Fed Alleges Illegal Sale of Lippo Bank Shares

The U.S. Federal Reserve accused a little-known Caribbean-based firm of illegally acquiring a controlling interest in a Los Angeles bank owned by controversial Indonesian businessman James Riady. Riady and the bank, Lippo Bank California, figured prominently in congressional investigations into questionable fund-raising practices during President Clinton’s 1996 reelection campaign. The Fed said BOT Corp., based in Curacao in the Netherlands Antilles, and Riady had violated the Bank Holding Company Act as a result of BOT indirectly acquiring more than 25% of the voting shares of Lippo Bank California and exercising a controlling interest over its management. Both Riady and BOT denied the allegations, it said, but BOT had agreed to provide the Fed with a plan for 98% of the voting shares of the bank to be divested to independent third parties. The relationship between Riady and BOT was not made clear in the Fed’s order. BOT had also agreed, without admitting any wrongdoing, to pay a civil monetary penalty of $300,000 and forfeit any additional proceeds from the sale of the bank over $30 million, the Fed said.