ALLENDE FOUNDATION FILES LAWSUIT AGAINST BANCO DE CHILE

Lawyers Accuse Bank Of Helping Pinochet Launder Fortune

In a new twist in the investigation of former dictator Gen. Augusto Pinochet’s secret fortune, the President Allende Foundation filed a US$107 million lawsuit in U.S. courts Thursday against the Banco de Chile. The lawsuit alleges that the bank’s New York branch helped Pinochet illegally transfer funds from his Washington D.C., based Riggs Bank accounts while the general was being held in London on an international arrest warrant.

The legal brief submitted by the foundation claims that the Banco de Chile eluded established banking policies and obstructed an international investigation with the intention of hiding the true identity of Pinochet’s bank accounts when they moved US$6 million for the general after Spanish courts ordered all of his accounts frozen in 1998. The Banco de Chile has vowed to fight the lawsuit and rejects the foundation’s allegations.

The lawsuit identifies an additional 24 accounts opened between 1995 and 2005 by Gen. Pinochet or his family at the New York branch of the Banco de Chile and managed by his financial executors Hernán Donoso and Oscar Aitken. Both men are included in the charges brought against the Bank.

According to Reuters, the bank said it would “take all steps necessary before the courts of justice to defend its rights. (The lawsuit) is completely without merit, in both form and substance.”

However, Banco de Chile previously agreed to pay a fine of US$3 million in October imposed by the U.S. Treasury’s Financial Crimes Enforcement Network for violating established banking regulations on money laundering.

Joan Garcés, the lawyer who filed the charges on behalf of the foundation, was a personal political advisor to President Salvador Allende in the early 1970s. After the military coup of 1973, he moved to Paris and finally Spain where he has spent the last 23 years as a human rights lawyer.

“The massacre at the Moneda palace and the assassination of the political leaders that followed made me the sole survivor among President Allende's personal political advisers,” said Garcés. “I had a very strong sense of duty to contribute to the understanding of the period that came to an end on September 11.”

Garcés has been representing victims of Gen. Pinochet’s military regime since 1996 and was a key player leading to the arrest of Pinochet in London in 1998. The newest lawsuit comes on the heels of a successful legal settlement reached between the foundation and Riggs Bank last March in which the bank agreed to pay US$9 million to victims of human rights abuses committed during the military regime.

The money laundering case first came to light after a 2004 U.S. Senate report found that the Riggs Bank helped the former dictator hide between US$4 and 8 million in bribes and illegal commissions related to the sale of Chilean military weaponry (ST, Oct 10). In several investigations since then, Chilean authorities uncovered more than US$27 million hidden in over 100 banks and offshore trading companies around the world, including U.S. branches of the Banco de Chile.

The Chilean bank is also facing complications from separate but related investigations into the 1992 murder of Gerardo Huber, a Chilean colonel who worked for Chile’s Army Weapons Factory (FAMAE). Huber was part of a scheme to ship weapons to Croatia during the United Nations arms embargo of the early 1990s. He was murdered shortly after implicating military superiors in the operation. Judges investigating the case subpoenaed bank records of all FAMAE accounts at the Banco de Chile to determine, among other things, if the bank had any role in funneling illegal payments to Chilean military officials involved in the case.

In related news, an appeal made by Gen. Pinochet’s lawyers in the Operation Colombo case to overturn the court’s decision to prosecute the former dictator for the kidnapping and murder of six left-wing political activists was rejected unanimously by Chile’s Court of Appeals. Pinochet’s lawyers disputed the results of a Nov. 9 medical report that determined that the general is physically and mentally fit to stand trial. Defense attorneys are now expected to appeal the decision to the Supreme Court.