President George W. Bush said allegations of money-laundering at Riggs National Corp. are being investigated after a U.S. Senate report found the bank helped former Chilean dictator Augusto Pinochet hide millions of dollars from prosecutors.

“The people of Chile must know there will be a full investigation,” Bush told reporters while meeting with Chilean President Ricardo Lagos. “You’re seeing a transparent society dealing with allegations. The Riggs Bank is being fully investigated and they’ll be investigated in a very open way.”

The Riggs case has led the U.S. government to consider regulatory changes such as giving a single agency greater authority to enforce laws against laundering and terrorist financing, the New York Times reported, citing congressional leaders. PNC Financial Services Group Inc., Pennsylvania’s biggest bank, agreed Friday to buy Washington-based Riggs for $779 million.

Riggs agreed in May to pay $25 million in civil penalties for violation of laws banning money-laundering.

Bush told reporters that Lagos “wants to know the truth” about the Riggs case. The Senate report also cited Riggs for lapses in reporting suspicious transactions involving Saudi diplomats who may have had ties to two Sept. 11 hijackers.

Chile’s State Defense Council may decide at a meeting tomorrow whether to ask Chilean courts to also investigate the Riggs bank accounts, said Claudia Valladares, a spokeswoman for the council.

‘Bad Condition’

Lucia Pinochet Hiriart, Augusto Pinochet’s daughter, told the Chilean daily La Segunda that she was surprised by the accusations against her father, an 88-year-old former general who ran Chile from 1973 to 1990.

“I can’t believe that my father, a person who, when it came to money, taught me values of honor that were almost to the point of exaggeration, could have done something like that,” Pinochet Hiriart said. She said that when she saw him on Saturday he was in “very bad condition and very away – as if he was trying to remember things without being able to.”

Guillermo Garin, a retired general who serves as spokesman for Pinochet, didn’t return a phone call seeking comment.

William McQuillen, Bloomberg.com, July 19, 2004