S. Hrg. 108–633 MONEY LAUNDERING AND FOREIGN CORRUPTION: ENFORCEMENT AND EFFECTIVENESS OF THE PATRIOT ACT HEARING BEFORE THE PERMANENT SUBCOMMITTEE ON INVESTIGATIONS OF THE COMMITTEE ON GOVERNMENTAL AFFAIRS UNITED STATES SENATE ONE HUNDRED EIGHTH CONGRESS SECOND SESSION JULY 15, 2004 Printed for the use of the Committee on Governmental Affairs ( VerDate 0ct 09 2002 08:29 Oct 15, 2004 Jkt 095501 PO 00000 Frm 00001 Fmt 6011 Sfmt 6011 C:\DOCS\95501.TXT SAFFAIRS PsN: PHOGAN COMMITTEE ON GOVERNMENTAL AFFAIRS SUSAN M. COLLINS, Maine, Chairman TED STEVENS, Alaska JOSEPH I. LIEBERMAN, Connecticut GEORGE V. VOINOVICH, Ohio CARL LEVIN, Michigan NORM COLEMAN, Minnesota DANIEL K. AKAKA, Hawaii ARLEN SPECTER, Pennsylvania RICHARD J. DURBIN, Illinois ROBERT F. BENNETT, Utah THOMAS R. CARPER, Delaware PETER G. FITZGERALD, Illinois MARK DAYTON, Minnesota JOHN E. SUNUNU, New Hampshire FRANK LAUTENBERG, New Jersey RICHARD C. SHELBY, Alabama MARK PRYOR, Arkansas MICHAEL D. BOPP, Staff Director and Chief Counsel JOYCE A. RECHTSCHAFFEN, Minority Staff Director and Counsel AMY B. NEWHOUSE, Chief Clerk PERMANENT SUBCOMMITTEE ON INVESTIGATIONS NORM COLEMAN, Minnesota, Chairman TED STEVENS, Alaska CARL LEVIN, Michigan GEORGE V. VOINOVICH, Ohio DANIEL K. AKAKA, Hawaii ARLEN SPECTER, Pennsylvania RICHARD J. DURBIN, Illinois ROBERT F. BENNETT, Utah THOMAS R. CARPER, Delaware PETER G. FITZGERALD, Illinois MARK DAYTON, Minnesota JOHN E. SUNUNU, New Hampshire FRANK LAUTENBERG, New Jersey RICHARD C. SHELBY, Alabama MARK PRYOR, Arkansas RAYMOND V. SHEPHERD, III, Staff Director and Chief Counsel LELAND B. ERICKSON, Counsel ELISE J. BEAN, Minority Staff Director and Chief Counsel ROBERT L. ROACH, Minority Counsel and Chief Investigator MARY D. ROBERTSON, Chief Clerk (II) VerDate 0ct 09 2002 08:29 Oct 15, 2004 Jkt 095501 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 C:\DOCS\95501.TXT SAFFAIRS PsN: PHOGAN C O N T E N T S Opening statements: Page Senator Coleman .............................................................................................. 1 Senator Levin .................................................................................................... 4 Senator Lautenberg .......................................................................................... 17 Senator Fitzgerald ............................................................................................ 33 Prepared statements: Senator Shelby .................................................................................................. 75 WITNESSES THURSDAY, JULY 15, 2004 Lawrence I. Hebert, President and Chief Executive Officer, Riggs Bank N.A. .. 10 Raymond M. Lund, Former Executive Vice President, International Banking Group, Riggs Bank N.A. ...................................................................................... 10 R. Ashley Lee, Executive Vice President and Chief Risk Officer, Riggs Bank N.A. ....................................................................................................................... 10 Daniel P. Stipano, Deputy Chief Counsel, Office of the Comptroller of the Currency, U.S. Department of the Treasury ..................................................... 43 Jennifer C. Kelly, Deputy Comptroller, Mid-Size and Credit Card Bank Su- pervision, OCC ..................................................................................................... 43 John Noonan, Former Assistant Deputy Comptroller, OCC ................................ 43 Lester Miller, Examiner-In-Charge (Riggs Bank), OCC ....................................... 43 Andrew P. Swiger, Executive Vice President, ExxonMobil Production Com- pany, Houston, Texas .......................................................................................... 63 Albert J. Marchetti, Vice President, International and Federal Relations, Amerada Hess Corporation, New York, New York ........................................... 64 Steven P. Guidry, Central Africa Business Unit Leader, Marathon Oil Com- pany, Houston, Texas .......................................................................................... 66 ALPHABETICAL LIST OF WITNESSES Guidry, Steven P.: Testimony .......................................................................................................... 66 Prepared statement .......................................................................................... 122 Hebert, Lawrence I.: Testimony .......................................................................................................... 10 Prepared statement .......................................................................................... 76 Kelly, Jennifer C.: Testimony .......................................................................................................... 43 Prepared statement .......................................................................................... 86 Lee, R. Ashley: Testimony .......................................................................................................... 10 Prepared statement .......................................................................................... 76 Lund, Raymond M.: Testimony .......................................................................................................... 10 Prepared statement .......................................................................................... 76 Marchetti, Albert J.: Testimony .......................................................................................................... 64 Prepared statement .......................................................................................... 118 Miller, Lester: Testimony .......................................................................................................... 43 Prepared statement .......................................................................................... 86 Noonan, John: Testimony .......................................................................................................... 43 Prepared statement .......................................................................................... 86 (III) VerDate 0ct 09 2002 08:29 Oct 15, 2004 Jkt 095501 PO 00000 Frm 00005 Fmt 5904 Sfmt 5904 C:\DOCS\95501.TXT SAFFAIRS PsN: PHOGAN IV Page Stipano, Daniel P.: Testimony .......................................................................................................... 43 Prepared statement .......................................................................................... 86 Swiger, Andrew P.: Testimony .......................................................................................................... 63 Prepared statement .......................................................................................... 115 APPENDIX Staff Report entitled ‘‘Money Laundering and Foreign Corruption: Enforce- ment and Effectiveness of the Patriot Act—Case Study Involving Riggs Bank’’ ..................................................................................................................... 126 EXHIBITS 1. a. Riggs Bank N.A., Timeline on OCC Supervision of BSA/AML, pre- pared by OCC ............................................................................................... 211 b. Cash Deposits into Otong Account Controlled by EG President, chart prepared by the Permanent Subcommittee on Investigations ................. 213 c. Transfers to and from Equatorial Guinea’s Oil Account at Riggs Bank Involving Kalunga Company S.A., chart prepared by the Permanent Subcommittee on Investigations ................................................................. 214 d. Transfers from Equatorial Guinea’s Oil Account at Riggs Bank To Apexside Trading, Ltd., chart prepared by the Permanent Sub- committee on Investigations ....................................................................... 215 e. Quotes from U.S. State Department Report on Equatorial Guinea, charts prepared by the Permanent Subcommittee on Investigations ..... 216 f. Pinochet Legal & Financial Timeline: 10/98–5/02, chart prepared by the Permanent Subcommittee on Investigations ....................................... 220 g. Sample of Oil Company Payments in Equatorial Guinea, chart pre- pared by the Permanent Subcommittee on Investigations ...................... 221 h. Riggs will not accept as a customer any individuals, company or trust relationship whom we have any reason whatsoever to believe . has obtained funds through illegal or illicit means. Quote from Riggs Know Your Customer Compliance Policies and Procedures Manual— January 2001 ............................................................................................... 222 2. Riggs & Co. Know Your Customer Client Profile for three accounts: —Ashburton Company Ltd .............................................................................. 223 —Althorp Investment Co., Ltd ........................................................................ 234 —Pinochet Personal Account [(Augusto Pinochet Ugarte) (Lucia Hiriart)] . 242 3. Riggs Negotiable Instrument Issuance Log (Cashiers’ Checks/Inter- national Private Banking) Listing cashiers’ checks in the name of A.P. (Pinochet); IPBD Clearing (International Private Banking Division); L. Hiriart (Pinochet’s spouse) ............................................................................... 245 4. Four Riggs Monthly Bank Statements: Augusto Pinochet Ugarte and Lucia Hiriart De Pinochet dated 11–22–00 through 1–23–01 and L Hiriant and A Ugarte dated 1–24–01 through 3–21–01 ...............................