Magazine article American Banker

Continental Says 3 Violated Bank Ethics Code in Oil Deals

Magazine article American Banker

Continental Says 3 Violated Bank Ethics Code in Oil Deals

Article excerpt

CHICAGO -- Oil loans are a hot topic again at Continental Illinois National Bank and Trust Co. after the bank found that three high-ranking officers broke the bank's ethics code and failed to report possible conflicts of interest.

The former energy-loan officers "have clearly violated our code of ethics which all Continental bank employees at every level in the organization are required to follow," said Roger E. Anderson, chairman of the bank.

They are former executive vice presidents George R. Baker and Gerald K. Bergman and former senior vice president James C. Cordell. All three resigned from the bank in 1982 in the wake of massive losses caused by the bank's purchase of $1.05 billion in questionable energy loan participations from the failed Penn Square Bank NA of Oklahoma City.

Mr. Baker was the No. 4 man at Continental in charge of all domestic lending; Mr. Bergman headed the special industries department that handled energy lending; and Mr. Cordell managed Continental's Texas division from its Houston office.

Continental Revealed its internal investigation after the Denver Post reported in its weekend editions that the three former officers invested in oil and gas businesses owned by Denver oilman Marvin Davis at te same time Continental was the lead bank in lending more than $500 million to companies controlled by Mr. Davis. The three failed to disclose their investments as required under the bank's code of ethics.

"I am shocked by these disclosures. We took investigative action immediately upon learning details involving these former employees," said Mr. …

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