the far...
, has been widely accused since 1973 of corruption, illegal arms sales, and torture
Torture
Torture is the act of inflicting severe pain as a means of punishment, revenge, forcing information or a confession, or simply as an act of cruelty. Throughout history, torture has often been used as a method of political re-education, interrogation, punishment, and coercion...
. In 1994, Riggs officials invited Pinochet to open an account at Riggs Bank. Pinochet was arrested in 1998 in Britain
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
for possible extradition to Spain
Spain
Spain , officially the Kingdom of Spain languages]] under the European Charter for Regional or Minority Languages. In each of these, Spain's official name is as follows:;;;;;;), is a country and member state of the European Union located in southwestern Europe on the Iberian Peninsula...
, and his accounts were ordered frozen by court orders. A recent U.S. Senate
United States Senate
The United States Senate is the upper house of the bicameral legislature of the United States, and together with the United States House of Representatives comprises the United States Congress. The composition and powers of the Senate are established in Article One of the U.S. Constitution. Each...
report has revealed that Riggs executives helped Pinochet disguise millions of dollars. By using shell companies and hiding accounts from federal regulators, Riggs illegally allowed Pinochet to retain access to much of his fortune.
The Senate report also indicated that regulators were negligent in holding the bank accountable. Although Pinochet's accounts at Riggs had been reported in U.S. and British newspapers, and although these accounts were largely unreported to regulators, those same regulators never made a serious effort to investigate. The bank examiner from the Office of the Comptroller of the Currency
Office of the Comptroller of the Currency
The Office of the Comptroller of the Currency is a US federal agency established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all national banks and the federal branches and agencies of foreign banks in the United States...
tasked with investigating Riggs in 2002, R. Ashley Lee, was later given an executive position at Riggs. In 2004, Lee was placed on paid leave by the bank pending a Justice Department investigation on whether he violated government ethics rules.
The disclosure of the Riggs accounts reignited the case against General Pinochet, and a ruling that he was not mentally competent to stand trial was overturned when it was proven that the general himself had orchestrated some of the huge transactions. In 2004, he was ordered to stand trial for crimes against humanity, and additional claims of mental and physical incompetence have been overruled. Pinochet died, however, in December 2006 before being judged. However, in September 2007, Pinochet's widow and five children were indicted by a Chilean court on charges including embezzlement.
Repercussions
Riggs Bank was fined $25 million in May 2004 by the Office of the Comptroller of the CurrencyOffice of the Comptroller of the Currency
The Office of the Comptroller of the Currency is a US federal agency established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all national banks and the federal branches and agencies of foreign banks in the United States...
and the Financial Crimes Enforcement Network
Financial Crimes Enforcement Network
The Financial Crimes Enforcement Network is a bureau of the United States Department of the Treasury that collects and analyzes information about financial transactions in order to combat money laundering, terrorist financiers, and other financial crimes.As reflected in its name, the Financial...
for violations of money-laundering laws. A long running Justice Department investigation was wrapped up quickly in February 2005 with Riggs pleading guilty and paying a $16 million fine for violations for the U.S. Bank Secrecy Act after a Wall Street Journal article reported December 31, 2004, that Riggs had extensive ties to the CIA, including that several bank officials held security clearances. Also in February 2005, the bank and Allbritton family agreed to pay $9 million to Pinochet victims for concealing and illegally facilitating movement of Pinochet money out of Britain. No similar payment has been made with regard to Equatorial Guinea, as reported in this weekly Anti-Money Laundering Report from the Fair Finance Watch The abuses at Riggs led Congress to consider forming a single agency with greater authority to enforce money laundering and currency control laws. Daniel E. Stipano, deputy chief counsel for the Office of the Comptroller of the Currency
Office of the Comptroller of the Currency
The Office of the Comptroller of the Currency is a US federal agency established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all national banks and the federal branches and agencies of foreign banks in the United States...
, said, "What happened with Riggs is unacceptable. It cannot be repeated."
Riggs and its executives denied any wrong-doing, although some executives may now face criminal trials. Members of the Albritton family resigned from the bank board. The operation was acquired by PNC, which phased out the scandal-plagued embassy business. On February 10, 2005 PNC Financial Services
PNC Financial Services
PNC Financial Services Group, Inc. is a U.S.-based financial services corporation, with assets of approximately $264.3 billion...
agreed to acquire Riggs, and on May 16, 2005, the Riggs name was officially retired and all Riggs branches opened as PNC Bank branches.
External links
- Scandal coverage from the Washington Post
- Scandal overview from the New York Times
- BBC NewsBBC NewsBBC News is the department of the British Broadcasting Corporation responsible for the gathering and broadcasting of news and current affairs. The department is the world's largest broadcast news organisation and generates about 120 hours of radio and television output each day, as well as online...
: Bank payout to Pinochet victims - Weekly Report on Riggs and Money Laundering
- The PNC Riggs Collection, Special Collections Research Center, Estelle and Melvin Gelman Library, The George Washington University