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WSJ.com - 'Bank of Presidents' Stumbles Amid Probe of Terrorism Funds Page 1 of5

T H EW A L LS T R E E TJ O U R N A L .O N L I N E

April 7, 2004

PA G E O N E'Bank of Presidents' StumblesAmid Probe of Terrorism Funds

Riggs National M ay Pull O utO f Diplomatic Business;Another Treasury Inquiry

From Tyler to Pinochet

By GLENN R. SIMPSONStaff Reporter of THE WALL STREET JOURNALApril 7,2004; Page.41

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WASHINGTON -- In the early 1980s, Riggs Bank ran advertisements calling itself "the mostimportantbank in the most important city in the world."

That claim captured the bank's special status here, where it has long enjoyed a close relationshipwith the U.S. government and the capital's large diplomatic contingent. And it reflected theambitions of Joe L. Allbritton, then the bank's chairman, to make himself a powerful Washingtonplayer.

Today, the bank's connections are drawing intense scrutiny from federal investigators looking into

terrorism financing. Under pressure from the probes, Riggs is now planning over time to exit thediplomatic banking business entirely, possibly by selling it, according to people familiar with thematter. The bank already terminated its lucrative relationship with the Embassy of Saudi Arabialast month.

While the diplomatic business isn't very profitable, it has been a calling card for Riggs andaccounts for about 23% of Riggs' $4.2 billion in deposits. The bank deals with about 95% of thecity's 160-some embassies and missions.

The FBI and federal regulators are probing huge cash withdrawals by the Saudis and have accusedRiggs of failing to alert regulators of suspicious transactions. The Office of the Comptroller of theCurrency has classified Riggs as a "troubled institution" for failing to adequately tighten itsmoney-laundering controls despite an order to do so. The office is considering a fine. On Tuesday,Moody's Investors Service changed its outlook on Riggs to "negative" from "stable."

Regulators are also pursuing a second, previously undisclosed, line of inquiry into whether Riggsviolated "know your customer" record-keeping laws in its dealings with foreign customers of itsprivate banking division, according to lawyers and investigators. Treasury Departmentinvestigators are digging into the relationship between Riggs and high-risk foreign customers,including former Chilean leader Augusto Pinochet.

http://online.wsj.com/article_print/0,,SB108128688499075866,OO.html 4/7/2004

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"The legislation that transformed the military was very controversial at the time, and the militaryresisted," Mr. Hastings said. "In some ways, the intelligence community is in the same positionthe military was prior to 1986, too much duplication, too much competition, not enoughcoordination and not enough collaboration."

He said another issue that must be addressed is the lack of diversity in the intelligence branches.He said the United States must recruit Middle Easterners, blacks, Koreans, Vietnamese and anyother minorities to be effective in gathering intelligence in other countries.

"James Bond is not going to infiltrate Bora Bora," Mr. Hastings said.

Porter J. Goss, Florida Republican and chairman of the intelligence committee, said there is apossibility that some of what the Democrats are calling for could be done this year.

"I intend to do an authorization bill, finish the weapons-of-mass-destruction inquiry in the next fewmonths and then look at the architecture of the intelligence community," he said.

Mr. Goss said he has been coordinating with Sen. Bob Graham, Florida Democrat, to insure thatthere will be continuity in the Senate when the House makes its move to restructure theintelligence community.

34. Probe of Riggs's Handling of Saudi Cash Intensifies

GLENN R. SIMPSONThe Wall Street Journal

Federal officials have intensified their inquiries into Riggs Bank's handling of large amounts ofcash for foreign accounts, and a central focus is on the bank's failure to file "suspicious activity"reports on dozens of large withdrawals from the personal accounts of Saudi Arabia's longtimeambassador to Washington. Pressure from multiple investigations has caused a rupture in the

longtime relationship between the Saudis and Riggs, which was terminated last month, a fewdays after the bank called in a large personal loan to Saudi Prince Bandar bin Sultan and anotherto the embassy.

In 2001 and 2002, Prince Bandar, his wife or his aides withdrew more than $20 million in cashfrom their personal accounts, according to regulatory officialsand lawyers involved in the matter.Riggs, a unit of Washington's Riggs National Corp., acknowledges it failed to file required"suspicious activity" reports on the withdrawals, which were made with sequentially numberedchecks. Banks are required to file "suspicious activity" reports on large cashtransactions that occur frequently or without a clear purpose.

Regulators are threatening to impose new requirements and other penalties on Riggs. And thebank says in securities filings that it expects to be classified by the Office of the Comptroller of

Currency as a "troubled institution" for failing to adequately tighten its controls against moneylaundering despite an order to do so last year. Such a designation requires the bank to adoptasset- preservation measures, calls for ratcheting up regulatory scrutiny and limits the ability oftop executives to resign with large severance packages.

Riggs, which has long dominated the capital's lucrative market for diplomatic banking, hasstruggled since the attacks of Sept. 11, 2001, to come to grips with the U.S. government's intensenew scrutiny of funds from theMiddle East, where financial oversight is more casual, and clientrelationships are heavily based on trust.

PRESS CLIPS FOR APRIL 2, 2004 45

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Bush Should Cry Uncle and Release Saudi Info By Allan P Page 1 o f 2

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Bush Should Cry Uncle and Release Saudi liBy Allan P. Duncan

6-28-osopednews.com

"W ewill direct every resource at our command to win the war against terrorists, every means of diplomacy, everyintelligence, every instrument of law enforcement, every financial influence. We will starve the terrorists of fundingPresident George W. Bush, September 24, 2001

Tough words from Bush less than two weeks after the most devastating attack in American history. Over time thoihave become the words of a paper tiger when it comes to actually dealing with those who were clearly involved inth e attacks on 9-11.

Withthe release of the Congressional Joint Inquiry Report on 9-11, the Bush Administration forced the redaction cpages from the report on the role of Saudi Arabia and another unnamed country ( Pakistan is my guess), in financLaden. Their reasoning is that it would compromise our national security for the information to be made public.

I think that the reason the information was not released is because it would reveal embarrassing information abouterm relationship between the Saudis and the Bush family itself.

Some of the information that was revealed pertained to two of the hijackers, Khalid al-Mihdhar and Nawaf al-HaznA c c o r d ingto the report,

"ThisJoint Inquiry confirmed that these same two future hijackers, Khalid al-Mihdhar and Nawaf al-Hazmi, had nuicontacts with a long time FBI counterterrorism informant in California and that a third future hijacker, Hani Hanjourapparently had more limited contact with the same informant."

"The informant has made numerous inconsistent statements to the FBI during the course of interviews after Septe2001."

"The Administration has to date objected to the Inquiry's effortsto interview the informant in order to attempt to rthose inconsistencies. The Administration also could not agree to allow the FBI to serve a Committee subpoenadeposition notice on the informant. Instead, written interrogatories from the Joint Inquiry were, at the suggestion oprovided to the informant. Through an attorney, the informant has declined to respond to those interrogatories ancindicated that, if subpoenaed, the informant would request a grant of immunity prior to testifying.

W hywould The Administration want to block a more thorough investigation into what the FBI informant might haknown?

Maybe because there is far more to this story than most people know.

http://www.opednews.com/duncan_bush_should_cry_uncle_and_releas.htm 3/26/2004

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#2003-79UNITED STATES OF AMERICA

DEPARTMENT OF THE TREASURYOFFICE OF THE COMPTROLLER OF THE CURRENCY

In the Matter of: )Riggs Bank National Association )McLean, Virginia )

CONSENT ORDER

The Comptroller of the Currency of the United States of America ("Comptroller"),

through his National Bank Examiner, has examined Riggs Bank National Association, McLean,

Virginia ("Bank"), and his findings arecontained in the Report of Examination for the

examination that commenced on January 6, 2003 ("ROE").

The Bank, by and through its duly elected and acting Board of Directors ("Board"), has

executed a "Stipulation and Consent to the Issuance of a Consent Order," dated July 16, 2003,

that is accepted by the Comptroller. By this Stipulation and Consent, which is incorporated by

reference, the Bank has consented to the issuance of this Consent Order ("Order") by the

Comptroller.

Pursuant to the authority vested in him by the Federal Deposit Insurance Act, as

amended, 12 U.S.C. 1818, the Comptroller hereby orders that:

Article I

COMPLIANCE COMMITTEE

(1) The Board shall maintain its BSA Compliance Committee ("Committee"), which

shall be comprised of at least three (3) directors. A majority of the Committee shall not be

employees of the Bank or family members of any such person. Upon the change in any member

of the Committee, the name of the new member shall be submitted in writing to the Assistant