The chairman and CEO of embattled Riggs Bank's parent company unexpectedly resigned Monday, relinquishing his position and board seat in a move that strips the bank's biggest shareholder of any direct representation on the board or executive control of the bank.
The surprise announcement by Robert L. Allbritton came 10 days after he and his family agreed to pay $1 million into a new $9 million fund for victims of former Chilean dictator Augusto Pinochet, who is said to have hidden money in Riggs with the help of bank officials. The old-line Washington bank is paying the remaining $8 million.
Riggs pleaded guilty in January to a criminal felony charge of failing to report suspicious transactions to authorities and has agreed to pay $41 million in civil and criminal fines to the U.S. government.
Allbritton, 37, assumed control of the bank from his father, Joe Allbritton, several years ago. The Allbritton family, a powerful local dynasty, collectively owns nearly 43 percent of the bank's stock. Joe and Robert Allbritton and other family members stand to gain a total of several hundred million dollars from the anticipated sale of parent Riggs National Corp. to Pittsburgh-based PNC Financial Services Group Inc.
PNC is buying Riggs National — stripped of the embassy and international business that got the bank into trouble — for some $643 million in cash and stock. The two parties, which have had a rocky road to a merger and sharp disputes over the buying price, hope to complete the deal by the end of this month.
"With the PNC merger only a few weeks away after the successful renegotiation of the terms of the agreement, and with the recent settlement of legal matters important to the merger, it is an appropriate time for me to resign all my positions with Riggs Bank and its parent company," Allbritton said in a brief statement issued late Monday.
Asked whether pressure from federal bank regulators or PNC had figured into his decision to resign, an Allbritton spokesman from outside Riggs, Sean Kevelighan, replied, "It was his own decision."
Allbritton said he would return to Allbritton Communications Co., which owns the ABC television station in Washington, WJLA, of which he is chairman and chief executive officer. Allbritton also was its president from 1998 through February 2001.
Riggs Bank spokesmen didn't immediately return a telephone call seeking comment. PNC spokesman Patrick McMahon declined comment.
The settlement with Pinochet's victims does not preclude potential civil or criminal action in the future by U.S. authorities against any officials or directors of the bank. A former Riggs senior vice president who was in charge of the accounts at the bank of officials of Equatorial Guinea has been the subject of a federal grand jury investigation in Washington.
PNC agreed last week to pay nearly $4 million to settle a class-action lawsuit by Riggs Bank shareholders, brought against current and former members of the bank's board, alleging that Riggs stock plunged because of the actions of board members. The suit accused the board of having a role in money laundering at Riggs in the year before the merger proposal by PNC.
Riggs, accused by banking regulators of failing to report suspicious transactions in accounts held by Saudi diplomats in Washington, still faces private lawsuits related to Saudi Arabia and the 2001 terrorist attacks, and another that alleges racketeering.
Riggs said last month that it expected to report a loss of $60 million for the fourth quarter of 2004 and a full-year loss of $100 million, and that it is closing its London branch — the final step in the shuttering of its international operations.