US Senate Report Ties Bermuda Banks To Drug And Terrorist Money

Mairi Mallon, Royal Gazette

13 March 2001

This story is reproduced by kind permission of the Royal Gazette at: http://www.accessbda.bm

A trail of money believed to have come from terrorism and drugs was placed in Bank of Butterfield and then deposited in Bank of Bermuda, according to a United States Senate report into money laundering obtained by The Royal Gazette.

And "influence" by a senior banker at Swiss American Banking Group was used to make "staff" at the Bank of Bermuda accept the cash deposit in 1989, the document claims.

According to the report published by the Minority Staff of the US Senate Permanent Subcommittee on Investigations report on Correspondent Banking: A Gateway to Money Laundering, some $450,000 in cash appeared to have come from a safety deposit box at the Bank of Butterfield and was deposited at the Bank of Bermuda.

The report section called "The Fitzgerald Case - Drugs and Terrorist Money", claims that the General Manager of Swiss American, Peter Herrington "used Swiss American's relationship with the Bank of Bermuda to influence the staff there to accept the cash deposit.

"When the funds were then transferred to the account at Swiss American, they were `held' until Herrington made the book entries," the report states.

Swiss American bank is owned by Swiss oil trader and financier and former Bermuda resident Bruce Rappaport, who was said to be, in the 1980s, an important customer at the Bank of Bermuda. He is believed to still have accounts at the bank, and is named many times in the money laundering report as the owner of Swiss American.

Yesterday, Bank of Bermuda said it could not comment on the matter or on whether Rappaport still has accounts with the bank. A written statement from Barry Shailer, Chief Compliance Officer, said: "Bank of Bermuda has a duty of strict client confidentiality, consistent with our legal obligations to our clients.

"Therefore we are unable to comment on any matters concerning a client relationship, including confirming or denying whether an individual is now or ever has been a client of the bank." Bank of Butterfield did not return calls.

The revelations about Bank of Bermuda and Bank of Butterfield were made as part of a section on money laundering and fraud involving Swiss American Bank and Swiss American National Bank.

The report claims that from 1985 to 1997 both Swiss American Bank and Swiss American National Bank were "significantly involved in a money laundering case involving a man name John Fitzgerald".

The report said that the involvement began when Fitzgerald, who pleaded guilty to money laundering and racketeering on behalf of a drug organisation in Boston, deposited $7 million into accounts at the Swiss American Bank and the Swiss American National Bank between 1985 and 1987.

An investigation led to Herrington being fired from Swiss American and an investigation into the money and where it had come from.

Involved in the investigation was the Special Branch of the Bermuda Police, and their report was used in a description of the trail of funds as it was laundered, including a further $5 million put through the Bank of Bermuda.

The investigation said it also said "another $500,000 came through a cash deposit at the Bank of Bermuda."

It is not clear if this is a separate amount of money or part of the $5 million or $450,000 previously mentioned. If it is separate, 85 percent of the total money laundered in the Fitzgerald investigation went through the Bank of Bermuda

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