Monday, June 11, 2007

Bandar-Gate USA - The Riggs Bank Connection

By Cernig

Newsweek: Hundreds of pages of confidential U.S. bank records may be the missing link in illuminating new allegations that a major British arms contractor funneled up to $2 billion in questionable payments to Saudi Prince Bandar bin Sultan.

By now you are probably aware that a massive scandal is underway in the UK concerning an alleged $2 billion dollars in bribes consultancy fees paid by UK defense giant BAe to Prince Bandar of Saudi Arabia, Bush's best friend in the Kingdom. The scandal has only been fuelled by Tony Blair closing down an official enquiry into the affair on grounds of "national security". I wrote last Friday about one possible bit of fallout from the scandal here in the US - the proposed purchase of US defense company Armor Holdings by BAe.

The latest issue of Newsweek points up another way in which the scandal in the UK could impact on the American political scene.
Before the U.K. closed the inquiry, British investigators contacted the U.S. Justice Department seeking access to records related to the Saudi bank accounts. Many of these records were first obtained by NEWSWEEK in 2004. At the time, the magazine reported that federal regulators had been alerted to millions of dollars in "suspicious" activities in Saudi accounts at the now-defunct Riggs Bank.

...The Riggs Bank records show the use of those funds raised concerns among bank officials and U.S. regulators. In November 2003, Riggs filed a "suspicious activity report" with the Treasury Department disclosing that over a four-month period, $17.4 million from the Saudi Defense account had been disbursed to a single individual in Saudi Arabia. When Riggs officials asked the Saudis who the person was and why he was receiving the funds, they were told the individual "coordinates home improvement/construction projects for Prince Bandar in Saudi Arabia," and the payments were for a "new Saudi palace," one document shows.

In another instance, Bandar wired $400,000 from a Riggs account to a luxury-car dealer overseas. "It was impossible to distinguish between government funds and what would normally be considered personal purposes," said David Caruso, who served as Riggs's compliance officer at the time. Caruso also confirmed to NEWSWEEK that the Saudi Defense account was regularly replenished with $30 million each quarter from an account in London. But the bank never knew the source of the funds. The bank was so concerned about the withdrawals that it cut off all business with the Saudis. In May 2005, the U.S. Treasury fined Riggs $25 million for failing to monitor "extensive and frequent suspicious" activity in Saudi and other accounts. (Asked about the Riggs records, Bandar's lawyer said the palace in question was "Prince Bandar's official residence" in Saudi Arabia and that audits by the Saudi Finance Ministry found "no irregularities" in the Saudi accounts while Bandar was ambassador.)
I reckon the chance of any Saudi official audit showing criminally corrupt irregularities in a Saudi prince's affairs is about as likely as turkeys voting for Thanksgiving, myself.

But, of course, 2003 wasn't the first time irregular goings-on involving Prince Bandar and Riggs Bank had been noticed. Two of the 9/11 hijackers were funded by money that had its origins in the Riggs account of Princess Haifa bint Faisal, the daughter of the late King Faisal and wife of Prince Bandar, according to one MSNBC report from 2002. Back then, there was considerable anger at Buish administration reluctance to allow Congress access to classified data on the matter.
Questions over the money trail have enflamed a fierce, behind-the-scenes struggle between two congressional committees looking into 9-11 and the Bush administration. Senate Intelligence Committee co-chairman Robert Graham of Florida, a Democrat, and Richard Shelby of Alabama, a Republican, believe that the FBI failed to fully investigate 9-11. The lawmakers suspect that the administration does not want to look too closely at Saudi connections to the hijackers. The White House clearly fears jeopardizing U.S.-Saudi relations. In addition to Saudi oil, the United States needs Saudi bases to stage a possible invasion of Iraq. Administration officials reluctantly confirmed to NEWSWEEK that money had moved from Princess Haifa's account to al-Bayoumi, but they stressed that they do not know the purpose of the payments or whether any Saudi officials were even aware of them. "The facts are unclear, and there's no need to rush to judgment," said one administration official. In meetings with intelligence committee leaders, Vice President Dick Cheney, Attorney General John Ashcroft and others have adamantly rejected attempts to declassify the information, citing national-security concerns.
In February 2005, Riggs Bank voluntarily paid a $16 million fine for violations of the U.S. Bank Secrecy Act (an affair during which it was revealed that the bank had extensive ties to the CIA), after previously being fined $25 million for involvement in money-laundering. At the same time, (incidentally, a period when George's uncle Jonathan Bush was a senior executive at Riggs), long-running Justice Department investigation into affairs at the bank was suddenly ended. Riggs Bank was aquired by PNC Bank and the Riggs name disappeared.

So now there's a new $2 billion question. Was the sudden ending of investigations a move to cover up embarassing mistakes in the lead up to 9/11, to bail out Uncle Jonathan...or done to protect Prince Bandar from the BAe bribery corruption scandal - something that the Bush administration must have had knowledge about all along?

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