Riggs Bank Fined $16 Mln for Helping Chile's Pinochet (Update3)
March 29 (Bloomberg) -- Riggs Bank, branded a greedy ``henchman of dictators'' by a federal judge, was fined $16 million for helping former Chilean dictator Augusto Pinochet and the leaders of oil-rich Equatorial Guinea hide hundreds of millions of dollars in secret accounts.
U.S. District Judge Ricardo Urbina in Washington, who earlier questioned whether the fine was merely the cost of doing business for Riggs, today accepted the plea agreement between the Justice Department and the Washington-based bank. He ordered Riggs to pay the penalty immediately. The bank's parent, Riggs National Corp., is to be purchased by PNC Financial Services Group Inc. for $652 million.
``There is no way of measuring the amount of harm and atrocities and human rights violations perpetrated by Pinochet and Equatorial Guinea as a result of the enabling criminal activity by Riggs Bank,'' Urbina said. The bank ``now stands disclosed before this court as a greedy corporate henchman of dictators and their corrupt regimes.''
Pinochet, 89, ruled Chile following a 1973 military coup until 1990 and remained head of the country's armed forces until 1998. His regime killed or tortured thousands of Chileans.
In a 1996 letter to Pinochet, Joe L. Allbritton, then Riggs's chief executive officer, wrote that Chile had ``an excellent future thanks to you and the policies and reforms you instituted,'' according to a U.S. Senate subcommittee report.
Equatorial Guinea was cited for ``serious abuses'' in the U.S. State Department's 2004 human-rights survey. The report said there were arbitrary detentions of political dissidents and security forces tortured and beat prisoners, sometimes fatally. The government ``severely restricted freedom of speech and of the press,'' the report said.
Senate Report
The Senate subcommittee investigation last year determined that Pinochet, his relatives and military officers kept accounts at Riggs dating back to 1979. The bank's guilty plea covered an eight-year period when Pinochet was no longer the country's military dictator.
On March 16, Senate investigators said Pinochet and his family stashed at least $15 million in more than 125 secret accounts at Riggs, Citigroup Inc. and several foreign banks with U.S. operations. The Pinochet family had accounts at the U.S. branches of Banco de Chile and Espirito Santo Bank of Miami, a unit of Portugal's Banco Espirito Santo, the Senate report said.
In 1994, a delegation of Riggs executives led by President Timothy Coughlin, who retired last year, met with Pinochet to urge him to reopen accounts with the bank, the report said.
Lunch With Pinochet
Two years later, Allbritton attended a cavalry review and luncheon with Pinochet at the Chilean Army Calvary School. In a thank-you note that praised Pinochet's policies, Allbritton also said, ``I will be only too pleased to be of assistance to you and your country in anyway I can.''
Allbritton, the biggest shareholder of Riggs National Corp. relinquished his CEO position in 2001. He retired from the bank holding company's board last May after U.S. bank regulators fined Riggs $25 million for failing to report suspicious transactions.
Together, the $41 million in civil and criminal penalties almost equals profits for Riggs National Corp. from 1999 through 2003, Assistant U.S. Attorney Steven Durham told Urbina. As part of its settlement with the government, Riggs has shut down its private international banking business and a unit that served foreign embassies in Washington.
Careful Balance
Durham said the government struck a careful balance between punishing Riggs, weighed against its willingness to cooperate. A bigger fine could have meant a bank failure, Durham said, noting that Riggs has been losing money for a year.
Defense lawyer Mark Hulkower said Riggs deserved credit for its cooperation. ``The bank stepped forward at the earliest possible moment'' and offered to enter a guilty plea, he said. ``This is not a low-dollar plea.'' Hulkower noted that the $16 million fine is four times the amount of profit the bank made servicing the Pinochet and Equatorial Guinea accounts.
The fine ``is in the interest of justice as it does serve the purpose of sentencing,'' the judge said.
Riggs has agreed to continue to cooperate with the investigation. ``The investigation is far from over and I do expect there will be additional persons brought before your honor as a result of the bank's cooperation,'' Durham said.
Secret Accounts
Riggs Bank admitted that Pinochet stashed more than $10 million in secret accounts between 1994 and 2002. By 2003, top officials of Equatorial Guinea, including President Teodoro Obiang Nguema, had more than $700 million in cash deposits or loans from Riggs, prosecutors said in court papers. Obiang seized power in a 1979 military coup.
The bank pleaded guilty Jan. 27 to failing to report suspicious transactions by Pinochet and Equatorial Guinea's ruling family. Such reports must be filed with regulators under the Bank Secrecy Act.
Riggs also agreed in February to pay $8 million to settle claims in Spain by former victims of Pinochet's regime. In 1998, a Spanish judge tried unsuccessfully to extradite Pinochet to Spain to answer to charges of torture.
Riggs shares dropped 1 cent to $18.97 as of 2:50 p.m. New York time on the Nasdaq Stock Market.
http://www.bloomberg.com/apps/news?pid=10000086&sid=aELa77giX00w&refer=latin_america#
Bush Should Cry Uncle and Release Saudi Info
By Allan P. Duncan
6-28-03 opednews.com
"We will direct every resource at our command to win the war against terrorists, every means of diplomacy, every tool of intelligence, every instrument of law enforcement, every financial influence. We will starve the terrorists of funding." President George W. Bush, September 24, 2001
Tough words from Bush less than two weeks after the most devastating attack in American history. Over time though, they have become the words of a paper tiger when it comes to actually dealing with those who were clearly involved in financing the attacks on 9-11.
With the release of the Congressional Joint Inquiry Report on 9-11, the Bush Administration forced the redaction of 28 pages from the report on the role of Saudi Arabia and another unnamed country ( Pakistan is my guess), in financing Bin Laden. 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 about the long term 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-Hazmi. According to the report,
"This Joint Inquiry confirmed that these same two future hijackers, Khalid al-Mihdhar and Nawaf al-Hazmi, had numerous contacts with a long time FBI counterterrorism informant in California and that a third future hijacker, Hani Hanjour, apparently had more limited contact with the same informant."
"The informant has made numerous inconsistent statements to the FBI during the course of interviews after September 11, 2001."
The Administration has to date objected to the Inquiry's efforts to interview the informant in order to attempt to resolve those inconsistencies. The Administration also could not agree to allow the FBI to serve a Committee subpoena and deposition notice on the informant. Instead, written interrogatories from the Joint Inquiry were, at the suggestion of the FBI, provided to the informant. Through an attorney, the informant has declined to respond to those interrogatories and has indicated that, if subpoenaed, the informant would request a grant of immunity prior to testifying.
Why would The Administration want to block a more thorough investigation into what the FBI informant might have known?
Maybe because there is far more to this story than most people know.
One of the other characters involved in this story was Omar al-Bayoumi, supposedly just a simple Saudi student studying in the US. The report has some interesting things to say about this simple student though,
"Despite the fact that he was a student, al-Bayoumi had access to seemingly unlimited funding from Saudi Arabia. For example, an FBI source identified al-Bayoumi as the person who delivered $400,000 from Saudi Arabia for the Kurdish mosque in San Diego. One of the FBI's best sources in San Diego informed the FBI that he thought that al-Bayoumi must be an intelligence officer for Saudi Arabia or another foreign power."
Turns out that some of the money al-Bayoumi received was from Princess Haifa Al-Faisal, wife of the Saudi Ambassador Bandar Bin Sultan, and daughter of the late King Faisal. The money then ended up in the hands of Khalid al-Mihdhar and Nawaf al-Hazmi for monthly living expenses while they rented rooms in the home of the FBI informant.
The checks from Princess Haifa were drawn on Riggs Bank in Washington D.C. One of the chief officers of Riggs Bank is Jonathan Bush, an uncle of President George W. Bush.
According to Margie Burns in her article titled Bush-connected firm provided security at World Trade Center, "Given that Jonathan Bush, the president's uncle, is a Riggs executive, it is difficult to understand any obstacle for US authorities pursuing the recently reported "Saudi money trail." The princess's charitable activities were processed through Riggs, but attention focused on the Saudis seems not to extend to the US bank they used."
So this is most likely one of the main reasons why information relating to the funding of Al Qaeda by the Saudis has been redacted from the report. If Bush was really serious about starving the terrorists of their funding, he'd have to start by seizing Saudi money from his Uncle Jonathan's bank in Washington D.C.
So it appears to me, that the redaction of the Saudi information from the 9-11 Report had more to do with covering the President's own ass from the embarrassing fact that his own uncle was part of the Saudi money trail that enabled two of the hijackers to crash a plane into the Pentagon, and very little to do with jeopardizing our national security at all.
Allan Duncan is a Social Worker who lives in New Hope, PA. This article is copyright by Allan Duncan ADuncan282@aol.com originally published by opednews.com Permission is granted to forward this or to place it on a website if the article is included intact, including this statement
Oh ... .one more thing about Jonathan Bush....
He's another SKULL AND BONES alum...referred to in this article as a "fanatical Bonesman" for his active opposition to allowing women into the ultra-secret society
Powerful Secrets;
Alexandra Robbins. Vanity Fair. New York: Jul 2004., Iss. 527; pg. 116
There's the secrecy; the C.I.A. link; the crypt-like headquarters, called "the Tomb"; the bizarre rituals; and the roster of alumni, who include three presidents, two Supreme Court chief justices, and scores of Cabinet members, senators, and congressmen. No wonder Skull and Bones, most famous of Yale's undergraduate clubs, is a conspiracy theorist's delight. With two Bonesmen vying for the presidency-John Kerry was tapped in 1965, George W. Bush two years later-ALEXANDRA ROBBINS cuts through the Skull and Bones mystique to reveal its true hold on both candidates
There are certain sure signs of spring at Yale. Dogwood trees blossom across New Haven. The daffodils on Old Campus bloom. Freshmen turn their speakers to face the courtyard and blast music while they kick Hacky Sacks and throw Frisbees on the green. And a certain group of upperclassmen participate in a quiet but frenzied one-night ritual known simply as Tap Night.
Each of Yale's six major secret societies elects its members on the same night in April of the prospective members' junior year. In April of 1965 and 1967, respectively, John F. Kerry and George W. Bush received the same fateful call to the same mysterious organization: the undergraduate club perhaps mythologized more than any other by the outside world, Skull and Bones.
It's no secret that Skull and Bones, which elects 15 Yale juniors annually to meet in a crypt-like headquarters called "the Tomb," is no mere college club. The fact that the 2004 presidential election is a Bones-versus-Bones ballot raises eyebrows not just because it brings to light that, despite their ideological differences, both candidates come from the same echelon of American society but also because it's a bit astounding that a club with only about 800 living members has seen so many of them reach prominence. Conspiracy theorists are having a field day speculating about the group that has been called everything from "an international mafia" to "the Brotherhood of Death."
They are not completely wrong. Skull and Bones really is one of the most powerful and successful alumni networks in America. Alumni, or "patriarchs," return often to the Tomb, where connections are made and favors granted. Some classes have "Pat Night," an event where patriarchs mingle with "knights" (undergraduate members) and circulate job offers. Among its roster, Bones counts three U.S. presidents, two Supreme Court chief justices, and scores of Cabinet members, senators, and congressmen. Bonesman president William Howard Taft named two fellow Bonesmen to his nine-man Cabinet.
More good news for the fanatics: there is a strong link between Bones and the C.I.A. In Bush and Kerry's day, the agency was known as an "employer of last resort," says a Bonesman from the 1960s, since so many Bonesmen went on to join. "If you couldn't get a job elsewhere, you could go there if you wanted to." Because of the high numbers of Bonesmen in the C.I.A. and in the Time Inc. empire (Time-magazine co-founders Henry Luce and Briton Hadden were members), these organizations were "explicitly willing to take" Bonesmen seeking employment.
Many Bonesmen who had become C.I.A. operatives and government officials returned to the Tomb and discussed highly classified matters, as National-Security Adviser McGeorge Bundy reportedly did. "The things that fascinated me at Pat gatherings were the level of penetration ... and how open they were about talking in the Tomb," says a Bonesman who graduated in the 1980s. "They talked about foreign operations at the time, the stuff that became Iran-contra. The level of trust was startling. It was like once you were trusted enough to get in, people just talked openly."
Other illustrious alumni include Pulitzer Prize-winning biographer David McCullough; former New York Times general manager Amory Howe Bradford; actor James Whitmore; Morgan Stanley founder Harold Stanley; J. Richardson Dilworth, manager of the Rockefeller fortune; former Major League Baseball deputy commissioner Stephen Greenberg; and Walter Camp, the father of American football. During World War II, Bones' Henry Stimson, the secretary of war who often consulted fellow Bonesmen railroad heir W. Averell Harriman and poet Archibald MacLeish, hired four other Bones members for his War Department-Robert Lovett as assistant secretary of war for air, Artemus Gates as assistant secretary of the navy for air, George Harrison as a special consultant, and Harvey Bundy as his special assistant. In this respect, those in the conspiracy crowd who link Skull and Bones to the building of the atomic bomb are not entirely off base: Bonesmen were involved with its construction and deployment.
To be sure, it is an elite group. But while some members come away only with close friendships and peculiar college memories, others take Bones so seriously that they purposefully spread self-aggrandizing rumors about the society to fuel a culture of mystery. Some go as far as to threaten reporters. "The guys who take it really seriously are typically the ones who have lived the myth-the second- and third-generation Bonesmen who campaign to get in, and once they get in it's almost a religious fervor," the 1980s Bonesman says. Many Bonesmen spoke for this article only on condition of anonymity because, as one puts it, "I don't want to get in trouble with those guys." (Neither the White House nor the Kerry campaign returned repeated calls for comment.)
On April 28, 1967, the current president of the United States felt a clap on his shoulder. Contrary to numerous reports, Bush was not tapped by his father (although alumni occasionally participate in "tap"). By the time he got to Yale, Bush had several relatives in Skull and Bones, including his father and grandfather, but it was David Alan Richards who was assigned to tap him, likely because they both lived in the residential college Davenport. Richards met Bush in the Davenport courtyard, wearing his Tiffany gold Skull and Bones pin. "I was told that was my man. I smashed him on the shoulder, barked at him, 'Go to your room,' and followed my instructions," says Richards. "Now it's a matter of some embarrassment because I'm such a Democrat."
(A knight tells a prospective member to go to his room in a nod to Yale's early days, when Tap Day was held in a courtyard in front of an audience of hundreds. Once in private, the Bonesman intones, "At the appointed time tomorrow evening, wearing neither metal nor sulfur, nor glass, leave the base of Harkness Tower and walk south on High Street. Look neither to the right nor to the left. Pass through the sacred pillars of Hercules and approach the Temple. Take the right book in your left hand and knock thrice upon the sacred portals. Remember well, but keep silent, concerning what you have heard here.")
Richards's Bones experience-he was a knight in the class of 1967-intersected both Bush's (1968) and Kerry's (1966). "I have the odd feeling of being a center of the hinge," says Richards, now a real-estate attorney in New York. Of the election process, he says, "It's like picking the American soldiers for a World War II movie-one Jew, one Italian, one American Indian. You want a mix. You don't want everyone to be an Andover preppie who played lacrosse. Did we feel pressure [to elect Bush]? Are you aware of legacies when you're voting? Yeah. But he was well known to two intersecting circles. In my club there were three members of the fraternity D.K.E. and three people in Davenport, and he had the legacy going back several generations. I don't think W. was particularly interested in joining, but it was part of the family life. Do I believe reports that his father encouraged him to do it, as opposed to going into an underground [society] to drink? It's likely. I suspect family pressure was put on him."
Some of those relatives, including Bush's father and grandfather, attended his initiation in the Tomb, says Richards. "All I will say about his initiation," another patriarch who was present says, "is that he caught on pretty quickly and I was pleased with his response." The society is so secretive about Bush's time in Bones that the scrapbooks from his year-each class keeps candid brown-paged scrapbooks to memorialize the experience-have been sealed so knights can't read them. "If those scrapbooks were as obscene as ours were, it's a good thing for the White House and for the society," a Bonesman of that period muttered.
Bones largely presented a departure from Bush's usual college escapades. No alcohol is allowed inside the Tomb, and much of the time inside is spent on debates and delivering "life histories," or oral autobiographies. When George H. W. Bush gave his life history in the fall of 1947, he focused on his military service, married life with Barbara, and his hope to "have an impact in public service," one of his clubmates says. George W. Bush, by contrast, spent most of his presentations in the Tomb speaking about his father-reportedly in "almost God-like terms."
Life histories, as well as initiation rites, the rumored "Connubial Bliss" ritual, and the twice-weekly meetings, all occur in the Tomb. The Tomb has been the Skull and Bones haunt since 1856, when Daniel Coit Gilman, the founding president of Johns Hopkins University, incorporated Bones as the Russell Trust Association, now re-incorporated as RTA. A three-story Greco-Egyptian monolith of brown sandstone, "the T," as Bonesmen refer to it, sits on High Street in the middle of the Yale campus. No non-members-"barbarians," in Bones lingo-are allowed to enter. Inside the Tomb, the halls have been decorated by renowned architect John Walter Cross (a Bonesman) with pieces by distinguished painters such as J. Alden Weir (a barbarian). Dozens of skeletons and skulls grip the walls, surrounding such items as a mummy, gravestones-including one labeled "Tablet from the grave of Elihu Yale [the school's namesake] taken from Wrexham churchyard"-and war memorabilia.
The dining room, which members call "the boodle," is the most impressive chamber in the Tomb, decorated with engraved silver and bronze skulls and 30-foot-high windows that overlook a lush courtyard. The room is blanketed by portraits of the most illustrious Bones alumni, including William Howard Taft; Supreme Court chief justice Morrison Waite; Kerry's classmate Dick Pershing, who was killed in the 1968 Tet offensive; and, as of 1998, former president George H. W. Bush. The skulls and crossbones stamp everything from skull-shaped crockery to exit signs printed with letters composed of tiny skulls. Light shines through the gaping eye sockets of skulls bordering otherwise elegant fixtures. There are grand fireplaces on either side of the room which double as goals for the violent soccer-hockey hybrid Bones sport known as "boodleball."
One of the most avid boodleball players of his year was John Kerry. Kerry, along with Dick Pershing, David Thorne (a publishing executive in Massachusetts), and Fred Smith (the founder of FedEx) played boodleball as often as possible. The game, which involves a half-deflated ball and frequently leaves Bonesmen bleeding, is supposed to be played in the dining room only after it is cleared of couches and other furniture. "The four of us were the core of the boodleball group," says Thorne. "Freddie Smith was a maniac, and Dick broke his toe once. There were a lot of very hard obstacles in the way and we didn't bother moving them."
Kerry came to treasure his boodleball teammates more than the men on his college teams. By all accounts Kerry, who may have felt like an outsider as a Catholic at St. Paul's, his extremely Waspy Episcopalian prep school, thrived at Yale. He was president of the Political Union, a debater, and an athlete who played soccer, ice hockey, and lacrosse. He was friendly with about half a dozen members of his 1966 Bones class before they entered Bones, and was tapped by his St. Paul's friend John Shattuck, who would go on to be an assistant secretary of state under Clinton.
In the Tomb, Kerry bonded closely with the other knights and often steered conversations toward Vietnam and politics. Kerry helped Smith resurrect Yale Aviation, once an influential naval-air-reserve unit founded by Bonesmen during World War I. "Bones was one of the most meaningful parts of his life because of the focus and intensity that came from that experience: the regularly scheduled meetings, the amount of time you formally and informally spend with a group of people that created a bond, and a focus you don't get out of other activities like athletic teams. He remains very close to the guys. Most of us would go out of the way to help each other, no questions asked," says Thorne, Kerry's closest friend and former campaign manager, who became Kerry's brother-in-law when Kerry married Thorne's twin sister, Julia. (Kerry's second wife, Teresa, had become the daughter-in-law of a Bonesman when she married her first husband, Senator John Heinz.)
Other Bonesmen say Kerry was "delighted" by Skull and Bones because it built and cemented strong friendships. Fellow Bonesman Chip Stanberry (1966) was Kerry's partner for three years on Yale's debate team, but he says the friendship didn't grow close until they went through Bones together. "We think of politicians as garrulous and backslapping. John was private and reserved. He was shy to jump into a crowded circle of four guys having a beer. People therefore mistook him as aloof," Stanberry says. In the protective environment of the Tomb, however, Kerry "relaxed, he was more natural. He broke out of whatever that shy, reserved part of his person was. John took it seriously, and it meant a lot to him. Of course, John took everything seriously."
As are all matters relating to Bones, the origin of the society is shrouded in mystery. The most plausible story has Yale student William Russell, later a Civil War general and Connecticut state representative, studying abroad in Germany in 1832. He returned to Yale dismayed to find that Phi Beta Kappa, until then a secret society, had been stripped of its secrecy in the anti-Masonic fervor of the time. Incensed, Russell grabbed some big men on campus, including future secretary of war Alphonso Taft, and formed an American chapter of a German society. The group was founded on the legend that when Greek orator Demosthenes died, in 322 b.c., Eulogia, the goddess of eloquence, arose to the heavens. Originally called the Eulogian Club, the society holds that the goddess returned to take up residence with them in 1832.
Hence the importance of the number 322 to Bones members-Kerry has used 322 as a code, and Thorne uses 322 as his phone extension; W. Averell Harriman used it as the combination of the lock on a briefcase carrying dispatches between London and Moscow-and the obsession with the goddess Eulogia. Members open a shrine to her at Thursday- and Sunday-night meetings, and regularly sing "sacred anthems" about her.
Both 322 and Eulogia are central symbols in the society's initiation. When an initiate approaches the Tomb for the ceremony, the front door creaks open and knights immediately cover his head with a hood. After a brief stay in "the Firefly Room," a pitch-black living room in which his hood is removed to reveal the lit cigarettes the patriarchs wave to resemble fireflies, he is whirled throughout the building and the grounds.
The heart of the ceremony is in Room 322-the Inner Temple, or "I.T." There, a group of knights (led by a distinguished patriarch known for the evening as Uncle Toby, dressed in a distinctive robe) awaits the initiate, wearing masks and various costumes, including the Devil, Don Quixote, Elihu Yale, and a Pope with one foot sheathed in a monogrammed white slipper that rests on a stone skull. Other knights are dressed as skeletons, and patriarchs line the halls, where their solemn duty is to yell so loudly they scare the new member.
One by one, each neophyte is led into the I.T., where he's shoved around to various features of the room, including a picture of Eulogia, and forced to do things such as read a secrecy oath repeatedly, kiss the Pope's foot, and drink "blood" from "the Yorick," a skull container usually holding red Kool-Aid. Finally, the initiate is shoved to his knees in front of Don Quixote as the shrieking crowd falls silent. Quixote taps him on the left shoulder with a sword and says, "By order of our order, I dub thee Knight of Eulogia."
Soon after initiation, each knight is assigned a Bones name, which the society will call him from then on. There are three ways to acquire a nickname: receive one from a patriarch who wishes to pass his down, as Bankers Trust head Lewis Lapham (father of the Harper's editor of the same name) passed "Sancho Panza" to political adviser Tex McCrary; accept a traditionally assigned name, such as "Magog," which is given to the knight with the most sexual experience (Robert Alphonso Taft and William Howard Taft each earned this distinction); or choose your own (McGeorge and William Bundy chose "Odin," Supreme Court justice Potter Stewart-who swore in George H. W. Bush as director of the C.I.A. and vice president-chose "Crappo," W. Averell Harriman and Dean Witter Jr. were "Thor," and Henry Luce opted for "Baal"). John Kerry likely came close to earning the name "Long Devil," the traditional tag for the tallest man in the club, but narrowly missed-Alan Cross, now a doctor in North Carolina, is taller. Kerry chose his own name, but Bonesmen are keeping it quiet. George W. Bush, unable to come up with his own name, was dubbed "Temporary" and never managed to decide on a replacement.
At the end of the school year, the new group of 15 is whisked away to Deer Island in the Saint Lawrence River, 340 miles from New York City; the 50-acre private island was given to the society by a Bonesman at the turn of the 20th century. Both Kerry and Bush returned to the island as seniors. Kerry's group prepared to go to Vietnam. (Kerry spent his time there rewriting his class oration in a rustic cabin by candlelight.) Bush's club spent their time digesting the news that Bobby Kennedy had been shot.
When the knights return from summer break, they almost immediately launch into the activity that a knight from Prescott Bush's class once called "a wonderful sensation." Perhaps the most prevalent rumor about Bones is that initiates must lie naked in a coffin and masturbate while recounting their sexual histories. Naked coffin exploits aren't officially on the Bones program, but part of the rumor is not too far from the truth: at successive Sunday meetings, each knight has an evening devoted to him for the activity known as "Connubial Bliss." In a cozy room lit only by a crackling fire, in front of 14 clubmates lounging on plush couches, he stands before a painting of a woman named Connubial Bliss while the knights sing a sacred anthem about romance, ending with "so let's steal a few hours from the night, my love." Then he is expected to recount his entire sexual history.
Apparently this ritual has remained unchanged since the acceptance of women into the club in 1991. A group of Bonesmen led by William F. Buckley Jr. (Bones name: Cheevy) obtained a court order blocking initiation of the society's first female members, claiming that admitting women would lead to "date rape" in the "medium future." Approximately 83 women have since been admitted, despite feverish lobbying by W.'s uncle Jonathan Bush, whom a fellow member called a "fanatical Bonesman." Neither Bush's nor Kerry's daughters are members, however. Kerry's daughter Vanessa wasn't tapped in 1998, and last year Bush's daughter Barbara decided to join Spade and Chalice, an underground (less formal, tomb-less) society.
For all the mystery and conspiracy theories surrounding Skull and Bones, the club's deepest secret may be its most obvious: the bonds between Bonesmen often supersede others. "For some people, Skull and Bones becomes the most important thing that ever happened to them, and they tend to stay involved," a patriarch told me. Indeed, the year spent as an undergraduate in the club is really only the beginning of a lifetime membership that can, depending on how it is used, reap enormous benefits.
As his father and grandfather had done before him, George W. Bush called a Bonesman when he was looking for his first job out of college. Although Robert Gow wasn't hiring at the time, he still took on Bush as a management trainee at his Houston-based agricultural company Stratford of Texas. In 1977, when Bush formed his first company, he turned to his uncle Jonathan Bush, who lined up $565,000 from 28 investors. One investor brought in approximately $100,000: California venture capitalist William H. Draper III, a Bonesman. Even Bush's Rangers baseball deal involved a Bonesman-Edward Lampert (Bones 1984) was an initial investor.
Bonesmen used to grant favors if a fellow member began a conversation with the code phrase "Do you know General Russell?" By the time he was running for president, Bush didn't have to ask. In October of 2000, Stephen Adams (Bones 1959), who owns Adams Outdoor Advertising, spent $1 million on billboard ads in key states for Bush. When asked a few years ago why he had made such a large contribution to someone he hadn't met, Adams replied that the shared Bones experience was a factor. Even a 1970s Bonesman who tried to quit the society admitted he would readily help a fellow Bonesman "just because of Bones. Because we did go through something really weird together."
Bush apparently feels the same way. One of the first social gatherings he held in the White House was a reunion of his Skull and Bones 1968 clubmates, and within the past two years he held another reunion, this time at Camp David. One of Bush's early appointments as president was Robert McCallum Jr. (Bones 1968), now associate attorney general. (In 2002, McCallum, whose Justice Department civil division includes attorney and 1984 Bonesman David Wiseman, filed pleadings in U.S. District Court asserting an executive privilege that would make information on presidential pardons more secret than in the past.) Among Bush's other Bones appointees are Bill Donaldson (1953), chairman of the Securities and Exchange Commission (and onetime director of the Deer Island Corporation); Edward McNally (1979), general counsel of the Office of Homeland Security and a senior associate counsel to the president; Rex Cowdry (1968), associate director of the National Economic Council; Roy Austin (1968), ambassador to Trinidad and Tobago; Evan G. Galbraith (1950), the secretary of defense's representative in Europe and the defense adviser to the U.S. mission to nato; James Boasberg (1985), associate judge of the superior court of the District of Columbia; former Knoxville mayor Victor Ashe (1967), the first mayor appointed to the board of directors of the housing-finance company Fannie Mae; Jack McGregor (1956), a nominee for the Saint Lawrence Seaway Development Corporation advisory board, the same waterway that is home to Deer Island; and Bush's cousin George Herbert Walker III (1953), ambassador to Hungary. Frederick Smith (1966) was reportedly Bush's top choice for secretary of defense until he withdrew from the running because of health reasons.
Bonesmen say the president values the society because it became an extension of his family: the Bush-Walker web in Bones includes at least 10 members, including those who, like Reuben Holden (Bones name: McQuilp), married in. Donald Etra, a member of Bush's 1968 Bones club and a close friend who regularly visits the president, says Bones is important to Bush because "loyalty and tradition is important to the family." But Bush views Bones, he adds, "as a private matter which he does not discuss. The president believes there's still a realm where privacy counts."
Bones loyalty runs deep in John Kerry too. In 1993, Kerry, who, like Bush, has participated in several reunions with his clubmates, organized a meeting and a visit to Arlington National Cemetery on the 25th anniversary of Dick Pershing's death. When Pershing died, Kerry wrote to his own parents that Pershing "was so much a part of my life at the irreplaceable, incomparable moments of love, concern, anger and compassion exchanged in Bones that can never be replaced." After the trip to the gravesite, 10 members convened at a Washington hotel to talk about Pershing, Bones, and one another. "It was very, very moving and poignant," says Chip Stanberry. "It was neat that John went to the trouble to make it happen, and 30 years later we were able to pick up with each other, immediately identifying, feeling a connection." Kerry has also been back to the Bones Tomb a few times and once delivered a speech there. "When he's got a little time, he stops in. Most of us do," Thorne says.
On at least one occasion, Kerry took on a more involved Bones role. In 1986, Jacob Weisberg, now the editor of Slate, was taking time off from Yale to intern at The New Republic, in Washington, D.C., when he received a call from Kerry's secretary. "Senator Kerry wants to see you in his office," the secretary said. "He won't tell me what it is about."
Weisberg showed up at the senator's office at eight a.m. Initially, Kerry made small talk while Weisberg wondered why he was there. Then Kerry tapped him for Bones. Weisberg, who hadn't known Kerry was a member, was stunned.
"Senator Kerry," Weisberg said, "you're a liberal-why do you support this organization that doesn't admit women?"
Kerry listed his efforts to assist women throughout his career. "I've marched with battered women. I've supported women's rights. No one can question my dedication to women." Weisberg said he wasn't interested. Kerry replied, "Promise me you'll think about it before saying no."
When Weisberg called Kerry back, his call went straight through to the senator. He rejected the offer, and Kerry, Weisberg recalls, said he was disappointed.
Kerry's fellow Bonesmen say the senator considers Skull and Bones a valuable part of his college life and a source of lasting friendships-but no more than that. "I don't think it plays a significant role in his thinking or in his circle of advisers," says Alan Cross. Indeed, a glance through notable figures in Kerry's life reveals only the Bonesmen whom he knew before they were tapped. And Kerry, as an anti-war Vietnam veteran, publicly railed against fellow Bonesman McGeorge Bundy in testimony before the Senate Foreign Relations Committee in 1971.
"[Kerry's] family carried the name Forbes, but John was never comfortable as a part of the Establishment," says Thorne, who adds that the 1966 group wasn't the "elite Establishment type." "He achieved what he achieved on his own. His is a life marked by intellectual and other kinds of achievement, not by who you know. That's just how he was."
Thorne has friends in both the Kerry and Bush families, and has discussed the Bones-versus-Bones election with Kerry and with first cousin Brinkley Thorne, one of Bush's fellow 1968 Bonesmen, who has remained close to the president. When I asked David Thorne why Kerry dismisses inquiries about the society, he said the Bones face-off is simply a source of amusement. "It's kind of an amazing coincidence, and so much elitism can be drawn from it. The accusation of all the mysteries attributed to Bones-is this the big one?" Thorne laughs. "I think John feels it's not relevant to the election, like marriage or divorce. It's a private matter. Bones is no less meaningful to George than it was to John, and I'm sure they both know of their own experience and they acknowledge that."
Certainly neither man is speaking about Bones in public. "It's a secret," Kerry deadpanned when Tim Russert asked him about Bones on Meet the Press. "It's so secret we can't talk about it," Bush responded when Russert asked him a similar question in February 2004.
Despite political differences, most members view the upcoming election with a mixture of pride in the society and embarrassment at the increased scrutiny. As they see it, Bones will have a White House connection either way. "It's a win-win situation," says a 1960s Bonesman. "If there is a goddess, it looks like she is smiling on them both."
The Washington Post
May 6, 2005 Friday
The Personal Side Of Riggs's Money;
Investigators Examine Benefits Allbritton Gained From Bank's Assets
Terence O'Hara, Washington Post Staff Writer
On Feb. 4, 2003, John Koloszar, the personal driver and bodyguard for Joe L. Allbritton, drove off the Euro Motorcars lot in Bethesda in a sparkling new, emerald green Mercedes sedan, fully loaded. The S430, with a V-8 engine and all-wheel drive and tan interior, had 12 miles on it. The price tag: $91,444.
According to sources, Koloszar drove Allbritton's new ride to the 17th Street NW headquarters of Riggs Bank and presented the invoice to David Eisner, a manager in accounts payable. Eisner -- a longtime Riggs employee who was accustomed to cutting checks for items purchased by the Allbritton family for the bank -- refused to authorize payment.
Eisner was backed up by bank Chief Financial Officer Steven T. Tamburo: Allbritton was not a bank employee; it wasn't company policy to provide cars for directors, and the automobile had not been bought through normal channels.
Then Koloszar asked the president of the bank, Lawrence I. Hebert, to authorize payment.
Hebert did. And Allbritton had his green Mercedes, paid for by the shareholders of Riggs.
At the time, Allbritton was a board member but not a Riggs employee. He had resigned as chief executive two years earlier, handing over management to his son, Robert, and his longtime business lieutenant, Hebert.
In Allbritton's years at Riggs, even as he began to relinquish control, he often used the bank to pay for expensive items and services from which he and his family benefited, according to sources with direct knowledge and other people familiar with an ongoing Department of Justice investigation into use of the bank's assets. The sources, and vehicle ownership records, also confirmed how payment was obtained for the Mercedes.
"The Allbrittons at all times adhered to all applicable laws and regulations, including those of the IRS as well as corporate policy," said Paul Clark
The investigations are an outgrowth of two years of trouble at the bank, including a record fine for failing to abide by federal anti-money-laundering laws and revelations of suspicious transaction in accounts held by former Chilean dictator Augusto Pinochet and the dictator of Equatorial Guinea. Riggs agreed to be acquired by PNC Financial Services Group Inc. in a merger that is scheduled to be completed May 13.
Other examples of Allbritton's use of bank assets include:
* The use of bank employees, including one skilled in calligraphy, and bank equipment to create personal stationery, including invitations for wedding-related parties for Robert in 2003.
* Riggs employed a driver, a fitness instructor and a massage therapist whom Joe Allbritton used.
* Spending on high-price personal items and gifts, including a $1,000 three-piece luggage set, a $5,000 set of pillows for the bed at the company's London apartment, and a $2,500 Rolex watch for a representative of the Gulfstream Aerospace Corp., which made Riggs a specially modified, $39.2 million jet.
* More than $4 million in expenses to maintain an apartment in London, including a $250,000 renovation in 2002 and 2003. While the residence, adjacent to and maintained by the posh Savoy hotel, was used a few times a year to host business meetings, sources familiar with its use said Joe and his wife, Barbara, also a director, used it whenever they visited London.
* Gulfstream jets that cost the company more than $30 million to operate from 1996 to 2004, with most of its time in the air devoted to flying the Allbrittons and friends on personal travel.
None of the non-jet expenditures, including the Mercedes, which Riggs sold last year for less than $50,000, were disclosed to shareholders because the company treated them as business expenditures. And because the taxable benefit to Allbritton for his personal use of the jet was low -- in part because of a favorable, now-changed tax treatment used by the bank -- shareholders were not told until last year how much it cost to fly the Allbrittons to their homes, vacation spots, horse races and shopping trips.
Riggs is disappearing. Next week, its merger will be completed, its board will disband and the institution will pass into history. Board members and management will face shareholders for the last time today at 9 a.m., in the company's Corcoran branch, across from the U.S. Treasury.
Company policy required the board's audit committee to regularly review Allbritton's expenses.
Government sources say that the U.S. attorney's office in the District, the Internal Revenue Service and the Office of the Comptroller of the Currency are investigating whether bank assets were misused but that it is too early to say what direction those investigations will take.
"As previously disclosed, Riggs is working closely with regulators and other government officials on a variety of issues," said spokesman Mark N. Hendrix. "Because of the sensitivity of these matters, it would be inappropriate for Riggs to comment any further."
In his last 10 years as chief executive, Allbritton was paid more than $15 million in cash, in addition to being given options on several million shares of Riggs stock. During those years, Riggs consistently performed well below its peer banks, in part because of its high overhead. Total deposits shrank during a period of historic growth in retail banking.
Key to the ongoing investigations, sources say, are the circumstances under which Riggs's Gulfstream V jet was purchased in 1998 and the income Riggs reported on Allbritton's W-2 forms to the IRS for his personal use of that jet and a Gulfstream III the bank had owned previously.
Because Federal Aviation Administration regulations generally make it impractical for companies to require reimbursement for personal use of corporate aircraft, most companies don't. Instead, personal use of a company aircraft is added to employee income as a fringe benefit.
But IRS rules on calculating the benefit are based on the cost of a first-class commercial air ticket. The costs of flying jets such as Riggs's former Gulfstreams are much higher.
According to Riggs's calculations, Allbritton's benefit from the use of the jets was low enough that the company was not obligated to report it to shareholders.
In April 2004, to comply with evolving SEC guidance on the disclosure of perks, Riggs changed the way it reported Allbritton's personal use of the Gulfstream V. As a result, Riggs put that cost at $251,187 in 2002, $334,552 in 2003 and $189,000 in 2004. However, Allbritton continued to report the IRS-defined lower benefit on his taxes for those years.
One reason Allbritton was able to report a lower benefit was a tax-code regulation that applies to top executives or directors of companies. Under the "working conditions safe harbor" provision, companies may require top executives to use company-owned aircraft for all personal and business travel. If the company can demonstrate that an executive might face a "bona fide" physical threat traveling by commercial carrier, the executive's tax liability is cut in half.
Riggs relied on a 1994 assessment by Vance Security, which then provided guards for Riggs branches. The study cited a threat to Allbritton in the late 1970s, when he owned the Washington Star newspaper. The assessment was done when, under a change in policy, Riggs stopped requiring Allbritton to reimburse the company for personal use of the aircraft.
One company financial executive and an accountant with Arthur Andersen LLP, the bank's auditing firm at the time, questioned the use of the provision. In a 1994 memo, the accounting firm warned Riggs that it was taking a "material risk" by claiming a security threat to Allbritton, based on the accounting firm's belief that the Vance assessment did not establish one. Nonetheless, Riggs used the security threat to justify a lower benefit to Allbritton for 10 years, even though the security assessment was never updated during that time.
Allbritton spokesman Clark said attorneys for the family who worked on the matter said that Andersen actually suggested using the working condition safe harbor and that they have no recollection of Andersen objecting to its use.
While jet use cost shareholders more than $30 million from 1996 to 2004, and Allbritton used the planes more than half the time, his imputed income for that use was less than half a million dollars, according to sources familiar with the investigation.
Allbritton received board approval to purchase a new jet in 1998. In that March 13 letter to the board, he cited two reasons for purchasing the $39.2 million plane. The new plane would be quiet enough to meet noise restrictions at many airports, and it would have an extended flying range that would be helpful in visiting international clients. Allbritton described Riggs's international business as "profitable" and "growing."
It was at the time, but in subsequent years the international operations lost money and began to shrink, according to company SEC filings. One reason profit declined was high overhead costs, including the cost of the corporate jet.
The letter seeking approval to buy the aircraft told directors that it would cost $39.2 million -- but left out one reason why. Sources familiar with the costs said they included more than $1 million in special interior modifications. Those included the removal of several seats so a large galley could be installed to prepare special meals. The Allbrittons also ordered a second bathroom to be installed to be used by pilots and the steward, leaving the aft bathroom for them.
Before 1995, the year Riggs stopped reporting the value of Allbritton's personal use of company aircraft, shareholders had repeatedly questioned having a corporate jet. And for three years in the early 1990s, Allbritton was forced to justify it at annual meetings.
"Beyond the shadow of a doubt, it is a profitable item for the bank," he told shareholders at an annual meeting in May 1994, according to an account in the Washington Times.
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