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An Outrageous Double Standard… Banco Popular Didn't Heed Its Own Red Flags


An Outrageous Double Standard

By Miriam Ramirez

February 9, 2003
Copyright © 2003 San Juan Star. All rights reserved.

By now, everyone on the island is well aware of the fact that Puerto Rico’s leading financial institution, Banco Popular de Puerto Rico ("BPPR"), has just avoided criminal prosecution by the Federal Dept. of Justice by paying nearly $22 million in fines and by essentially having a one year probation being slapped onto its operations.

Puerto Rico was named as a High Impact Drug Trafficking Area ("HIDTA") a few years ago, and we are now seeing that drug money reaches all sectors of local life.

After watching CEO Richard Carrion’s crafty local media blitz and the slew of apologists that essentially excused the bank’s conduct, I had to laugh. I laughed because some of these people are the same persons who do a lot of chest pounding and engage in a lot of sanctimonious high decibel drivel when the corruption in question involves the PNP.

Now, let me be perfectly blunt: If someone breaks the law, regardless of social, economic or political connections, then that person should pay the consequences. But here we have a bank whose oversight was so lax that a guy depositing over $20 million in cash in small bills did not raise an eyebrow and now the sanctimonious crowd, who, to no one’s surprise is comprised mostly of PPD stalwarts, starts bleating about how "it’s not the BPPR, society itself is sick". How convenient.

Let us be clear on a couple of points: The first one is that the amount of money the bank laundered is more than twice the amount that is alleged that the people involved in the CRIM , Fajardo and Misla cases took. In other words, we are looking at a massive operation that took place right under the bank’s nose.

The second point is that the PPD’s reaction to the political corruption cases has been to allege that Governor Pedro Rosselló must have known about them. But here, we have a case where the PPD’s President, Governor Calderón, is not just a big shareholder in the BPPR, but also was a member of the bank’s board of directors when these events first took place.

Later on, paying no attention to the obvious conflict of interests, as Mayor of San Juan she conducted business with the bank at the same time these events were taking place. If we used the same standard being used against the PNP, then we could say that Sila Calderon was part of a "kleptocracy", that she was Ali Baba and had 40 thieves under her, and apply all that other inflammatory rhetorical nonsense that the PPD and its mouthpieces in the media have been dumping on the PNP.

But have no fear, that will not be the case. The governor will not be questioned; and if she is, she will, as is her custom when faced with controversial and damaging matters, refuse to answer or simply lie. And the people calling for the criminalization of the PNP will turn a blind eye to this entire event.

So, if we are to be consistent, let us apply one standard. If we are going to hold a chief executive responsible because some of his aides betrayed his trust, let us not pick and choose which chief executives are to be held responsible. Let us not pound our chests and be self-righteous regarding one person, only to become a sycophantic and hypocritical mouthpiece when someone we like betrays us.

Then, and only then, will we be able to tackle the problems, such as drug trafficking, that are destroying the quality of life on this Island.

Miriam Ramirez de Ferrer is a PNP Senator

Banco Popular Didn't Heed Its Own Red Flags

Maria Padilla

January 29, 2003
Copyright © 2003 THE ORLANDO SENTINEL. All rights reserved.

¡Que escándalo! What a scandal.

Banco Popular de Puerto Rico, the island's largest bank and the largest Hispanic bank in the United States, paid nearly $22 million in fines to the federal government after a three-year money-laundering investigation found the bank didn't follow procedures when certain drug dealers made deposits. Treasury officials said it was among the largest fines ever assessed a bank -- equivalent to half the increase in Banco Popular's operating expenses for the quarter ended in December.

Bank officials said the settlement was the best way to avoid potentially prolonged litigation -- and it's also a great way to contain the damage.

Banco Popular, which has nine branches in Central Florida and dozens of others throughout the United States, thinks this was an "isolated event," according to David Chafey, executive vice president. The bank also was quick to state that the investigation didn't point to the complicity of a single employee.

But of course, it's unlikely we will ever know the whole truth now that the parties have settled.

In Puerto Rico, the 109 year-old bank is a coddled institution. Everybody loves Richard -- Carrión, that is, the bank's chairman, president and chief executive officer who also is a scion of the bank's founding family.

Last year, Carrión told an Orlando audience that "I would fear the shame of my employees more than I would any investigation," referring to the spate of corporate scandals. Isn't it ironic?

Banco Popular's hand is everywhere on the island: It has a foundation that helps support many organizations. It's a major island advertiser, with a brand name any company would covet. It is known as el banco del pueblo, the people's bank, a nod to its populist beginning.

When Banco Popular launched its Central Florida operations in the late 1990s, the region's large Puerto Rican population knew exactly what it was. Bank branch openings were festive affairs, not staid or stodgy.

But any further investigation into the money laundering certainly would hurt Banco Popular's image.

And -- surprise! -- it seems few people want to dwell on the issue. Certainly not the island's governor, who owns stock in the bank. Or island regulatory agencies that should have spotted the sleazy transactions.

The island's largest newspaper played the story deep in its business section, instead of the front page, where it belonged. But then again, the newspaper owner also is the bank's largest shareholder, with nearly 3 million shares, according to bank filings.

Inquiring minds demand to know, however, exactly how a bank can accept such large deposits and nobody raise a red flag? It strains credulity to suggest that no bank employee was involved. No way, José.

For example, the Treasury investigation found that on one occasion an entire branch operation came to a halt when $1 million was deposited in small bills. All employees were needed to count the money. And this didn't strike anyone as suspicious activity?

Chafey said the bank is guilty only of not filing reports on time.

It's too bad this happened to Banco Popular. But it shows, yet again, that bad things happen to companies that become local darlings and are smitten with their own self image.

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