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Riggs Bank: The Pinochet Connection and how can we forget: Wal-Mart: The Workfare Company
Source: Alternet, 2005-01-26
Candidate: Big Business
Riggs Bank: The Pinochet Connection
An explosive report from the U.S. Senate Permanent Subcommittee on Investigations of the Committee on Governmental Affairs, issued in July, revealed that Riggs Bank in Washington, D.C. illegally operated bank accounts for former Chilean dictator Augusto Pinochet, and routinely ignored evidence of corrupt practices in managing more than 60 accounts for the government of Equatorial Guinea.
An ongoing internal investigation by Riggs has revealed that the bank's dealing with Pinochet dates back to 1985, while the Chilean despot remained in power, according to a November Washington Post report.
Riggs has not so far been cited for civil or criminal violations in connection with the Pinochet money-laundering scheme. In May, the bank paid $25 million in fines in connection with money-laundering violations related to the Equatorial Guinea and Saudi Arabian governments.
The bank capitalized on its venerable reputation in Washington to become the banker to the embassies that dot the city and the large foreign diplomatic corps resident in the U.S. capital. Riggs eagerly sought to service them all, apparently even when dictators and their families requested the bank engage in illegal activities to launder money.
The Permanent Subcommittee on Investigations report found that from 1994 until 2002, Riggs opened at least six accounts and issued several certificates of deposit (CDs) for Pinochet while he was under house arrest in the United Kingdom and his assets were the subject of court proceedings. The aggregate deposits in the Pinochet accounts at Riggs ranged from $4 million to $8 million at a time.
What is now becoming apparent is that Riggs was collaborating with Pinochet even a decade earlier, with a scale of activity not yet clear.
Riggs was not a passive or unknowing actor in this drama. According to the Permanent Subcommittee on Investigations report, high bank officials solicited Pinochet's business, the bank helped Pinochet set up offshore shell corporations and open accounts in the names of those corporations to disguise his control of the accounts, altered the names of his personal accounts to disguise their ownership, and otherwise worked to help him hide his money flow.
Although these activities seem to violate U.S. banking rules, the Office of the Comptroller of the Currency (OCC) did not take enforcement action against the bank after it learned of these matters in 2002. That presumably was not unrelated to the fact that the OCC examiner at Riggs soon thereafter went to work for Riggs.
Pinochet is not the only dictator for whom Riggs undertook money laundering.
Equatorial Guinea is a small, oil-rich West African country dominated by a dictator, President Teodoro Obiang Nguema Mbasago. Obiang, his family and cronies live a life of luxury, while the rest of the country remains desperately poor.
The Permanent Subcommittee on Investigations report found that from 1995 until 2004, Riggs Bank administered more than 60 accounts and CDs for the government of Equatorial Guinea, Equatorial Guinea government officials or their family members. Money laundering to cover up corruption appeared to be routine.
Combined, these accounts represented the largest relationship at Riggs Bank, with aggregate deposits ranging from $400 to $700 million at a time.
Riggs does not deny these activities took place, and its internal investigation is continuing. A number of Riggs employees involved in the scandals have been fired or demoted. In July, Riggs announced that it was going to be acquired by PNC Financial Services Group (see profile of AIG above) for more than $700 million. Ongoing legal problems at Riggs could derail the deal, which is supposed to be consummated early in 2005, but for now both parties say it remains on.
Wal-Mart: The Workfare Company
Wal-Mart faces a class action lawsuit on behalf of 1.6 million women workers, alleging rampant employment discrimination at Wal-Mart.
The Service Employees International Union (SEIU) has announced plans to spend $25 million a year with the ultimate goal of unionizing Wal-Mart, the largest private U.S. employer.
And the company – which has already lost more than 200 site fights – faces an even more-intensified resistance to its efforts to locate new stores, as it increasingly seeks to enter markets in more urban areas.
But while on a bit of a public relations defensive, the company remains the colossus of U.S. – and increasingly global – retailing. It registers more than a quarter trillion dollars in sales. Its revenues account for 2 percent of U.S. Gross Domestic Product.
A February 2004 report issued by Rep. George Miller (D-Calif.) encapsulated the ways that Wal-Mart squeezes and cheats its employees, among them: blocking union organizing efforts, paying employees an average $8.23 an hour (as compared to more than $10 for an average supermarket worker), allegedly extracting off-the-clock work, and providing inadequate and unaffordable healthcare packages for employees.
Miller's report's innovation was in documenting how Wal-Mart's low wages and inadequate benefits not only hurt workers directly, but impose costs on taxpayers. The report estimated that one 200-person Wal-Mart store may result in a cost to federal taxpayers of $420,750 per year – about $2,103 per employee. These public costs include: $36,000 a year for free and reduced lunches for just 50 qualifying Wal-Mart families. $42,000 a year for Section 8 housing assistance, assuming 3 percent of the store employees qualify for such assistance, at $6,700 per family. $125,000 a year for federal tax credits and deductions for low-income families, assuming 50 employees are heads of household with a child and 50 are married with two children. $100,000 a year for the additional Title I [educational] expenses, assuming 50 Wal-Mart families qualify with an average of two children. $108,000 a year for the additional federal healthcare costs of moving into state children's health insurance programs (SCHIP), assuming 30 employees with an average of two children qualify.
Wal-Mart's abuses are giving rise to countervailing efforts, but it is an open question whether the company has amassed such power that it will be able to defeat such initiatives.
In California, in November, the company was able to stave off by a 51-to-49 percent margin a proposition that would have required every large and medium employer in the state to provide decent healthcare coverage for their workers, with the employer contribution set at a minimum of 80 percent of costs.
Wal-Mart dumped a half million dollars into the anti-Proposition 72 campaign just a week before the vote.
"As one of California's leading employers, we care about the health of our 60,000 employees here," said Wal-Mart spokesperson Cynthia Lin, in celebrating the defeat of Proposition 72. "That's why we provide our employees with affordable, quality health care coverage."
The biggest immediate challenge facing Wal-Mart is the class action lawsuit filed by its women workers. The women allege that Wal-Mart pays female workers less than men, promotes men faster than women and men above more competent women, and fosters a hostile work environment.
While Wal-Mart is willing to bend to consumer demand on marginal issues like covering over the headlines on Cosmopolitan magazine, it is not so flexible on respect for worker rights. Nor is there any sign of a consumer rebellion on anything like the scale necessary to make the company revisit its employment policies.
The full-length version of this piece can be found at The Multinational Monitor.
Russell Mokhiber and Robert Weissman are co-authors of On the Rampage: Corporate Predators and the Destruction of Democracy (Monroe, Maine: Common Courage Press). Robert Weissman is general counsel for Essential Inventions, a nonprofit mentioned in the Abbott profile.
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