By Mairi Mallon The man named in a US Senate investigation into money laundering started an account for money from mobsters involved with the IRA, drugs and gun-running while still working at the Bank of Bermuda, according to a Bermuda Special Branch investigation report.

And the same report states Peter Herrington was promoted three times while working at the Bank of Bermuda.

Herrington worked at the Bank of Bermuda between 1979 and 1985, at least part of the time as senior legal counsel, before he went on to work as the General Manager of Swiss American Banking Group.

Herrington is accused in a US Senate report, released last week, of using "influence'' on staff at the Bank of Bermuda to get them to accept bundles of cash believed to belong to criminals while working at the Caribbean bank, Swiss American.

It is during his period at Swiss American in Antigua that he became a central figure in the money laundering process, according to the US Senate report on the laundering of $7 million said to be linked to the IRA and the drugs trade.

The Special Branch report, dated October 1989, states: "Herrington lived in Bermuda for five years and received three promotions at the Bank of Bermuda.

"He has been described as a difficult character, not easy to get along with and arrogant, but always maintaining a professional manner. He had a keen interest in rugby and played for Renegades RFC whilst residing on the Island.'' And the Special Branch report, obtained by The Royal Gazette after the release of the Senate report, adds that some of the drugs money first appeared in the Bank of Bermuda while he worked there.

The report states that $252,156 was held in the Bank of Bermuda by Reinberg/Murray.

Joseph Paul Murray is an infamous mobster from Boston who served ten years for his part in organising the sale of arms to the IRA.

A web of accounts at Swiss American were used to launder the money and included one held by Murray's wife Suzanne Jay Murray, who was said to be using the name Susan Jay Reinberg.

The Reinberg/Murray account in the Bank of Bermuda was originally held in an account normally used for residents and the Special Branch said: "Certain other irregularities could not be explained.'' It added: "What they (the directors of Swiss American) did know was that Herrington was working at the Bank of Bermuda when the account was opened and when he went to Antigua the money later went with him.

"He even paid large penalty fees to transfer the money in October 1985.'' The Special Branch report says that this money appears to be the first, and the "suspect deposits'' started with the transfer of the Reinberg/Murray money.

Murray and his gang hit the headlines when they were jailed in connection with events on the American registered trawler Valhalla, when it crossed the Atlantic in 1984 and transferred weapons to an Irish ship that was later detained by Security Forces. The Valhalla returned to Boston and was detained.

Murray and two other men were convicted and jailed. One of the men involved, John McIntyre, disappeared and is believed to have been killed by the IRA.

Murray and others also pleaded guilty to importing about 30 tons of cannabis to the USA using a trawler carrying the drug buried beneath gravel and steel plates.

The Special Branch, which worked with the FBI on the investigation in the 1980s, said during Herrington's tenure at Swiss American, he had a long list of suspect actions.

"He travelled on business and charged the expense to more than one account, sometimes travelling with female companions.

"Bank slips were written as `cash' and `deposit' when money was being transferred from one account to another as a way to disguise its destination.

Only by checking other banking records can the accountants identify whether true cash was handed over and frequently it was not.

"Herrington appears to have had total control of the funds and manipulated the charges and fees on accounts.'' It also adds that many of the loans made out by Herrington are c/o Antigua National Trust Ltd -- part of Swiss American which Herrington also managed -- with no further details available.

It adds: "Funds transferred from Bermuda appear to have been `held' until he returned to Antigua and made the appropriate book entries.'' Of that $7 million investigated for money laundering, the documents from the Senate probe and the Special Branch appear to indicate that 85 percent ($5.95 million) was laundered through the Bank of Bermuda, and includes documents from Bermuda Police Special Branch investigations into the case.

Money laundering inquiry Herrington is closely linked with the central character in part of the Senate investigation, John Fitzgerald, who was convicted of racketeering conspiracy and money laundering in the United States in connection with the $7 million of mob money.

The Minority Staff of the US Senate Permanent Subcommittee on Investigations report on Correspondent Banking: A Gateway to Money Laundering revealed this week that: "The General Manager of the Swiss American Banking Group was at the time Peter Herrington who assisted Fitzgerald with the formation of all IBCs (a type of share-owned corporation) and management of the accounts at SAB (Swiss American Bank) and SANB (Swiss American National Bank). The formation of the accounts was handled by Antigua International Trust. Herrington served as director of all the IBCs and Guardian Bank and performed transactions in the SAB and SANB accounts.'' Swiss American Banking Group is owned by financier Bruce Rappaport, a former Bermuda resident who is believed to have during the 1980s held millions of dollars in Bank of Bermuda accounts.

The report also states Herrington tried to buy the bank from Rappaport for $2 million in conjunction with one of Murray's gang. Rappaport instead fired him, the report states.

It adds: "After his dismissal Herrington was allowed to return to the bank for six weeks and during this time was seen by other staff to remove boxes of records.

"Herrington was detained in Geneva on May 26 1987 after a complaint of `Damage to Property and Disloyal Management'. Local police decided they had no jurisdiction and he was released. This appears to be Rappaport reacting to events in Antigua.'' The whereabouts of Herrington are not presently known.