Dirty money

March 05, 2005

BANKS THAT launder or hide money looted from foreign treasuries by dictators and military strongmen should take note that such practices can be costly to their image and, maybe more important, their bottom line.

Riggs Bank's recent agreement to pay a total of $9 million into a fund for victims of former Chilean dictator Gen. Augusto Pinochet is financial poetic justice for a bank that knowingly and willingly traded in dirty money with a human rights violator. Bank officials were quick to deny responsibility for the actual human rights violations, as if that made its purposeful lawbreaking more palatable. Riggs pleaded guilty to illegally concealing secret Pinochet accounts in violation of U.S. banking law and agreed to separately pay a $16 million criminal fine as a result of the Pinochet accounts.

The Riggs payment is the first outside compensation to General Pinochet's victims. Last December, the Chilean government formally acknowledged past tortures and killings of thousands of its citizens under his rule and announced it would compensate victims and their survivors. Chileans who believe in the rule of law had reason to feel vindicated then.

Now, they should get more satisfaction knowing that even if General Pinochet, who is under house arrest and facing a criminal trial for murder, somehow evades a long and well-deserved jail sentence, neither he nor his relatives or political cronies will be able live off the secret Riggs accounts. Last July, a Senate investigative committee outlined the unethical lengths Riggs officers took to conceal the accounts, such as placing them under aliases and attempting to secretly transfer funds.

Requiring U.S.-based banks not to hold the illegally gotten gains of presidents and despots may not prevent the money from being spirited off to other willing banks in other countries, or placed under mattresses, for that matter, but it still sends a message that such practices will not be accepted as business as usual in this country.

The Riggs investigation led Banco de Chile to close General Pinochet's accounts in Miami and New York last month after U.S. officials accused the bank of concealing them. General Pinochet is also under investigation for tax evasion because of the accounts. These actions should serve as a cautionary tale to dictators and bankers alike that stolen loot isn't welcome in America.

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