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Pinochet hid funds at citigroup and others

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Pinochet Hid Funds at Citigroup, Others -- U.S. Senate
Wed Mar 16, 2005 01:48 AM ET

By Kristin Roberts
WASHINGTON (Reuters) - Chilean ex-dictator Augusto Pinochet used an intricate web of more than 100 U.S. bank accounts, including 63 with Citigroup, to hide and launder at least $15 million, a U.S. Senate report due out on Wednesday shows.

The Senate Permanent Subcommittee on Investigations found Pinochet's use of the U.S. financial system to cloak his financial dealings extended far beyond his accounts at Riggs Bank, which has admitted to failing to report suspicious transactions and paid a criminal fine.

The Chilean strongman's activities also involved accounts at Banco de Chile and Espirito Santo Bank, the Senate subcommittee said.

Related accounts and transactions were also found in at least five other banks, including Bank of America, it said.

None of the banks immediately returned calls for comment.

Most of the Pinochet accounts at Citigroup, the world's largest financial services company, were handled by Citibank Private Bank, the report said.

"New information shows that the web of Pinochet accounts in the U.S. was far more extensive, went on far longer, and involved more banks than was previously disclosed," said Michigan Sen. Carl Levin, the panel's top Democrat.

"Some banks actively helped him hide his funds, others failed to comply with U.S. regulations requiring banks to know their customers," he said on Tuesday.

The report shows Pinochet had the longest and closest link with Riggs, an involvement more extensive than once thought.

Instead of the nine accounts first reported, it involved 28 and spanned 25 years, not eight. Riggs, a unit of Riggs National Corp., also opened accounts for Chilean military officers that were used to funnel $1.7 million to Pinochet-linked accounts, the Senate subcommittee said.


The first related accounts at Citigroup were opened in 1981 and the company has identified 63 U.S. accounts and certificates of deposit opened for Pinochet and his family in New York and Miami between then and 2004, the Senate subcommittee said.

Of those, 15 were opened for Pinochet personally over 14 years with another 19 in the name of his family members.

Citigroup also helped family members arrange international wire transfers and establish offshore entities. The bank issued credit cards and made loans to several family members, the Senate investigation found.

While Levin called Riggs' efforts to help Pinochet in a class of their own, he said Citigroup failed to conduct enough due diligence to determine the true identity of its customers and the sources of funds.

"We don't want to compare Citibank with Riggs," Levin said. "On the other hand, there was sloppiness and failure to know your customer, which they were supposed to do ... and we can't let them off the hook."

"We believe (Citibank's) failure to know their customer violated internal policies and general requirements of the regulators, but no specific regulations," Levin said.


More than 3,000 people died in political violence in the Pinochet era and tens of thousands more were tortured, imprisoned and exiled as the military suppressed opposition.

Pinochet, 89, kept his money hidden until last July when the Senate panel revealed he had stashed some $8 million at Riggs.

In January, Riggs pleaded guilty and agreed to a $16 million fine for violation of the U.S. Bank Secrecy Act. This related both to the Pinochet accounts and those of officials of oil-rich Equatorial Guinea.

Riggs also agreed in February to settle a Spanish lawsuit by paying $8 million into a fund for victims of the ex-dictator.

The scale of the transactions and bank secrecy rules in other nations limited the panel's ability to determine the total amount of Pinochet-related funds that moved through the U.S. system, Senate staff said.

Levin said the total was at least $15 million and could be much higher.

Dozens of human rights cases against Pinochet are in Chile's courts, but his defense team has kept him from trial so far. Even his staunchest supporters, who deem the repression justified given the Cold War context, had their faith shaken when his secret bank accounts were revealed and as Chilean courts launched probes into tax evasion, tax fraud and embezzlement.

Chilean authorities say Pinochet may have evaded as much as $17 million in taxes over the years.

Banco de Chile, Chile's No. 2 bank, held Pinochet accounts since 1973 and identified 24 New York and Miami accounts linked to him, including some offshore.

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