VAMPIRES IN THE CITY
Bloodsuckers in a Castle Called Citigroup
Sightings from The Catbird Seat
~ o ~
October 3, 2006
CITI Group Al Qaeda
The Bush Crime Family Terrorist Bank
By Stewart Webb, Federal Whistleblower
From The Denver Post
The Bush Millman Clinton Lansky Jewish Mob Connections: The Deceased
Bush Crime Family Denver Boss Hog, Leonard Yale Millman, was a partner of
Recently obtained evidence indicates the relationship between Millman and Lansky
was deeply intertwined for years involving Narcotics Money Laundering, and other
illegal activities. Lansky was known to be the head of the MISPUKA-JEWISH
MAFIA operating inside the United States. Elaine Millman the New Boss Hogs
recently stated the Mossad cleaned me out and shook me down – this is far from
Elaine Millman still controls $3.5 Trillion Dollars according to the latest
Senator Hillary Clinton
It is known that Senator Hillary Clinton whose real name is Hillary Rodenhurst
Clinton of New York has been acting as a Mossad Bush Crime Family stooge for
Iran Contra Operation Eagle
Hillary was involved in Narcotics Money Laundering with George H. W. Bush,
Leonard Millman, Ollie North, M&L Business Machines Company of Denver a
Millman Cut-out front company that Bankrupted in 1991, involving the Iran Contra
Narcotics for Weapons Operations code name Eagle.
Narcotics for Weapons Operation Black Eagle
When Congress outlawed Operation Eagle under the Bolin Act, George H. W. Bush
setup Operation Black Eagle, to intentionally hide the Narcotics for Weapons
operations from Government Officials and investigators – these illegal operations
Hillary Clinton laundered Billions in Narcotics Money through M&L Business
Machines of Denver, Silverado Savings and Loan of Denver, then the money went
oversea to cleans the money, through John Dick in the Isle of Man and the Isle of
Jersey to The Compodium Trust Company, (Dick a Denver Resident was a Millman
Front) then back under the disguise of Foreign Trusts through Jackson Stephens
of Little Rock, Arkansas and the Rose Law Firm where Hillary Clinton was a
partner. Then Hillary’s money flowed through Morgan Stanley under the name
MIApollo Investments Ltd.
The 21 pages of Top Secret Documents proving the $3.6 Billion in Narcotics
Money laundering can be found on www.StewWebb.com under US Intel Breaking
Denver Attorneys Norman Brownstein, Steve Hoth, Allen Karsh
Many of those Narco-Trusts are now under the Control of Norman Brownstein,
Steve Hoth and Allen Karsh, all Denver Colorado Attorneys.
White House Aid Vince Foster
White House Aid Vince Foster a Rose Law Firm Partner was murdered by the
Clinton’s after it was learned by Bill & Hillary Clinton and Bushes that Vince
Foster was working with Defense Intelligence Officer/ Counter Intelligence Leo
Wanta who was involved in a Sting Operation of Fugitive Mossad Agent Mark Rich.
Vice President Albert Gore Jr., DIA Leo Wanta, General Vernon Walters and
others good guys had compromised Vince Foster who turned States evidence and
informant in order to arrest Mark Rich, and bring to Justice The Clintons, Bushes
and others involving Iran Contra and other espionage activities against The United
Foster was killed after Clinton’s learned of this operation. Foster was last seen in
the White House having sex with both Clinton’s. A yellow pick up truck bearing
the Arkansas license number RCG-702 belonging to Hensel-Phelps Construction
Company of Little Rock with Headquarters in Greeley Colorado carried Foster’s
body out of the White House in a Rug and Vince Foster’s body was dumped in a
park. Helsel Phelps was controlled by Phil Winn, an MDC Director’s brother, and
Hensel Phelps Construction Company A Major Contractor at
Denver International Airport
Hensel Phelps committed massive frauds on Government contracts involving the
Airport Construction. Example: Was the $200 million dollar baggage system that
did not operate and had to be replaced. Many scams and frauds were done by
Hensel Phelps in the Denver Airport Construction.
Leonard Millman and Elaine Millman Organized
Crime Figures and 9-11 WTC
This now not only connected Leonard Millman and his widow Elaine R. Millman who
lives at 3333 E. Cherry Creek Drive #70 Denver, Colorado as Organized Crime
Figures, Bush Crime Family Boss Hogs Laundering Narcotics Money, but other
scandals including Savings & Loan, HUD, Denver International Airport, Securities,
Oil & Gas, Government Contract Frauds, Iran Contra and most of the scandals from
1970-2005 including the Latest $10 Billion dollar Pension Fund Frauds.
But this new evidence directly ties Millman’s to the MISPUKA-JEWISH MAFIA,
including the financing of the Al Qaeda Terrorist Network involving the Attack
on September 11, 2001….
This new evidence ties Bushes, Millman‘s, Clinton‘s, CIA, FBI Division 5 Ted L.
Gunderson, DEA, U.S. Customs, U.S. Military, MISPUKA, JEWISH MAFIA, The
Queen of England all in Bed Together.
Denver Attorney Allen Karsh brother of Organized Crime Figure Elaine Millman,
has repeatedly claimed he is the MISPUKA, JEWISH MAFIA. Allen Karsh has
repeated this to many in Denver, including Prostitutes in Denver who have provided
Allen Karsh sexual services for payment (Prostitution). Allen was divorced from
Mary Ann Karsh a wannabe psychologist & Denver gadfly, they had one son. Allen
Karsh one of the Mafia attorneys and brother-in-law of deceased Leonard Millman
and now runs the daily Crime Family Operations with Boss Hog Elaine Millman.
Allen Karsh has been a major Narcotics Importer into the United States of
America for Years, under Karsh Investments at 950 S. Cherry Street, Denver
Colorado. Allen Karsh imports narcotics from Mexico to Denver, Colorado each
week with Narcotics packed in the seafood, put on ice to cover up the heat from
Karsh has a US Customs agent on his payroll that buys off, OKs the loads during
inspections, then the Narcotics is sent to Peter Brophy’s Restaurant in Boulder,
Colorado for redistribution to various Strip-Bars in Denver, Shot Gun Willies,
Proof of the Pudding, and others owned by Leonard Millman, Larry Mizel, Norman
Brownstein and Bobby Rifkin.
HUD Fraudsters Phil Winn and Allen Karsh
Karsh also was involved in looting the US Government in the HUD, Department of
Housing & Urban Development Scandal of 1989 with The Winn Groups of Denver.
Former Switzerland Ambassador 1988-1989 Phil Winn, the former FHA
Commissioner from 1981-1982 was convicted and to be sentenced and never served
a day in jail after pleading guilty in the HUD Scandal.
In The United States District Court For The District Of Colorado Judge Sherman
Finesilver never completed the sentencing of Phil Winn. Sherman Finesilver had
been involved in Obstruction of Justice for Leonard Millman and Larry Mizel over
many National Scandals. Judge Sherman Finesilver’s son was disbarred as an
attorney after being caught as a Narcotics Dealer.
Finesilver’s son and Neil Bush, George W. Bush’s brother were in the Narcotics
Business together involving Sun Flow Energy Company. Bill Clinton gave Philip D.
Winn a Presidential Pardon. Allen Karsh’s involvement, using Haggaman & Karsh,
Karsh & Haggaman, Karsh and Lottner as attorneys of record in the HUD Frauds
was never really investigated and covered-up. The Winn Group stole hundreds of
Billions from HUD.
AIMCO: The United States Largest Apartment Landlord
Those stolen properties are now under the umbrella of AIMCO a Real Estate
Investment Trust (REIT) with over 500,000 apartments in the United States all
stolen from HUD.
Asset Investors: a MDC subsidiary company
Phil Winn a Director of Asset investors Colorado’s largest financial institution is an
M.D.C. Holding, Inc. subsidiary controlled by Leonard Millman and being run by
Larry Mizel, at 3600 S. Yosemite, Denver, Colorado. Allen Karsh and Steve Hoth of
the Norman Brownstein Law Office of Denver are in control of the late Leonard
Millman Estate. Norman Brownstein is an attorney of record who represents
Millman’s companies including MDC Holdings, Inc., CITI Group, AIMCO and many
other Illegally gained assets.
CITI Group Al Qaeda Headquarters
MDC Holdings, Inc. owned Silverado Savings and Loan where Neil Bush, George W.
Bush’s brother was a director. Norman Brownstein also represents Millman’s, Banks
including CITI Corp, also known as CITI Group who was deeply involved with the
financing of Terrorist Cells in the United States and paid those involved in the 9-11
WTC, World Trade Center Attack on America. CITI Group is now being called Al
Qaeda Headquarters. This is Treason against America, and indictments should
immediately be brought.
AIG American Insurance General
Millman’s were further tied to AIG; Millman’s were involved with massive frauds
and money laundering with AIG and Carl Lindner. Lindner who operated the
Chiquita Bananas United Fruit Company ran the Costa Rico Narcotics for
Weapons Operations with John Hall and General John Singlaub during the 1980s-1990s.
American Insurance General and CITI Group-CITI Bank
American Insurance General who received 12 subpoenas from New York Attorney
General Elliot Spitzer, in connections to the 9-11 WTC financial accounts tied to
CITI Group. Marty Greenberg who resigned as CEO of AIG the day the subpoenas
were issued worked for Millman’s cut out front company Meyer Blinder, the Worlds
Largest Penny Stock Brokerage that collapsed in 1990-1991. MDC Holdings, Inc.,
operated National Brokerage Group of Companies in the 1980s where Maurice
Greenberg was deeply involved with Iran Contra activities, money laundering, stock
frauds and manipulations.
Maurice Greenberg, Pete Peterson, Leonard Millman and The CFR
Maurice Greenberg also known as Marty Greenberg took the fifth amendment a
few days ago when asked about the 9-11 World Trade Center financing of the Al
Qaeda Terrorists. Maurice Greenberg also is a Director of the CAR, Council of
Foreign Relations, a New World Order Terrorist think tank, were Leonard Yale
Millman was an Honorary Director. Another CFR Director Pete Peterson and
Leonard Millman were involved with the Blackstone Group.
MDC-BCCI Bank Of Credit and Commerce International
A series of articles by Time Magazine were done on BCCI.
MDC, Silverado, Lincoln Savings and Millman’s were directly involved with the
Bushes, in a world wide Terrorist and Money Laundering Operation. That Operation
today is known as Al Qaeda. (See: www.stewwebb.com BCCI – and, yes, I did my
part in exposing it.)
Adolph Hitler and George H. W. Bush
Remember who first coined the phrase The New World Order – Nazi Adolph
Hitler. When George H. W. Bush was President, Bush re-coined the phrase The
New World Order, in several speeches. Since Prescott Bush, George W. Bush the
White House Occupants, grandfather financed Adolph Hitler during World War 11
through Brown Bothers-Harriman and was charged with Trading with the Enemy
Act, I think it would be appropriate given the evidence that I and many others
possess of the Atrocities and Espionage activities of this New World Order Bush
Crime Family against America, that we could now change the White House Name to
Bushes NAZI-Al Qaeda Headquarters.
Al Qaeda is a disgusting ruse, all created to keep the world in a perpetual state of
terror! Al Qaeda was created by the Bushes and is a pawn of the New World
CITI Group and American Insurance General Financed the
9-11 World Trade Center Terrorist Attack!
George H. W. Bush and Leonard Millman’s CITI Group financing the attack on The
United States of America on Sept 11, 2001, known as 9-11, WTC, if this is part of
The New World Order, then we as Americans need to immediately take control of
The White House and the US Government and put an end to The New World
Rather than Hang these Gangsters for Treason and Killing
3,000 Americans for Oil and Money…
I have another suggestion, lets order our troops out of Iraq, and let the Iraq
people know we American’s will no longer tolerate such activity of The New World
Order Satanists and drop these Goons on the Airstrip at Baghdad Airport.
The Iraq people then will save America a large amount of taxes in funeral expenses
for these Nazi Goons.
Who has the Handcuffs?
– Stew Webb, Federal Whistleblower
March 23, 2005
Citigroup, Putnam Pay
SEC Fines Over Fund
In three unrelated cases, federal regulators fined Citigroup Inc. and Putnam
Investments $20 million and $40 million respectively and a smaller brokerage firm
$100,000 to resolve allegations that they concealed from customers the fact that
brokers were paid to recommend certain mutual funds, creating a conflict of
The Securities and Exchange Commission announced the separate settlements
Wednesday with Citigroup, the biggest U.S. financial institution; Putman, the
seventh-largest mutual fund company, and brokerage Capital Analysts Inc.
Citigroup, Capital Analysts and Putnam, a unit of Marsh & McLennan Cos., neither
admitted nor denied wrongdoing as part of the agreements….
December 13, 2004
Citi, Amex Plan Credit Card
By Matthew Goldstein, TheStreet.com
Citigroup and American Express are joining forces to issue a new credit card.
The new card will be issued by Citigroup, but will be accepted by merchants that
are part of the American Express network, according to a press release. Citibank
will be responsible for handling and billing customers.
The companies did not disclose the financial terms of the partnership.
The deal between the two financial services firms reflects the changing landscape
in the credit card business following a federal antitrust ruling against
MasterCard and Visa. In a landmark case, a New York federal court found that
the two big credit card associations had engaged in uncompetitive business
practices that had a negative impact on American Express and other card
The court specifically struck down a rule imposed by Visa and MasterCard that
had prohibited member banks from issuing cards from other companies. The
Supreme Court, in October, refused to overturn the court’s ruling.
In the wake of the court decision, American Express filed suit last month against
eight banks that allegedly conspired with MasterCard and Visa to engineer a
boycott of American Express’ charge card. The lawsuit named most of the
nation’s major banks, but not Citigroup.
At the time, analysts on Wall Street were puzzled by American Express’ decision
not to name Citigroup as a defendant.
October 18, 2004
A tale of suicide bombers, Saudi princes, cash payments to
terrorist groups – and how Citigroup got caught up in all of it.
By Robert Lenzner and Nathan Vardi, Forbes
IN AMERICA’S WAR ON TERROR, cutting of the financial flow to the bad guys
is a key goal. But it is a particularly elusive one. Even when a patriotic U.S. bank
spots something suspicious, it may be hard-pressed to do much about it.
And so it is that Citigroup, the world’s largest financial institution, finds itself
confronting the fact that a bank it partly owned and managed in Saudi Arabia
may have funneled thousands of dollars to terror groups and to the families of
Palestinian suicide bombers–at the behest of the Saudi royal family.
The allegations involve Saudi American Bank, also know as Samba, the Riyadh-based affiliate in which Citi had a 20% stake. In late 2002 Samba was added as a
defendant in a federal lawsuit filed by relatives of Sept. 11 victims against
prominent Saudis and charities to which they appeared to be connected.
The suit, prosecuted by Washington, D.C. lawyer Allan Gerson, among others,
alleges that Samba “participated in the fundraising campaign in Saudi Arabia for
collection donations to the heroes” of the Palestinian uprising. Samba has filed a
motion to dismiss.
Now Gerson is eyeing an additional suit against Citigroup and has lined up as
possible plaintiffs 150 people who have lost relatives or themselves been injured in
terror attacks in Israel….
In May Citigroup set plans to sell its 20% stake in Samba and end its presence in a
market it had served since 1955.
Citigroup had run Samba under a management contract since 1980. At one point
Citigroup had 30 people at Samba, including the managing director, the treasurer
and chiefs of a few departments….
Samba, the second-largest bank in Saudi Arabia, with a 12% share of bank profits
in the kingdom, earned $383 million in 2003. It was the linchpin of Citi’s close ties
to the Saudi elite. The royal family’s Prince Alwaleed Bin Talal Alsaud, the
world’s fourth-richest man, owns $9.4 billion in Citigroup stock and a 7%-plus
stake in Samba. Samba’s chairman was billionaire Abdulaziz Bin Hamad Algosaibi,
who died last year; his family, too, owns 7% or more of Samba.
Citigroup’s problems began in 2000, when Saudi Arabia’s royal family issued an
edict requiring large banks in the country to create a charitable account that would
channel donations to “martyrs” of the Palestinian uprising.
The Saudis billed this as a “humanitarian” effort and decreed that each new
account would be known as Account 98….
The effort was managed by the Saudi Committee for the Support of the
Intifada Al Quds, says a U.S. government official. The committee is run by Prince
Naif Bin Abdul Aziz, the interior minister, an official in the Israel Defense
Forces says. In October 2000 another royal, Prince Salman Bin Abdul Aziz,
governor of Riyadh, encouraged citizens to deposit money in Account 98.
In still another lawsuit a, the Saudi committee is alleged to have funded – through
Arab Bank – suicide bombers and Hamas, the Palestinian group that has claimed
responsibility for dozens of suicide bombings in Israel in recent years. That suit,
filed in July in U.S. district court in Brooklyn on behalf of eight families of terror
victims, alleges that $42 million was distributed to “terrorists and/or their
beneficiaries.” … Arab Bank, publicly traded on the Amman Stock Exchange, denies
The Saudi government’s role in paying death benefits to relatives of suicide
bombers didn’t spark much concern in the U.S. – until after the terror attacks of
Sept. 11, 2001. Undaunted, Saudi officials renewed their call for Account 98
donations in December 2001, making an appeal on a government-backed Web site.
Along the way, Israeli officials were gathering evidence about the Saudi-Hamas
connection. One lead grew out of a bombing in Tel Aviv on July 1, 2001. Twenty-three people were killed outside a beachfront disco when a man detonated a bomb
hidden in a bag he was carrying. Israel fingered a Hamas operative, Abdel Rahman
Hamad, as directing the disco blast. Three months later Israeli snipers killed him
as he sat reading the Koran on his roof at home in the West Bank.
Hamad’s name surfaced a few months later, as Israeli troops stormed the West
Bank offices of the Tulkarm Charity Committee, which the U.S. government calls a
Hamas-controlled front. Stored in a Talkarm computer was an Arabic spreadsheet
carrying the official logo of the “Kingdom of Saudi Arabia, the Saudi Committee
for Support of the Intifada Al Quds.”
The spreadsheet lists Hamad and indicates his family had received 20,000 Saudi
yiyals ($5,300). Seized documents show that the Tulkarm group received
$545,000 from the Saudi committee and that it funneled funds to 102 families,
including eight of suicide bombers.
In late 2002 Citigroup officials asked Samba about Account 98 but got nowhere.
Saudi secrecy laws forbid Samba from revealing account records to anyone outside
the kingdom. Yet U.S. law prohibits U.S. banks from doing business with Hamas or
any other terror group. In early 2003 Citi contacted U.S. Treasury and State
Department officials, who spent the ensuing months in talks with the Saudis,
worried that Account 98 cash might be going to terrorist activity….
In May Citigroup sold its 20% stake to the Saudi government for a $760 million
Now the Saudis, at U.S. urging, are phasing out Account 98, folding it and other
charity accounts into a single new entity.
The move may, or may not, do anything to stop the flow of money to bombers’
October 8, 2004
THE SECOND PRESIDENTIAL DEBATE BETWEEN
GEORGE W. BUSH AND SEN. JOHN KERRY
Senator Kerry, responding to a question regarding the domestic economy,
states that he has been consulting with the former Treasury Secretary in
the Clinton Administration – Robert Rubin.
* * *
– For more on the Robert Rubin flock, GO TO > > > AIG: The Un-American
Insurance Group; Allied World Assurance; The Chubb Group; Claims By Harmon;
Dirty Gold in Goldman Sachs; Dirty Money, Dirty Politics & Bishop Estate; KROLL,
The Conspirator; Marsh & McLennan: The Marsh Birds; The Poop on Aon; The
Prudential: A Nest on Shaky Ground; RICO in Paradise; Sukamto Sia: The
Indonesian Connection; Transylvania Travelers in St. Paul; What Price
Waterhouse?; Zeroing In On Zurich Financial Services
October 19, 2004
Fund-Raisers Trade With Iran, Iraq
By Matt Kelley, Associated Press
WASHINGTON – More than two dozen top fund-raisers for President Bush and
Democratic challenger John Kerry are current or former senior managers of
companies punished for trading with Iran or Saddam Hussein’s Iraq – including the
chairman of Bush’s Homeland Security Advisory Committee and Kerry’s fund-raising chairman.
Both candidates say they want the United States to hunt down and kill or capture
terrorists. They say those who harbor and finance terrorists are just as guilty.
Bush famously described Iran, Saddam’s Iraq and North Korea as an “axis of evil”
threatening to give terrorists weapons of mass destruction.
But the tough talk doesn’t address the role of American companies that do
business, intentionally or not, with countries such as Iran on the U.S. list of state
sponsors of terrorism.
Nineteen people who have raised more than $100,000 for Bush are current or
former executives or directors of a dozen firms fined for transactions with Iran
and Iraq during the past decade, government records show. Nine top Kerry fund-raisers work or worked for five of those companies. All held their respective
positions when some or all of the disputed transactions took place….
“In most of these cases, the violations are certainly not intentional and usually
inadvertent,” said Bank of America spokeswoman Shirley Norton. The Treasury
Department cited Bank of America or its subsidiaries seven times in the past five
years for transferring funds to or operating accounts for people in Iran, Sudan
Bank of America Vice Chairman James H. Hance, Jr., has raised more than
$200,000 for Bush’s 2004 campaign.
As for Iraq, Bush has seven and Kerry has three top fund-raisers from companies
fined for doing business with Saddam’s government.
One example is Joseph J. Grano, Jr., a top Bush fund-raiser and chairman of the
Homeland Security Advisory Council. Grano is the former chariman of an
American subsidiary of the Swiss bank UBS AG and was one of the bank’s six
executive board members. He now runs a consulting firm, Centurion Holdings LLC.
The bank paid a $14,750 penalty for permitting a 2001 funds transfer to Iraq.
UBS also paid a $100 million fine to the Federal Reserve this year after
regulators discovered that UBS workers in Zurich traded billions of dollars worth
of U.S. currency with Iran, Libya, Cuba and Yugoslavia between 1996 and 2003.
Some of that cash ended up in Iraq, where U.S. troops seized hundreds of millions
of dollars last year – some still in wrappings from the New York Federal Reserve
Another UBS executive with political connections is Blair Effron, a managing
director of UBS Investment Bank. Effron is a top fund-raiser for Kerry and co-chairs Kerry’s business outreach program. Robert Wolf, chief operating officer of
UBS investment Bank, also raised more than $100,000 for Kerry….
The punished firm with the most extensive links to the presidential candidates is
JPMorgan Chase & Co. Two longtime JPMorgan directors are Bush fund-raisers,
as are two former and one current executive. Another JPMorgan executive, Nancy
Phund, is a top fund-raiser for Kerry.
The Treasury Department’s Office of Foreign Assets Control has cited JPMorgan
and its subsidiaries five times for business with Iran in the past decade and once
for a $50,000 funds transfer by subsidiary Chase Manhattan Bank to Iraq in
Both Kerry and Bush also say they’re concerned about Iran’s nuclear programs,
which U.S. officials say are designed to make bombs by Tehran says are only to
The 12 punished companies managed by Bush fund-raisers have been cited 27 times
for dealings with Iran since President Clinton banned all trade with Tehran in 1995,
records of the Office of Foreign Assets Control say. The five punished companies
managed by Kerry fund-raisers were cited 12 times for Iran dealings.
One example is Citigroup, which has one Bush fund-raiser on its board of directors
and four Kerry fund-raisers in top executive ranks.
Kerry’s campaign finance chairman, Louis B. Susman, is vice chairman of Citigroup
The assets control office cited Citigroup three times for transactions involving
Iran and twice for doing business with entities on the U.S. terrorist watch list….
October 6, 2004
BANKING ON ELECTIONS
Finance sector invests
heavily in candidates
By Lucy Komisar, Corpwatch
When Phil Gramm came out of the Tavern on the Green one recent August
morning, his disposition turned edgy. The former Texas Senator, the long-time
banking committee chair, is now a vice chairman of the Swiss financial corporation
He’d just passed some pleasant hours hobnobbing with comrades in the money
trade, all lured to New York by the chance to make profitable connections during
the Republican Convention. But Gramm wasn’t keen on talking to waiting journalists,
certainly not to the CorpWatch team. Robert Rubin seemed quite at ease sitting
next to Teresa Heinz Kerry at the Fleet Center in Boston, home to the
Democratic Convention in July. The Clinton Treasury Secretary, former senior
partner at the investment company Goldman Sachs, is now chairman of the
executive committee of Citigroup. There was no chance of journalists bearding
him in the candidate’s box – at least none who would ask uncomfortable questions.
THERE’S AN OLD LABOR SONG THAT SAYS:
“The banks are made of marble,
with a guard at every door,
and the vaults are stuffed with silver
that the workers sweated for.”
Today, the banks attempt to disarm their critics with patron-friendly public
relations like Citibank’s gushy “live richly” campaign, which advises everyone that
money really doesn’t matter. What counts are “hugs.”…
So how come Citigroup CEO Sanford Weill, now the company’s chairman, collected
$44.6 million compensation in 2003? Robert Rubin pocketed $17 million. These
obscenely rich gentlemen must not be reading their company’s ads. (Or maybe the
ads are only for the masses.)
Such feel-good promotion masks an industry that is anything but benevolent. And
to kill needed regulation for the public good, the banks and financial services
companies (that now includes insurance companies, investment firms and stock
brokerages) offer big money to the candidates.
According to the Center for Responsive Politics, a Washington-based group that
analyzes raw Federal Election Commission (FEC) data, if one combines all finance
sector donors (including real estate, accounting corporations, insurance and stock
brokers) the combines total contributions to Democratic and Republican parties
and federal candidates so far this election season, is a staggering $218 million!
Over the course of his entire electoral career, six out of ten of President Bush’s
top lifetime contributors come from the financial sector. In the current
presidential campaign, all ten of Bush’s top contributors come from the financial
sector (accounting, banking, insurance, stock brokers and investment companies.)
According to summaries provided by the non-partisan public interest group the
Center for Public Integrity, contributions to Bush’s campaigns for Congress, Texas
governor and the presidency through the third quarter of this year show
$353,000 from UBS Financial Services, $445,000 from Credit Suisse First
Boston, $505,500 from Merrill Lynch, $493,000 from MBNA Companies, and
$343,000 from Goldman Sachs.
On the Kerry side, contributions to the committees of Citizen Soldier Fund,
Kerry’s Senate campaigns from 1984-2002, and Kerry’s 2004 presidential campaign
through June 30, 2004 included: Citigroup, $226,910; FleetBoston Financial Corp.,
$202,087; and Goldman Sachs Group $190,750. And not far down in Kerry’s list
one can find JP Morgan Chase and Bank of America, which recently merged with
Fleet Financial, Kerry’s biggest backer during his congressional career.
Bush and Kerry have four finance sector major donors in common:
JOHN KERRY 2004 CAMPAIGN PATRONS
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
ROBINS, KAPLAN, MILLER & CIRESI
UBS AG INC
GOLDMAN SACHS GROUP
VERNER, LIPFERT, BERNHARD, McPHERSON & HAND/PIPER RUDNICK
MINTZ, LEVIN, COHN, FERRIS, GLOVSKY AND POPED
MORGAN STANLEY DEAN WITTER & CO.
GEORGE BUSH 2004 CAMPAIGN PATRONS
MORGAN-STANLEY DEAN WITTER & CO.
MERRILL LYNCH & CO. INC
UBS AG INC
GOLDMAN SACHS GROUP
CREDIT SUISSE FIRST BOSTON
ERNST & YOUNG LLP
LEHMAN BROTHERS HOLDINGS, INC.
~ ~ ~
… The McCain-Feingold campaign finance law, passed in 2002, banned
corporations and unions from giving soft money contributions directly to the
political parties. Now only about 10 or 15 percent of contributions to the
candidates comes from PACS. Most money comes from individuals who “bundle”
their donations of up to $2,000 per candidate to make it clear who and what they
represent. Although the campaigns say they voluntarily report who their bundlers
are, they are not required to report it to the FEC.
In the Bush campaign, for example, the ten biggest financial services companies
have bundlers who collect $50,000, $100,000, $200,000 or more. Often
individuals make donations at the suggestion of a bundler in their company….
However, finance has jumped ahead of telecommunications to become Kerry’s
largest corporate benefactor, contributing at least $8 million through bundlers.
Goldmans Sachs executives account for four of Kerry’s top-ranked bundlers. Also
among them is Chad Gifford, former CEO of Fleet Boston and now the Bank of
What do banks and their brethern want for the cash?
According to an August 2003 Public Citizen report entitled Bullish of Bush, E.
Stanley O’Neal, CEO and chairman of Merrill Lynch, James Cayne, CEO of Bear
and Sterns, and Thomas A. Renyi, CEO of the Bank of New York, saved a total
of $1.9 million on their personal income taxes thanks to Bush tax cuts.
But far more important than saving on their executive’s personal income taxes,
these companies count on financial contributions to encourage politicians to cut
dividend taxes and corporate income taxes, to wave through massive mergers, and
water down regulations on accounting standards, money laundering, conflict of
interest restrictions and other public interest requirements.
For example, in 1999, Kerry used his position of the powerful Senate Finance
Subcommittee to support the merger of Fleet and Bank Boston, even though the
merger was opposed by local Democratic leaders and resulted in the layoff of
George Bush’s favors to finance capital are so numerous it’s difficult to list all of
them, but the dividend tax cut, cuts on capital gains taxes and support for the
privatization of Social Security are certainly at the top of the list….
But the big plum of finance de-regulation occurred in the waning years of the
Clinton Administration, under no other than Treasury Secretary Rubin, now at
In this era of giant global companies eating up small ones, the big banks wanted,
and they got, the abolition of the Glass-Steagall Act of 1933 which banned
mergers of banks and other financial services companies (insurance, brokerage,
investment companies) on grounds the mega-conglomerates would create conflicts
of interest. While banking regulators and the courts had gradually been eroding
the separations that existed in the law, it still remained the last government
firewall against global financial oligopoly.
Citigroup was the leading company in the financial services industry that
benefitted from the law enacting the abolition. It was called after its chief
sponsors the Gramm-Leach-Bliley Financial Services Modernization Act.
Yes, the bankers’ friend, Phil Gramm.
Citigroup lobbied aggressively and had a significant influence in shaping it,
according to a source close to the drafting process. It needed the law to legalize
its merger with the giant, Travelers Insurance, which was allowed “temporarily” by
President Clinton and Federal Reserve Chairman Alan Greenspan, supposedly to
allow time for the merged group to come into compliance….
How did Citigroup and its lobbyists get the Senate to rush through the legislation?
Roper says it’s the usual Capitol Hill story, “When the people who want the
legislation passed make massive campaign contributions and the people who oppose
the legislation are nonprofits who don’t make campaign contributions, the deck is
stacked in favor of passage.”
Citigroup took the lead in proving the critics right. Decisions about lending and
investment banking were tied to recommending client company stocks to investors.
Regardless of the worth of the stock, Wall Street brokers would hype stocks in
order to get companies to give them investment banking business. Financial
regulators, as critics had warned, proved utterly unable to prevent these problems.
Caught in the crooked act, Citigroup was one of ten major Wall Street firms that
agreed to pay a record $1.4 billion in 2002 to settle charges that they
inaccurately and unfairly promoted stocks of companies that gave their firms
lucrative underwriting contracts.
Among the President’s top supporters are eight of those firms: Merrill Lynch,
Morgan Stanley, UBS America, Goldman Sachs, Credit Suisse First Boston
Corp, Lehman Brothers and Bears Stearns. All were accused of knowingly
dispensing false stock market advice. In settling the case they admitted no
wrongdoing. But prominent personnel at some of the firms, including Merrill and
CSFB, have also been criminally prosecuted.
Kerry’s top ten presidential campaign donors include 3 of the same donors, UBS
AG Inc., Goldman Sachs, and Morgan Stanley Dean Witter & Co.
Kerry’s number two largest donor as of September 7, 2004: Citigroup.
Despite the big financial backing from finance, not all banking reformers have
given up hope on Kerry. When the Neighborhood Assistance Corporation of
America (NACA), ran a campaign against Fleet bank for engaging in predatory
lending against low-income home owners, Kerry voted for a bill to regulate
NACA president Bruce Marks says that there was a concern at one point that
Kerry was defending Fleet. Marks says, “We met with him, and he was fine. We
never saw him being out there aggressively supporting Fleet.” He says, “Kerry has
been on the right side with the consumer on the banking issues [such as] predatory
lending and disclosure.”
Could the Kerry administration turn in a better record on oversight to the finance
industry than the scandal plagued years of the Bush administration or the give-away era of the Clinton Administration?
Perhaps, but maybe we’d better find out just what Citigroup’s Rubin is whispering
in Kerry’s ear.
October 20, 2004
CITI BOOTS 3 OVER JAPAN SCANDALS
By Paul Tharp, New York Post
Heads began rolling among top brass at Citigroup over its private banking scandal in
Japan – including its superstar Vice Chairman Sir Deryck Maughan and two other
The shakeup came yesterday just a week after Citigroup chief Charles Prince
announced he was “personally hurt” over the alleged money laundering affair at its
private banking business in Japan.
Prince said in an internal memo at the world’s biggest bank that Maughan, 56, would
be leaving along with Investment Management head Thomas Jones and Peter
Scaturro, who ran the company’s big private bank.
The British educated Maughan – who owns more than $70 million in Citigroup stock
– has spent 21 years with the organizationn and its predecessor companies, having
started as a broker in 1983 at the former Salomon Smith Barney.
Prince last week reacted angrily to the Asian scandal, telling a news conference:
“In Japan, our private bank did not do the right thing. We have people who
violated the ruled, violated external rules … [and] despite very significant
preventative efforts, we once again found ourselves with people who did the wrong
thing, hurt customers and put the franchisee at risk.”…
Officials in Asia ordered Citigroup to shut its private banking office in Japan after
failing to conduct proper checks against money laundering.
Regulators in South Korea said they had uncovered fraud in Citigroup’s retail bank
A total of 48 branches in Asia are under investigation over possible overseas
transfers of up to $1.4 billion, including currency transactions.
Last month, Citigroup also apologized for several European bond sales that
triggered a probe by regulators in Britain.
August 26, 2004
Citigroup Sued Over Enron Scandal
NEW YORK (Reuters) – Citigroup Inc. faces a lawsuit from angry investors who
allege they were defrauded in a “massive scheme of deception” when they bought
securities tied to the credit-worthiness of bankrupt energy trader Enron Corp.
The suit, brought by Bank of New York Co. Monday in New York State Supreme
Court on behalf of numerous investors in Enron-related securities, is the latest in a
spate of actions at recovering billions of dollars lost when the Houston-based
company collapsed into bankruptcy in 2001.
Plaintiffs include well-known distressed debt funds Angelo Gordon & Co. and
Appaloosa Investment LP, who charged in the 77-page complaint that Citigroup
concocted a fraudulent scheme to raise billions of dollars from the sale of notes
called “Yosemite” securities.
Citigroup, the investors said, then used the funds to make “disguised” loans to
Enron “to reduce its own Enron credit risk, prop up Enron’s failing financial
condition and generate significant fees in the process.”
The complaint alleges fraud, breach of contract and fiduciary duty, and negligence
in the Yosemite transactions, which it said took place between 1999 and 2001.
Enron sought Chapter 11 bankruptcy protection on Dec. 2, 2001….
A successful lawsuit might complicate Citigroup’s plan to keep its already high legal
costs from rising further.
The company in May roughly quadrupled, to $6.7 billion, its reserves for legal bills,
including those for Enron, as it agreed to pay $2.65 billion to settle a lawsuit by
WorldCom Inc. investors accusing it of participating in financial fraud.
Citigroup Chief Executive Charles Prince said at the time, “We feel very
comfortable in saying that, with our advisers helping us, we have established a
reserve that will cover all of our meaningful exposures.”
In their complaint, the Yosemite investors said Citigroup knew Enron’s debts were
several billion dollars greater than the company publicly disclosed between 1999
They also said the bank wanted to cut its own, rising exposure to Enron. Though
Enron was an investment-grade company until just four days before it filed for
Chapter 11 bankruptcy, the complaint said Citigroup, because of undisclosed
information it possessed about Enron, knew that defaults were “likely.”
“Citibank thus found itself in a bind. It knew Enron was not loan-worthy, yet if it
failed to find Enron new sources of financing, it ran the significant risk that Enron
would collapse before Citibank could recover the billions of dollars Enron owed it,”
the complaint said.
“The Yosemite transactions were Citibank’s solution to its problem.”…
August 13, 2004
United Health, Citigroup unit settle
Medicare fraud claim
By Chad Bray, Dow Jones News Service
NEW YORK – Two insurers have settled civil Medicare fraud charges by the U.S.
attorney’s office in New York City for $20.6 million, the government said
In a news release, prosecutors said the Travelers Insurance Co., a life insurance
unit of Citigroup Inc., and United Healthcare Insurance Co., a unit of
Minnetonka-based UnitedHealth Group Inc., agreed to settle the case without
Under the terms of the settlement, Travelers will pay $10.9 million, while United
Healthcare will pay $9.7 million.
“The Travelers Insurance Co. decided to settle in order to avoid the distraction
of further litigation, and denies any wrongdoing in the case,” spokesman Bob Nolan
said in a prepared statement. “Today’s settlement announcement closes a chapter
on an issue that dates back almost a decade.”…
The government had claimed that Travelers, between October 1988 and January
1994, inflated its cost reimbursements well above its actual expenditures under
the Medicare program in order to obtain higher reimbursement and greater
performance incentive payments.
Travelers was the fiscal intermediary for the Medicare Part A program in portions
of Connecticut, Michigan and New York; the Medicare Part B carrier for
Connecticut, Minnesota, Mississippi and Virginia; the Railroad Retirement Board
carrier nationwide, and the Durable Medical Equipment carrier for Connecticut,
Michigan and New York.
United Healthcare took over those contracts in January 1995 and continued the
improper billing practices through December 2000, prosecutors said.
July 30, 2004
Parmalat seeks $10 billion in
Citigroup fraud case
By Christian Plumb, Reuters
MILAN – Parmalat is seeking more than $10 billion in damages from Citigroup in a
lawsuit that accused the U.S. bank of helping defraud the Italian food firm and its
shareholders and creditors of billions of dollars.
The new administration of Parmalat said in the lawsuit filed on Thursday that “the
top leavels” of the world’s leading financial services group played a crucial part in
the multi-billion euro fraud that plunged the company into insolvency in December.
“Citigroup engaged in a series of transactions with Parmalat or its subsidiaries
whose only economic purpose was to enrich Citigroup, at the ultimate expense of
Parmalat,” according to the lawsuit, filed in the U.S. state of New Jersey.
“Citigroup’s transactions with Parmalat were knowingly designed to assist Parmalat
in a broad, continuing series of fraudulent transactions,” it said.
Citigroup declined comment of the specifics of the suit … But it said it had been
the victim of fraud perpetrated by Parmalat.
“Citigroup lost hundreds of millions of dollars as a result of Parmalat’s fraudulent
conduct, and we will continue to pursue our substantial claims against the company
and defend against frivolous claims in search of a deep pocket,” the bank said….
“APPROVED AT TOP LEVELS”
Citigroup also created a special purpose vehicle called “buconero” – Italian for
black hole – used for loans among units in the Parmalat group.
The lawsuit says Citigroup designed and structured deals that helped “a few
culpable members of Parmalat’s management hide Parmalat’s mounting debt,
artificially improve its reported cash-flow and manipulate Parmalat’s financial
The transactions “were all approved at the top levels of Citigroup and required the
coordination of different groups at Citigroup throughout the world, from New
York, to New Jersey, to England and Italy itself,” according to the suit.
Saying $8 billion was “lost, stolen or wasted” with Citigroup’s help, the 65-page
complaint named a number of bank employees, including a Citibank managing
director, who it alleged had helped with the fraudulent transactions.
In addition to fraud, the suit accuses Citigroup of diversion of corporate assets,
unjust enrichment, deepening Parmalat’s insolvency, unlawful civil conspiracy and
Parmalat’s losses of more than $10 billion were a direct result of the fraudulent
activity, the suit said, asking the U.S. court for “an award of damages for all of
Citigroup had previously been named in at least two class action suits brought by
Parmalat investors in the United States.
Bank of America, which Milan prosecutors have asked a judge to bring to trial of
fraud charges along with Parmalat’s former executives and auditors, could not be
reached for comment.
Several other Italian and foreign banks are being probed to see how much they
knew about Parmalat’s finances when they did business with its ex-management.
Deutsche Bank said there had been no damage claims filed against it over
Parmalat. A source at the bank said it was in close negotiations with both Italian
and German regulators, Italian prosecutors and Parmalat’s Bondi.
A spokesman at Morgan Stanley declined to comment….
July 23, 2004
The Enemy Within
By Seth Lubove, Forbes
Riot police fired rubber bullets and tear gas at protesters in Rio de Janeiro in
1998 when Brazil broke up and privatized its massive state-owned monopoly phone
system, Telebras. For Brasil Telecom, one of the original Telebras companies, the
fighting hasn’t stopped since.
In a transatlantic feud that has landed in courts and government agencies on three
continents and the Caribbean, and sullied the reputations of Citigroup (nyse: C) and
now, potentially, J.P. Morgan Chase’s star investment banker Jimmy Lee, Brasil
Telecom and its feisty Italian-born female boss have waged a fierce battle over
control of the company with its second largest shareholder, Telecom Italia. The
Italian communications conglomerate owns a 19% stake in the holding company that
controls Brasil Telecom, although even that amount is the subject of a furious
battle over whether the Italians can increase their stake to their original 37%,
before regulatory requirements forced the company to reduce its holdings.
“This is a breach of the fiduciary duty a shareholder has with a company,”
complains Brasil Telecom Chief Executive Officer Carla Cico, 43, referring to
Telecom Italia’s war of attrition, the subject of various arbitrations, lawsuits and
regulatory actions. “The result today is Brasil Telecom’s stock is undervalued.”…
Now, a fresh firestorm has erupted over allegations that Brasil Telecom hired
private investigators at Marsh & McLennan’s Kroll unit to spy on Brazilian
government officials and look into whether Telecom Italia has conspired to
secretly undermine Brasil Telecom so it could take the company over on the
Both Kroll and Brasil Telecom acknowledge Kroll was hired, but say media reports
that Kroll spied on Brazilian officials to check if they were aligned with Telecom
Italia are bogus.
“Brasil Telecom never asked Kroll to investigate any member of Brazil’s
government, and we never did,” said Kroll’s regional managing director for Latin
America, Andres Antonius, in a statement….
Forbes obtained a copy of the Kroll report and related summaries. The 44-page
report includes no reference to government officials. Among many other things,
however, the report does allege that J.P. Morgan Chase, and Vice Chairman Lee,
aided Telecom Italia in a conspiracy campaign by arranging a secret financial
transaction that helped to further undermine Brasil Telecom.
Kroll claims in the report and in related summaries that Chase orchestrated a
complicated financing scheme with a separate company in 2000 that allowed
Telecom Italia to swoop in and buy out a corporate network services company that
Brasil Telecom was set to acquire for itself, despite the fact that Telecom Italia
participated in Brasil Telecom’s board discussions about the acquisition.
The network services company, Vicom, was instead acquired by something called
Globo Cabo (now Net Services), a Brazilian cable operator that Telecom Italia had
been “secretly” negotiating with, according to a summary of the Kroll report.
In March 2000, Telecom Italia met with Globo to discuss a deal in which Globo
could invest in Brasil Telecom if Telecom Italia was successful in taking the
company over, a violation of Brasil Telecom’s shareholder agreement, according to
According to the summary of the Kroll report, Chase “benefited from the fraud”
by earning fees and shifting the risk associated with the financing of the venture
away from Globo to Telecom Italia’s stronger balance sheet, while also obfuscating
Globo’s debt ratings….
Citigroup, meanwhile, has been dragged into the mess due to its investment,
reportedly $700 million, in DVC/Opportunity Partners (as in “Citigroup Venture
Capital”), a Brazilian fund that invests in newly privatized industries. The fund, in
turn, owns a controlling stake in the holding company that ultimately controls Brasil
Telecom, and which is aligned with management against Telecom Italia.
Much to the American bank’s likely aggravation, Citigroup’s name has been regularly
trotted out in stories about the feud, despite the bank’s contention that it has no
“controlling interest” in Brasil Telecom, according to a spokesperson who otherwise
declined to comment on the feud….
For more on Kroll Associates, GO TO > > > KROLL, the Conspirator
May 11, 2004
Citigroup To Pay $2.65 Billion in
WorldCom Fraud Settlement
By Gretchen Mortgenson, The New York Times
Hoping to close the books on its role as lead banker to WorldCom, Citigroup agreed
Monday to pay $2.65 billion to investors who bought stock and bonds in the
telecommunications giant before its bankruptcy filing two years ago.
The payment is the largest ever by a bank, brokerage firm or auditor to settle a
fraud case brought by investors who bought securities issued by a corporation
that was advised by one of those firms. It is the second-largest amount ever paid
to settle a securities class action, trailing Cendant Corp.’s payment of $2.85
billion in 2000.
The Citigroup settlement, which must be approved by the court, came just hours
before an appellate court was to hear arguments addressing among other things,
the conflicts between the firm’s stock analysis and the investment banking fees
generated by WorldCom. The Securities and Exchange Commission had filed a
friend of the court brief supporting the investors’ claims.
Litigation continues against the defendants: WorldCom’s former officers and
directors, other banks and brokerage firms that sold WorldCom securities, and
Arthur Andersen, the company’s auditor at the time.
Tens of billions of dollars in investor wealth vanished when WorldCom collapsed
in July 2002, and Monday’s settlement is the first indication of how much money
may yet be paid by the people and firms that helped the company sell its securities
to investors. In 1999, when the stock was at its peak, WorldCom had a market
value of more than $150 billion.
“This settlement, while historic, is only the first step,” Hevesi said. “We will
continue to pursue our claims against the others who bear responsibility for the
debacle at WorldCom. The investing public depends on the gatekeepers, and the
gatekeepers have to be diligent in making sure investors get accurate and truthful
March 17, 2004
THE MISSING WORD IS “CORRUPTION”
From The New Republic Online
Buried in the financial pages this morning is news that, last year, Sanford Weill of
Citigroup was paid $44.7 million – that being the year he lost his CEO position
owing to the many scandals the company has been embroiled in. Further buried in
the financial pages is news that, last year, Weill realized $262.4 million from
exercising stock options or selling accumulated stock back to Citigroup. Sanford
Weill took home $330 million last year for sitting in a chair at the top of a
There’s a word for this, and the word is corruption.
Set aside the regulatory problems and ethical lapses that have characterized
Citigroup under Weill’s leadership: the $400 million fine the company paid in 2002
for fishy dealings; the $1.5 billion write-off the company took in 2002 for the
federal fine and “toward estimated costs of the private litigation” arising from its
deceptive stock practices; the fact that Citigroup was humiliated when Weill tried
to get himself onto the board of the New York Stock Exchange – then run by the
greedy Dick Grasso – at the same time Citigroup was agreeing to Securities and
Exchange Commission sanctions. ….
Set all this aside and assume for the sake of argument that Weill’s name was not
tainted. … How could anyone at all sitting in a chair and signing memos be worth
$44.7 million in a single year? Did Weill have some blinding insight that was
without precedent in business history? Did Weill engage in some brilliant
masterstroke? Citigroup’s overall strategy differs only in minor respects from
that of its major competitors. … If an orangutan had been the company’s CEO in
2003, its share prices probably would have risen.
Did Weill do any unusually good job of attending meetings, schmoozing at lunch and
signing memos? Even if he did it’s impossible to justify $44.7 million for a single
year – bearing in mind that this money does not pop out of the air. Weill’s big
payday for 2003, or his accumulated $330 million haul, is money that could
otherwise go to Citigroup shareholders as dividends, while the portion that is stock
grants or exercised options both dilutes the value of shares held by existing
shareholders and represents shares the company might have sold to raise equity –
the reason stock exists in the first place – but instead gave away to Weill.
Last year Weill was paid $110,000 per day, The New York Times calculates in a
piece that was buried in the financial pages. That is grotesque….
Jeffrey Toobin observes in the current New Yorker of today’s CEO ethos: “They
took credit when the nation’s economy made almost every business leader look
good, and blamed the fates when times turned hard. Many were, in essence,
lavishly paid bureaucrats – caretakers rather than creators.” The $1.5 billion
Citigroup wrote off in 2002 for Weill’s mistakes came out of the pockets of
shareholders, but was presented by the company as just the vicissitudes of the
fates. Immediately Weill resumed shoveling shareholders’ money back into his
Corporate CEOs should be paid more than cab drivers, and many CEOs make
important contributions to society. But there’s a word for grabbing $44.7 million
for less than a year’s time sitting in a chair, and the word should be corruption.
Where is the locus of the problem in this case, with Weill personally or with the
company board that approved his grotesque exercise in avarice? The company
board had to vote to say, in effect, that there was no qualified person willing to sit
in the Citigroup chair for less than $44.7 million.
Big-company boards are composed mostly of people who benefit personally by
driving up executive pay; 11 of Citigroup’s 16 active board members are chairmen or
CEOs of big companies. If they throw absurd amounts at the Citigroup CEOs, this
makes it easier for them to argue that their own companies should throw absurd
amounts at them. Benefitting personally from your decisions about other people’s
money is called corruption.
It’s past time that greedy men like Weill stopped grabbing grotesque sums at the
expense of common shareholders, and it’s past time newspapers and politicians
stopped using euphemisms like “compensation” and called this what it is,
August 5, 2003
Citigroup, Morgan Chase fined for Enron
deals; corruption at the heights of
By Joseph Kay, www.wsws.org
Citigroup Inc. and JP Morgan Chase & Co., the largest and second largest US
banks respectively, reached an agreement July 28 with the Securities and
Exchange Commission (SEC) to pay a combined $255 million in fines in connection
with their involvement in the fraud perpetrated by Enron.
JP Morgan will pay $135 million and Citigroup will pay $120 million to the SEC. In
addition, both banks reached a settlement with the Manhattan district attorney
that includes an agreement to pay $12.5 million each to New York City and New
The SEC charged that the two banks aided defunct energy trading giant Enron in
disguising loans as cash in order to defraud investors. In December 2001, Enron
filed what at the time was the largest corporate bankruptcy in US history.
Having sustained itself on the basis of fraudulent accounting practices and illegal
financial manipulations, Enron – which had the closest ties to President George W.
Bush and other officials in his administration – has become a synonym for
corporate criminality. The revelations of the fraud carried out at that company
initiated a wave of accounting scandals – including those at WorldCom, Tyco and
The involvement of the banks in these scandals reveals that the corruption that
has come to light over the past several years is not simply a matter of a few “bad
apples,” but rather involves the entire corporate and financial elite….
The government is hailing the settlement as a great victory. … Manhattan district
attorney Robert Morgenthau stated that the settlement sent a signal: “No more
phony baloney offshore special purpose vehicles that are not understandable.”
However, the settlement will have little real consequences for the operations of
the banks. They have promised not to engage in such prepay deals in the future
unless the client companies practice full disclosure. Both Citigroup and JP Morgan
agreed to put in place tighter risk management controls, but purely on an internal
level. According to these new controls – which must be submitted to the Federal
Reserve for approval – senior executives will have to exercise greater oversight of
complex financial arrangements.
There are no provisions for government oversight of banking operations, and no
enforcement mechanisms or consequences if the banks do no comply.
As a sign that investors considered the settlement a win for the banks, stock
prices rose for Citigroup and JP Morgan the day the agreement was announced.
June 10, 2003
STUDY GIVES CITIGROUP BOARD
The board of directors at financial services giant Citigroup ranks worst overall
when it comes to the effectiveness of corporate boards, an independent
governance monitor said yesterday.
Taking a close look at America’s 1,700 largest companies, the Corporate Library
assessed the ability of their boards to provide effective oversight, and found
chief executive compensation to be one of the most significant indicators of who’s
In addition to Citigroup, the worst performers were Allstate Corp., Emerson
Electric Co., Gemstar-TV Guide and Honeywell International.
Citigroup defended itself yesterday, saying its “independent and active board has
been a source of strength as the company has grappled with highly complex issues
while simultaneously delivering record values for all its shareholders.”
Rounding out the 10 worst boards are J.P. Morgan Chase, Loews Corp., SBC
Communications, Verizon Communications and Walt Disney Co….
May 8, 2003
The Wall Street Fix
Last week, when New York State Attorney Eliot Spitzer, SEC Chairman William
Donaldson, and other regulators charged 10 of Wall Street’s biggest firms with
fraud and announced a $1.4 billion settlement – the biggest in Wall Street’s
history – they looked into the cameras and spoke of “restoring investors’ faith
But what has really been learned from the seemingly endless scandals that have
rocked Wall Street and shaken the markets for the past two years? How many
investors understand how Wall Street really does business, and how it fueled the
bubble during the 1990s?
In “The Wall Street Fix,” FRONTLINE correspondent Hedrick Smith looks inside
the culture of Wall Street and the world of investment banking, investigating the
hidden relationships between the Street’s biggest bank, Citigroup, and the bubble’s
most spectacular failure, WorldCom. Focusing on the story behind Worldcom’s
incredible rise and fall – and the relationship between its CEO Bernie Ebbers, and
Citigroup’s star telecom analyst Jack Grubman – Smith shows how Wall Street
drove the telecom boom, pocketing enormous profits, and then took millions of
investors on a ride that eventually cost $2 trillion in losses on WorldCom and other
“Jack Grubman and Salomon Smith Barney were essential enablers for WorldCom
to take off,” says Scott Cleland, CEO of the Precusor Group, an independent
research firm specializing in high tech and telecom. “It took a rising stock price.
It took some very good investment banking, and some very good salesmanship in
order to sell the marketplace [on the company].”
The key to these relationships between up-and-coming companies and investment
banks, industry insiders say, were the Wall Street analysts who were supposed to
provide investors with objective recommendations on which stocks to buy. The
analysts, however, worked for the investments banks, and instead of issuing
objective reports, these analysts were helping their employers secure the
lucrative banking business of the companies they were supposed to be
“What we found was that analysts were involved from the very beginning of the
investment banking relationship – going out there, soliciting a client, promising that
if you bring your business to our firm, we will take your company [and] proclaim to
the world that it is the best thing since sliced bread,” asserts Spitzer.
“It wasn’t just one corrupt individual,” he adds. “It was an entire business model
that was flawed….”
The report also looks at the relationship between Grubman and Citigroup CEO
Sandy Weill and how Weill’s creation of the nation’s first “superbank” in 1998 –
merging Salomon Smith Barney with Citibank, a giant commercial bank, and
Travelers, an insurance giant, under one corporate umbrella – contributed to the
conflicts of interest addressed in last week’s settlement.
The merger that created Citigroup was made possible by Federal Reserve Board
decisions in the 1980s and 1990s, and by Congress’s eventual repeal in 1999 of the
Glass-Steagall Act, a 70-year old law aimed at protecting investors by
separating investment and commercial banking.
“The repeal of Glass-Steagall was a big deal because it enabled the kind of colossal
combinations that just weren’t envisioned before,” Cleland says, “where your
brought the savvy of an investment banking house like Salomon Smith Barney
together with a Citibank. And Citibank could loan an enormous amount of money.”
In “The Wall Street Fix,” FRONTLINE reveals that Travelers gave WorldCom CEO
Bernie Ebbers a personal mortgage for $1 billion. Ebbers would use the loan to
build a personal business empire by purchasing half a million acres of timberlands in
Mississippi, Alabama, and Tennessee. In addition, Citibank gave Ebbers another
loan that he used to finance ownership of a 500,000-acre ranch in Canada – a loan
that attorneys representing irate stockholders charge was backed by 2.3 million
shares of Ebber’s WorldCom stock.
“That’s a very troubling link in our view,” says attorney Sean Coffey, whose client,
the New York State Employees Pension Fund, has sued Wall Street banks to
recover $300 million in WorldCom losses.
“Citibank [had] an interest in the stock price of WorldCom being high enough to
cover the loans they’ve made to Mr. Ebbers. And yet, in another part of the same
building you’ve got Jack Grubman issuing analyst reports saying, ‘Buy, buy, buy that
stock’ to drive the price up.”
Coffey also questions whether Grubman’s close relationship with WorldCom
executives would have alerted him to signs of the accounting fraud with which
WorldCom has been charged. According to Coffey, Grubman’s e-mails confirm that
instead of objectively analyzing WorldCom’s performance, Grubman was coaching
WorldCom executives on what to tell other stock analysts about the company’s
FRONTLINE also speaks with two former Salomon Smith Barney brokers, who
describe in detail how their firm steered choice initial public offerings (IPOs) to
telecom CEOs like WorldCom’s Ebbers far more frequently that was reported to
Congress. By offering large blocks of IPO stock at the typically low, opening-day
price – even after the actual price had doubled, tripled, or quadrupled in trading –
these brokers say Salomon was essentially giving millions of dollars in “free
money” to CEOs in exchange for their investment banking business.
“How do you pay a corporate officer five, 10, $20 million in risk-free profits and
not have it influence his decisions,” asks David Chacon, a former Salomon Smith
Barney broker who handled IPO offerings.
“It’s an impossibility. Of course it’s a quid pro quo.”…
“The Wall Street Fix” concludes with the settlement reached by 10 Wall Street
banks and several regulators. The settlement combines $1.4 billion in fines and
other payments with a handful of reforms, such as prohibiting IPO giveaways to
CEOs, and creating more distance between Wall Street analysts and investment
But several Wall Street veterans and investors tell FRONTLINE that the
settlement does not adequately protect investors. Some Wall Street experts say
that research analysts should be totally separated from investment banking, while
others say the banks should be forced to publicly acknowledge how they hurt
investors. Still others believe that criminal prosecution is necessary to restore
investor confidence in Wall Street.
“We’ve moved the ball somewhat, but the problem is still very much there,” says
former SEC Chairman Arthur Levitt.
“Have we heard from the firms precisely what they did? The fines are symbolic.
A satisfactory settlement of this issue would involve a public revelation and public
admission, by all parties across the board, of what went wrong.”…
September 20, 2002
Grubman faces charges
Fraud charges also could be leveled against Salomon
By Charles Gasparino, THE WALL STREET JOURNAL
The National Association of Securities Dealers is preparing to file administrative
charges of securities fraud against Salomon Smith Barney and its former
telecommunications analyst Jack Grubman, according to people familiar with the
matter. The charges would stem from the firm’s positive research reports on
Winstar Communications Inc., a telecommunications company that filed for
bankruptcy-law protection last year, these people said….
The NASD has focused on whether Mr. Grubman misled investors by touting
shares of Winstar, one of Salomon’s investment-banking clients, amid evidence
that the company was in deep financial trouble, people familiar with the matter
Any NASD civil action would mark the first major case by federal securities
regulators investigating whether big securities firms obtained investment-banking
business by making overly optimistic stock picks. Charles Prince, Salomon Smith
Barney’s new chief executive, met Thursday with Mary Schapiro, head of the
NASD’s regulatory division, to discuss the Winstar case, people familiar with the
The moves signal that Citigroup Inc. and its Salomon Smith Barney unit are
aggressively seeking to put a number of regulatory woes behind them. On
Thursday, Citigroup, the nation’s largest financial-services firm, agreed to pay
$215 million to settle federal charges that a company it acquired manipulated as
many as two million people into buying overpriced mortgages and credit
insurance before the Citigroup purchase….
Next week, Mr. Prince is slated to meet with NASD officials and Stephen Cutler,
the Securities and Exchange Commission’s enforcement chief, in a bid to arrive at
a “global settlement” of all federal regulatory matters involving Salomon. The
various inquiries involve allegations that the firm used hyped research to win
investment-banking deals and handed shares of hot initial public offerings to
corporate executives as a way of winning lucrative banking assignments,
misleading small investors in the process….
At the same time, Salomon has begun settlement talks with the office of New
York State Attorney General Eliot Spitzer, which has launched the most
far-reaching probe into conflicts of interest involving the firm’s research and
other matters, these people say.
The Spitzer investigation is potentially the most problematic for Citigroup: In
addition to investigating whether Mr. Grubman hyped research on telecom stocks
to win investment-banking deals, Mr. Spitzer also is examining the role played by
senior executives at the firm….
Mr. Spitzer’s office, meanwhile, also is investigating whether the firm improperly
doled out IPOs to senior executives whose companies did business with the
securities firm. Indeed, people close to the inquiry say Mr. Spitzer is considering
ways to force corporate executives who have improperly received IPO allocations
to “disgorge” some of the gains back to investors. . . .
If the NASD proves its securities-fraud allegations, it could levy a wide array of
sanctions against Mr. Grubman, including millions of dollars in fines and other
penalties such as suspension, or a prohibition, from the securities industry. The
firm also could face certain sanctions.
There is a potential downside for Mr. Prince in the Spitzer investigation. Mr.
Grubman’s lawyers have made it clear that the former research star is willing to
cooperate. They also point out the pressures placed on analysts by investment
bankers and other executives to influence stock ratings when lucrative
investment-banking deals are on the line….
In a sense, Citigroup already has paid a big penalty amid the various allegations
involving its business practices during the stock market bubble of the mid- to
This year, the market value of the financial-services giant has declined by
nearly $120 billion, or about 45%, as investors have questioned Citigroup’s
business model of combining corporate lending, investment banking, research
and brokerage services for small investors under one roof.
Managing conflicts at such a wide-ranging conglomerate has proved difficult. This
predicament was highlighted by Citigroup’s work with Enron Corp., the
Houston-based energy giant whose December bankruptcy-law filing triggered a
spate of disclosures of corporate malfeasance. Citigroup, like some other
financial-services firms, worked as Enron’s lender, underwriter and adviser, among
Congressional investigators believe that Citigroup helped Enron hide billions of
dollars in debt from investors and ratings agencies through a complex series of
transactions. Citigroup officials deny that the firm did anything wrong.
Meanwhile, separate inquiries by Mr. Spitzer’s office and the NASD concern
Salomon’s research practices involving a broad array of telecommunications firms,
and whether senior Salomon officials allotted hot IPOs to corporate executives
running these companies as a way of winning lucrative investment-banking business.
Much of this line of questioning surrounds the research of Mr. Grubman, once one
of the highest-paid analysts on Wall Street.
Mr. Grubman was initially at the center of the various probes, but in recent weeks
officials in Mr. Spitzer’s office, as well as NASD investigators, have shifted their
emphasis, people familiar with the matter say. Now, investigators are looking more
broadly at whether Citigroup’s various businesses create conflicts that put small
investors at risk.
“Conflicts of interest are rampant at Citigroup,” asserts Jacob Zamansky, a
lawyer who has filed an arbitration claim against the firm and Mr. Grubman over its
“If a firm like this has to choose between a big corporate client that provides huge
investment-banking fees, and a small investor who doesn’t, the investor will always
Copyright © 2002 Dow Jones & Company, Inc., All Rights Reserved.
September 29, 2002
Predators In Paradise?
The inside story of how lenders at Citibank allegedly
played loan shark, charging the island nations of the
Caribbean excess fees and interest payments
By JYOTI THOTTAM, TIME.com
In a rambling two-story house hidden by mango and chicle trees on the industrious
island of Trinidad lives an unlikely watchdog against corporate greed.
Ved Seereeram, a financial consultant and former banker, has been working for
years to expose what he describes as a prestigious U.S. lender aggressively
marketing financial instruments to governments that didn’t really understand
Tens of millions of dollars in excessive fees and interest, he says, have been
diverted from poor Caribbean countries into the coffers of Citibank, now a unit of
Until recently, no one really listened.
But with the unraveling of Enron and WorldCom and recent allegations of legal and
ethical lapses at Citigroup, Seereeram’s cries are finally being heard. As a result
of his investigations, Trinidad’s tiny island neighbor Dominica has filed suit against
the Citibank unit, alleging that it secretly and aggressively overcharged the
government of Dominica on a bond issue to finance the island’s first international
“We believe the allegations are without merit,” says Lula Rodriguez, a Citibank
spokeswoman. Seereeram hopes Dominica’s lawsuit will bring renewed scrutiny to a
case closer to home: a 1993 deal to refinance a natural-gas exploration project, in
which he claims Citibank overcharged Trinidad’s government. Citibank has denied
any impropriety in that transaction.
With his clipped cadences and precise, impatient manner, Seereeram talks like an
accountant of the green-eyeshade era. But in his eight years as a merchant banker
at Citibank Trinidad, he helped bring the island into the world of structured
finance, which involved complex deals that aided Trinidadian businesses in
minimizing their tax liabilities and hedging against swings in interest rates.
“Citi had the reputation of being innovative, sailing close to the wind and
dominating the capital market,” says Richard Young, managing director of
Scotiabank, a Canadian institution with a division in Trinidad. Seereeram rose to
managing director at Citibank’s merchant banking arm, but he left in 1998 after
clashing with management over bonuses and marketing strategy, he says.
He started working as a consultant and soon realized that Citibank Trinidad had
begun marketing the structured finance instruments that he had developed to such
state-owned entities as Trintomar, a joint venture of Petrotrin and NGC,
Trinidad’s oil and natural-gas authorities.
It bothered Seereeram that Citibank was taking complex financial vehicles
intended for private companies, in part to reduce their taxes, and selling them to a
struggling public entity that at the time paid minimal taxes. He began to
investigate, hoping to take a fee from any money recovered. “They were not
disclosing the true nature of the product,” he says.
The product was a refinancing package for a natural-gas exploration project off
the southern coast of Trinidad. Lacking the postcard beaches that draw tourists
to neighboring islands, Trinidad depends mostly on oil and industry.
The Trintomar venture stumbled over a series of drilling mishaps and in 1992 was
in danger of defaulting on a loan to Nissho Iwai, a Japanese company that had
financed the project. Three big international lenders submitted proposals to
refinance the $61.5 million balance owed to Nissho Iwai. The plans were similar,
but with its long history in Trinidad, Citibank emerged as the front runner.
Citibank proposed a deal in which it would buy Trintomar’s accounts receivable
(two-year contracts to supply petroleum to Shell and Texaco) for $66 million – a
little more than was needed to pay off the Japanese loan. Trintomar agreed in
principle and began talks with Citibank to finalize the terms.
But then the bank changed the game. In addition to the loan they had been talking
about, Citibank wanted to finance a second loan of $96.5 million. It was analogous
to someone going to borrow money for a car, and as a condition of the deal, the
lender insisted that he borrow more than twice what he needed——and pay fees
and interest on the whole thing.
Why did Trintomar agree to these terms? Seereeram and other critics say it was
a sort of bait and switch.
Citibank met with Trintomar three times in the spring of 1992 to pitch its original
$66 million refinancing proposal, and in a letter dated Sept. 9, Trintomar asked for
a formal proposal. The next day, Citibank sent a letter outlining the extra $96.5
million loan in several pages of eye-glazing detail. Trintomar officials, thinking the
smaller loan was still on the table, kept negotiating.
As Trintomar edged closer to default, the managing director of Citibank Trinidad,
Suresh Maharaj, turned up the pressure. “I am sure that you will appreciate that
we cannot hold open a commitment for this amount of $96.5 million indefinitely,”
he wrote on Dec. 1. “I have just visited my head office, and this matter was
discussed in detail … There are Citibank clients in other countries willing to use
these funds having already signed their respective commitment letters.”
Now facing default, Trintomar accepted the extra $96.5 million it didn’t
need. With the refinancing in place but the gas exploration project then failing,
Trintomar found a firm to sublease its production facility in late 1992 — an up-and-coming Houston outfit called Enron.
The loans were paid, and Enron (now EOG Resources in Trinidad) started pumping
millions of cubic feet of gas through the platform every day. The deal eventually
faded from view, until a new chairman arrived at Trinidad’s state-owned oil
Donald Baldeosingh was only 34 when he took the post and was determined to
make Petrotrin efficient and profitable. He wondered how the Trintomar venture
could have got into such a poor lending deal and asked a London law firm to look
into it. The firm retained David Hudson, a retired British merchant banker, who
responded with a scathing report, a copy of which Time obtained.
Hudson sifted through contract language that he called “virtually
incomprehensible” and found “two basic structural flaws” that were “wholly
inconsistent with normally accepted standards of banking conduct.”
Hudson calculated that Citibank, as a result, was paid more than twice as much in
interest and fees as it would have received under its initial proposal to
Trintomar: a total of $21.1 million in fees and interest on a loan of, effectively,
The surplus lending was, in Hudson’s opinion, extraordinary and unexplained. “I can
think of no good commercial reason for … these features of the structure, and
have seen no evidence of any,” Hudson wrote. “I conclude, based on the evidence
I have seen, that it is probable that the transaction, taken as a whole, was
both fraudulent and corrupt.”
Hudson’s report found a responsive audience in Baldeosingh, who stopped Petrotrin
from doing business with Citibank and pushed the government to investigate. “We
had an opportunity to recover a significant amount of money,” Baldeosingh says.
Instead, Trinidad’s elected officials turned on Baldeosingh. After tussling with
the Energy Minister over control of a Petrotrin unit, Baldeosingh left office.
News of Seereeram’s investigations surfaced in the local press, and Citibank took
out full-page ads in Port-of-Spain’s daily newspapers in January 2001 defending its
Citibank had commissioned Ernst & Young to conduct “an independent analysis of
the entire transaction,” the ads said. “The Ernst & Young report corroborates
Citibank’s own findings, that the 1993 transaction with Trintomar was fair,
reasonable and appropriate.”…
By the spring of 2001, the investigations into the Trintomar transaction had
fizzled out. Seereeram was distracted when a partner in his consulting firm was
disgraced in a separate financial scandal. Seereeram was turning into a Dickensian
figure: the aggrieved claimant in a never-ending dispute over money. This was a
character he knew well: Seereeram’s father, a sugar-cane farmer, spent 15 years
fighting a law that required farmers to surrender a percentage of their profits to
the sugar farmers’ trade association.
Seereeram hunted for other transactions in which Citibank had used financial
instruments like those in the Trintomar deal, which, he says, “made them (Citibank)
feel like they could get away with this.” His chase led him to the nation of
Dominica, a speck of island 300 miles north of Trinidad. Dominica depends on
connecting flights on small planes from larger islands, and its minor tourist trade is
struggling. The government sought bond financing from Citibank Trinidad to build
Dominica’s first major airport, which would be able to handle larger jets from the
U.S. and Europe.
Seereeram contacted Dominica’s government after seeing documents related to
the bonds. According to the terms of the deal, outlined in documents obtained by
Time, the airport was to be financed in part by bonds to be secured by a $2.8
million “sinking fund,” or money loaned in excess of construction needs and
managed by Citibank.
But instead of investing the sinking fund elsewhere, the documents show, Citibank
used the fund to buy up the airport bonds and convert them into a different kind
of bond that reaped a higher premium, without telling the borrower.
The government of Dominica filed suit against Citibank in July, accusing it of
extracting “secret profits” of about $1.8 million from the transaction, on a bond
issue that lacked proper security and provided, in effect, only $14.2 million in
financing, the lawsuit alleges. Citibank is expected to submit its formal response in
the case next month.
Dominica’s airport, hampered by bureaucratic struggles, has not been built.
With the renewed scrutiny directed at Citibank Trinidad, Trinidad is reconsidering
another controversial deal, a complex 1998 interest-rate swap now under review by
its attorney general. Conrad Enill, Trinidad’s Finance Minister, says his
government is closely watching what happens in Dominica. So far no one has been
willing to reopen the Trintomar transaction, but Seereeram persists.
It took his father 15 years to win his sugar battle. Seereeram has been fighting
for only four.
August 23, 2002
Weill role in Salomon deal probed
N.Y. examining whether Citigroup chief pressured analyst
By Charles Gasparino, THE WALL STREET JOURNAL
The New York state attorney general’s office, broadening its inquiry into research
practices at Salomon Smith Barney, is examining how the Citigroup Inc. unit won a
lucrative financing assignment from AT&T Corp. and what role Citigroup Chief
Executive Sanford Weill may have played, people familiar with the matter say.
THE BIG securities firm was one of three top underwriters on a huge April 2000
transaction, in which AT&T offered a then-record $10.62 billion “tracking” stock
to finance its wireless-phone unit. The deal also produced one of the biggest
paydays ever on Wall Street: nearly $45 million in fees each for Salomon Smith
Barney and the two other firms, Goldman Sachs Group Inc. and Merrill Lynch &
But the assignment was controversial from the start. Salomon Smith Barney was
selected as a lead underwriter only after Salomon telecom analyst Jack Grubman
upgraded his rating on AT&T to a “buy.” For years, Mr. Grubman had been bearish
on AT&T stock, and Salomon often had been excluded from top spots in
underwriting AT&T transactions. And, as reported in The Wall Street Journal at
the time, the change by Mr. Grubman came after Mr. Weill, an AT&T board
member, nudged the analyst to give AT&T a fresh hearing, people familiar with the
AT&T Chairman C. Michael Armstrong regularly had asked Mr. Weill to urge Mr.
Grubman to revisit the merits of AT&T’s cable strategy, a person familiar with the
matter says. Mr. Armstrong also was a Citigroup board member at the time.
Now, New York Attorney General Eliot Spitzer is investigating the transaction and
the activities of Messrs. Grubman and Weill, among others, as part of a broad
investigation into whether Wall Street firms violated New York State laws by
hyping stocks of companies that also were investment-banking clients, possibly
misleading investors in the process.
More broadly, the focus on the AT&T deal highlights Mr. Spitzer’s interest in
addressing the myriad conflicts facing major financial institutions.
Many of these conflicts have come in the aftermath of the breakdown of the
Glass-Steagall Act, the Depression-era legislation that separated the business of
bank lending from investment banking, and have helped roil the markets in the
wake of the collapse of Enron Corp.
Mr. Spitzer, according to people close to the inquiry, is concerned that the
creation of such financial behemoths could create the incentive for conflicts that
ultimately hurt consumers who are unaware that certain firms have lucrative,
multiple relationships with corporations as they issue research reports to their
clients. Mr. Spitzer, these people say, is considering using his investigative findings
to demonstrate that conflicts abound at such big companies, and he plans to push
for safeguards that will prevent alleged conflicts in the future, these people say….
Mr. Grubman, who left Salomon Smith Barney last week amid numerous
investigations into his research efforts, currently is at the center of Mr. Spitzer’s
investigation, possibly the most aggressive into conflicts of interest involving Wall
Street research. Other investigations on analyst conflicts currently are being
conducted by Congress, as well as the Securities and Exchange Commission and
the National Association of Securities Dealers, both of which regulate Wall
Street securities firms.
The AT&T development underscores the extent to which Mr. Spitzer’s
investigation has broadened beyond Mr. Grubman, to include other high-ranking
people at the firm. Investigators for Mr. Spitzer’s office are interested in finding
out what role, if any, Mr. Weill played in getting Mr. Grubman to change his mind on
AT&T before the underwriter selection, as well as detailing the conversations
between Messrs. Weill and Armstrong about Mr. Grubman’s research.
AT&T isn’t a focus of Mr. Spitzer’s examination, people close to the inquiry say. In
a statement, a spokeswoman says AT&T’s “relationship with [Salomon Smith
Barney] dates back many years even before that company took its current form.
We have a very strong method and process for selecting underwriters. [Salomon
Smith Barney] has an extensive distribution channel and its retail relationships are
critical when considering any major security deal.” Mr. Grubman has had a
tumultuous relationship with AT&T. He joined the big telephone concern in 1977,
just as the telecommunications industry began to take off. At one point, he butted
heads with the company’s top brass when he found a flaw in the company’s
economic model. In 1985 he began his career on Wall Street, where he quickly
established himself as one of the nation’s top telecom analysts as well as one of
Wall Street’s leading critics of AT&T.
Mr. Grubman believed AT&T was out of step with the changing telecom climate.
While his bearish stance on the company won him kudos from money managers as
shares of AT&T struggled, Salomon’s bankers took it on the chin when AT&T went
looking for underwriters.
In 1996, for example, about a year after Mr. Grubman downgraded AT&T, Salomon
was one of two major Wall Street firms denied the top underwriting spots for
Lucent Technologies, a $3 billion AT&T spinoff.
So it raised eyebrows when Mr. Grubman shifted his views before the big AT&T
stock deal in 2000. When AT&T announced in late 1999 it was planning to issue
stock to spin off a new wireless-telephone unit, Salomon was eager to win a lead
role. The deal was rumored to be among Wall Street’s largest ever — more than
$10 billion. A deal of that size would generate more than $250 million of fees for
But Mr. Grubman’s continued negative view on AT&T irked Mr. Armstrong, the
CEO, people familiar with the matter say. In internal meetings, Mr. Armstrong told
associates he believed Mr. Grubman’s position on the firm was misguided, according
to a person familiar with the situation. Mr. Armstrong also complained to Mr. Weill
at times, urging him to temper Mr. Grubman’s criticisms of the firm, said another
Around the time AT&T decided to issue the stock for its wireless unit, the firm
attempted to persuade Mr. Grubman to change his rating. People familiar with
the matter say Mr. Grubman was called to a special meeting so top company
executives could provide an analysis as to why the company deserved a better
rating, they add.
After hearing of the criticism from Mr. Armstrong, Mr. Weill prodded Mr.
Grubman to take another look at his view of AT&T, these people say. The
spokeswoman for Mr. Armstrong declined to comment on the matter. At the time,
AT&T scoffed at any suggestion that it granted Salomon the banking assignment
because of Mr. Grubman’s changed views.
So did Mr. Grubman. He said at the time: “Anyone who knows me knows that I call
them as I see them.”
In October of 2000, several months after the AT&T stock deal — and after
Salomon received $44.8 million in fees for its role in it — Mr. Grubman
downgraded the stock once again.
Copyright © 2002 Dow Jones & Company, Inc., All Rights Reserved.
August 8, 2002
Lawmaker Seeks Inquiry of
Rubin Intervention for Enron
WASHINGTON —— A House Republican lawmaker is seeking an investigation into
phone calls made on behalf of Enron Corp. to the Bush administration by former
Treasury Secretary Robert Rubin.
Rep. Mark Foley, R-Fla., wants the Securities and Exchange Commission to look into
the phone call, alleging that Rubin was attempting to tamper with Enron’s credit
“A former Treasury Secretary should not be soliciting financially-beneficial
favors from colleagues at an agency that he once led,” Foley wrote in a letter
to SEC Chairman Harvey Pitt.
“I would ask that you would investigate all equity trades submitted by
Citigroup or its subsidiaries and their clients in the two weeks preceding Mr.
Rubin’s call to Mr. Fisher as well as the two weeks following the call,” the
In his capacity as head of Citigroup, Rubin allegedly called Treasury
Undersecretary of Domestic Finance Peter Fisher last November to see whether
Fisher thought it would be a good idea for the Treasury Department to call bond
rating agencies to halt an expected reduction in Enron’s credit rating.
Former energy giant Enron declared bankruptcy last December after it revealed
that it had been using capital accounts to cover for losses in its operating
accounts. Its collapse was the first in a string of corporate scandals that has
claimed Tyco International, Global Crossing, WorldCom and others.
Enron’s credit rating and condition was very much on the minds of Citigroup
because Enron is a huge client of the bank. Citigroup has millions of dollars of
loans with Enron, and such an intervention on behalf of the Treasury to
bolster Enron would have benefited both the bank and the energy firm.
The Treasury Department did nothing about the call, but Foley told Fox News that
he wants to know whether Rubin or anyone else at Citigroup profited from insider
knowledge of Enron’s imminent demise.
“That’s the timing issue that’s critical, people were caught in the exits trying
to sell their shares, there was no market. I want to make sure the fat cats,
if you will, didn’t prematurely sell their shares knowing of the deteriorating
conditions,” Foley said, adding that he is not alleging that Rubin participated in any
Senate Democrats have called Citigroup officials to testify about the relationship
between the bank and the energy giant, but have not called Rubin specifically.
Democrats ask if Rubin is so important, why have Republicans who lead the House
not bothered to call him to testify. Republicans say they will leave that open as an
Fox News’ Major Garrett contributed to this report.
For more, GO TO > > > The Story of Enron; Claims By Harmon; Dirty Money, Dirty
Politics & Bishop Estate; Dirty Gold in Goldman Sachs; RICO in Paradise
June 19, 2002
Apartheid victims sue Citigroup,
NEW YORK — Four apartheid victims filed suit on Wednesday against Citigroup
Inc.(NYSE:C), UBS AG (VX:UBSZn) and Credit Suisse, alleging the banking
companies helped finance the violent South African apartheid regime and made
billions in loans to further its crimes against humanity.
The lawsuit, filed in Manhattan federal court, seeks class- action status on
behalf of other victims of human rights violations under South Africa’s
apartheid, a government policy of white rule and racial discrimination against black
Africans, who were denied basic rights and beaten or killed when they protested
the country’s unjust laws.
The suit seeks unspecified damages to be determined at trial.
The plaintiffs also ask the court to order the defendants to produce documents
related to their commercial and financial activities in South Africa from 1948
forward. They also want the creation of an independent international commission to
provide an accounting of profits that may have been unjustly obtained by the
Two of the named plaintiffs said they were tortured and two of the plaintiffs are
surviving parents of children who were killed in South Africa.
The suit alleges that the defendants had conspired with each other to provide
financing for technology systems, equipment and other products used by the
apartheid regime to commit crimes against humanity from 1948 to 1993. It
further alleges that despite the fact that apartheid officially ended in South
Africa in 1994, the defendants continue to profit from the conspiracy.
“As a direct and proximate result of defendants’ actions, the apartheid system
was supported and enabled to continue its systematic murders, massacres, killings,
imprisonments, torture and forced removals,” the suit alleged.
A Citigroup spokesperson said the company had not seen the suit yet, but added:
“Based on the allegations we have seen, we believe such a suit would have no merit.”
The suit proposes that claimants be organized into five different classes: surviving
parents; surviving children or dependents; surviving spouses; torture victims and
It said the individual classes include hundreds of thousands, if not millions, of
PLAINTIFFS’ LAWYER HECKLED
According to the suit, one of the U.S. banks that allegedly provided the most
support during apartheid and which violated the financial sanctions campaign
restriction was a predecessor of Citigroup. The suit alleged that loans made from
1960 to 1993 supported the regime.
“Predecessors of Citigroup provided Apartheid with in excess of $650 million in
principal alone. This amount represented about one-fourth of all loans made by U.S.
banks to support apartheid, the military, police and cooperating business,” the suit
It alleged that instead of ceasing their lending practices and demanding repayment
of outstanding monies, Citigroup’s predecessors converted loans to long-term loans
that could be paid back later with interest.
“The money from predecessors of Citigroup directly benefited and supported the
apartheid reign of terror in South Africa,” the lawsuit said.
When Fagan began the news conference in Zurich, a jeering crowd forced him to
move from the Paradeplatz, where Credit Suisse and UBS, Switzerland’s two
biggest banks, have formidable presences. Credit Suisse is headquartered in the
Paradeplatz, while the main Zurich offices of UBS are located in the office
complex. Hecklers were angered at what they saw as just another attempt to
smear the country’s good name.
On Tuesday, Washington, D.C., lawyer Michael Hausfeld, a prominent plaintiffs’
lawyer, said he is working with a group of about 20 lawyers and academics to file a
different suit on behalf of apartheid victims. He said he expects the suit will be
filed at the end of the summer after it is thoroughly researched.
He had criticized Fagan’s suit as premature and said it denigrated the entire issue
by trying to hold a small number of companies responsible for the “entirety of
Copyright 2002 Reuters Limited. All rights reserved.
Citigroup Awarded “Honor” as
World’s Most Destructive Bank
Source: Rainforest Action Network
August 2, 2000
US Top Bank Scores High Marks for Campaign Finance Corruption and
Environmental Destruction. Rally unites globalization, human rights and
environmental activists with urban community, youth and people of color
Philadelphia — As Republican delegates continued their week of partisan pomp
inside the RNC Convention, a broad coalition of activists took their message to the
source of campaign finance corruption highlighted during the summers political
conventions: Americas top corporations.
Outside of the local headquarters of Citigroups subsidiary Salomon Smith Barney,
the country’s largest bank was honored with the award for the World’s Most
Destructive Bank, earning this distinction for its role the buy-out of the country’s
elected political leaders and its unsurpassed contribution to the financing of
socially and environmentally destructive projects.
Citigroup has rightfully earned a triple A credit rating as the worlds most
destructive and corrupting bank, said Erick Brownstein of the Rainforest Action
Network. Whether it is buying influence with Republican and Democratic officials,
financing the most environmentally egregious projects abroad, or employing
predatory lending practices here at home, Citigroup comes out Number One in a
highly competitive private finance industry.
During Citigroup’s award ceremony, environmental and community advocates
pointed to corporation’s nefarious role in campaign finance corruption and
Citigroup’s funding for corporate prisons, Third World debt, genetic
engineering, and rainforest destruction won the company its dubious prize
today, according to representatives from organizations including ACT UP
Philadelphia, 50 Years is Enough, Association of Community Organizations for
Reform Now (ACORN), Just Act Youth Action for Global Justice, Student
Environmental Action Coalition (SEAC), and Rainforest Action Network.
The time is now for Citigroup to stop underwriting campaign finance corruption,
predatory lending and destructive projects, said Kelly Nagy from SEAC. Big banks
buy-out of politicians is bad for our communities and our environment.
Citigroup has contributed over $2 million to the Republican and Democratic
parties in the last two years as well as spending $17 million on lobbying costs since
Citigroup used their campaign contributions to buy the very changes in the law
which allowed the Citibank/Travelers merger by repealing parts of the Glass-Steagle Act.
It’s outrageous that we are allowing giant destructive corporations to buy off our
political system. It amounts to nothing more than legal bribery.
I never voted for Citigroup. said Patrick Reinsborough from the Rainforest Action
– For more information about Citigroup’s destructive activities, please visit the
Rainforest Action Network Website . . .
For more on the destruction of our environment, GO TO > > > Heavens & Earth
All Hell Breaks Loose
Michael C. Ruppert
May 31, 2001 –
These are nightmares come true.
Citibank buys Banamex – Mexico’s second largest bank – for $12.5 billion and Asa
Hutchinson is appointed head of the Drug Enforcement Administration.
The level of criminality in the US financial and political systems has reached a
threshold where it can no longer be spun into something which John Q Public can
ignore and where US drug “enforcement” efforts are now revealed to be nothing more
than a reaction to the imperative of “managing” the drug trade so as not to lose
control of the trillions of dollars at stake.
Crime has become, overtly, the largest free enterprise in the world.
On May 17 Citigroup, America’s largest financial institution commanding some $700
billion in assets announced a $12.5 billion purchase of Banamex’s parent company
controlling some $39 billion in assets. The move will place Citigroup in control of one
of the major – and proven – money laundering institutions in Mexico and allow Citigroup
(first time for a US company) to penetrate the Mexican stock market.
Now consider that Citigroup has on its Board of Directors the likes of Robert Rubin
(former US treasury Secretary), John Deutch (former CIA Director) and Gerald
In 1999 Citigroup was slammed by the Congress and the GAO for laundering
(1994) more than $100 million in drug money for Raul Salinas, brother of the
It was also found to be complicit in the laundering of money for corrupt officials from
Nigeria, Pakistan, and Gabon through its exclusive private banking operations for
The Peruvian journal La Republica, on May 21, disclosed that until last year Peruvian
strongman and CIA creation Valdimirio Montesinos had moved more than $18 million
Montesinos, a former drug lawyer and graduate of the School of the Americas, was
until then the national security chief for Peruvian President Alberto Fujimori. News
reports by Peter Gorman, published at www.narconews.com have strongly indicated
that Montesinos managed the “silent-coup” that overthrew Fujimori after Fujimori
decided to oppose US intervention in Colombia….
In 2000, then Treasury Secretary Rubin led an “all out” offensive (Operation
Casablanca) against Mexican money laundering. One of the banks targeted was
Banamex which was exposed as being a willing participant in the trade. U.S. Customs
Agent Bill Gately, who later retired in disgust, accused Rubinof deliberately shutting
down the investigation before it got to the highest levels. He did it on 60 Minutes.
Could Rubin, knowing that he would soon be at Citigroup, have been softening up
Banamex for the buyout to gain control of the drug flows?
The Citigroup dirt descends to even the personal level as Marc Weill, 44, the son of
Chairman Sandy Weill, was exposed in the AP last November as having a cocaine
addiction which necessitated that he relinquish control of Citigroup’s $113 billion
Consider also, that John Deutch, who joined Citigroup in 1996, brought with him the
former Executive Director of the CIA, Nora Slatkin as an alleged quid pro quo for
her stalling an investigation into Deutch’s mishandling of thousands of pages of CIA
files. Did Citibank get the files?
Banamex owner Roberto Hernandez is overtly connected to drugs. He will now join
After having lost a Mexican lawsuit against Por Esto Publisher Mario Menendez in
which the courts found that Por Esto’s allegations connecting Hernandez to hundreds
of tons of cocaine smuggling near Cancun were valid, Hernandez went on to sue
Menendez and veteran journalist Al Giordano in New York State [FTW – Feb, 2001].
That suit has sparked a huge public outcry and garnered Giordano and Menendez the
support of some of the most powerful lawyers in America.
Known locally as the “Cocaine Peninsula,” Hernandez’s property in Yucatan has been
photographed littered with smuggling equipment yet it has served as a vacation spot
for Mexico’s president-elect Vicente Fox, (July, 2000) and President Bill Clinton
(August, 2000). In true bi-partisan spirit, however, Fox shared Dallas-based media
adviser Robert Allyn with candidate George W. Bush throughout their respective
To complete his end of the Citigroup transaction Hernandez relied upon the brokerage
house of Goldman Sachs (once headed by Rubin) and the Wall Street law firm of
Sullivan, Cromwell is a CIA affiliate which gave us Allen Dulles (CIA Director) and
John Foster Dulles (Secretary of State).
As for Asa Hutchinson, the Republican Congressman from Arkansas whom President
Bush has nominated to head the DEA, nothing speaks more eloquently of the outrage
than the words of veteran Arkansas journalist Mara Leveritt ….
His complicity in covering up an enormous volume of cocaine smuggling in Mena,
Arkansas connected to the Contra war is “slap-in-the-face” obvious. No more can the
Democratic side of Congress react to Mena as a right-wing conspiracy. This time the
dirt lies on a member of the “Shi-ite” faction of the Republican Party.
It doesn’t matter anymore whether the American public chooses to notice. The fait
accompli is that drug money and criminal money are now out of the closet as the most
important determinants of economic success for the US financial system. The
careless arrogance of these moves only reveals the utter confidence in Washington,
on Wall Street and in the banking system that no voices from the wilderness can stop
Will the defection of Vermont Senator Jim Jeffords out of the Republican Party on
May 24 make a difference? Sure the Democrats will now control the committees
overseeing the Citigroup buyout and the Hutchinson confirmation.
But the scythe of dirty money has cut heavily down both sides of the aisle. — I’m not
holding my breath.
Mike Ruppert — 5/31/01
[Copyright 2001. Michael C. Ruppert and From The Wilderness Publications. This
story appeared as the lead essay in the May 31, 2001 issue.]
For more on Goldman Sachs, GO TO > > > Dirty Gold in Goldman Sachs
May 9, 2002
Travelers Property Casualty Names
New Board Members
HARTFORD, Conn. (BUSINESS WIRE) – Travelers Property Casualty is pleased to
announce that Frank J. Tasco, Leslie B. Disharoon and Kenneth J. Bialkin have
joined the company’s Board of Directors. The new Directors have agreed to serve
until Citigroup completes its previously announced tax-free distribution.
Mr. Tasco is the former Chairman of the Board and Chief Executive Officer of
Marsh & McLennan Companies, Inc. and served as a Travelers Property Casualty
Director from 1996 until 2000. He also served as a Director of Travelers Group (a
Citigroup predecessor company) from 1992 to 1998 and was Chairman of the Board
of Directors of Angram, Inc.
Mr. Disharoon is the former Chairman of the Board, President and Chief
Executive Officer of Monumental Corporation. He became a Travelers Group
Director in 1986 and served until 1998. He served as a Directors of Travelers
Property Casualty from 1996 to 2000 and has served on the boards of Aegon,
USA, Inc., GRC International Inc., and Johns Hopkins Hospital Endowment.
Mr. Bialkin, a partner at Skadden, Arps, Slate, Meagher & Flom LLP, served as a
Director of Travelers Property Casualty from 1996 to 2000. Other directorships
have included Citigroup and The Municipal Assistance Corporation for the City of
New York. . . .
Copyright 2002, Business Wire
For more on Marsh & McLennan, GO TO > > > The Marsh Birds
February 21, 2002
U.S. OKs Icahn Bid For ImClone
Corporate raider Carl Icahn doesn’t sulk when a plan sours–he finds a new one.
Mere days after withdrawing his bid from Shelbourne Properties, he’s on the
hunt; and U.S. antitrust enforcers said they will not obstruct Icahn’s bid to buy a
hefty stake in ImClone Systems . Recently, he filed with U.S. securities
regulators to acquire $500 million of ImClone’s shares, or nearly 40% of the
Icahn, 66, is known for his attempts to take over or force the breakup of
companies such as Nabisco Group Holdings and now-defunct Trans World Airlines.
A long-time friend of ImClone Chief Executive Samuel Waksal, the raider bought
a 5% stake in the medical company in 1999. The bid comes at a crucial time:
currently, ImClone is battling drug giant Bristol-Myers Squibb for control of their
Erbitux cancer drug….
Former Enron Chief Executive Kenneth Lay offered then-Treasury Secretary
Robert Rubin a seat on the board of directors in 1999, a time when the energy
trader was lobbying hard against efforts to regulate its derivatives-trading
business. Newly released documents suggest Lay offered Rubin a seat on the
Enron board two days after the latter announced he was resigning as President Bill
Clinton’s treasury secretary. Ever ambidextrous, Lay also sought help from
officials of the George W. Bush administration last fall, before the company filed
for bankruptcy protection.
Sources say on the same day Lay made the offer to Rubin he sent a letter to
congratulate Lawrence Summers, the incoming Treasury secretary. A few months
after, Lay referred to his connections with Rubin in a letter to Summers, urging
Treasury officials to back off from proposals to regulate Enron’s derivatives
Rubin, now a Citigroup executive, had turned down the offer. Citigroup is one of
Enron’s main creditors….
April 10, 2002
Ed McMahon Sues Over Toxic Mold
in L.A. Home
By Sarah Tippit
LOS ANGELES (Reuters) – As Johnny Carson’s sidekick, entertainer Ed McMahon
was famed for his infectious laugh. But as a homeowner, he says he is involved in a
drama that has left him seething.
McMahon, 79, is suing his home insurance company for $20 million, claiming it
botched a simple repair on a broken pipe and, as a result, allowed a toxic mold to
spread through his house, making his family sick and killing his dog.
In a lawsuit filed on Monday in Los Angeles Superior Court, McMahon, who for
years served as Carson’s sidekick on NBC’s “Tonight Show,” said he, his wife
Pamela, and household staff members have been battling illnesses as a result of
exposure to a mold known as stachybotrus chartarum.
He also said the family dog, Muffin, died as a result of a mold-induced infection.
The suit is the latest in a recent spate of litigation over toxic mold infestation, a
recently recognized phenomenon, which is believed to cause serious illness
particularly in the respiratory tract, and even death.
It names Scottsdale, Arizona-based American Equity Insurance Co., a unit of
Citigroup Inc. as a plaintiff as well as several Southern California contractors who
had been hired to clean up the mold. A spokeswoman for American Equity declined
to comment on Wednesday.
According to the suit, a pipe burst last July in McMahon’s estate in the posh
Coldwater Canyon section of Los Angeles, causing his den to be flooded. McMahon
made a claim under his policy with American Equity, which arranged to clean up the
damage caused by the flooding.
“What started out as a simple plumbing leak ended up a horrific nightmare only
Steven King could write about,” McMahon’s lawyer Allan Browne told Reuters. He
added the mold spread through the house with a high concentration in the main
The lawsuit charges that the contractors painted over visible mold and failed to
provide the McMahons with environmental reports related to the levels of mold
infestation despite repeated requests for documentation.
In addition, another contractor hired by the insurer to store the McMahons’
furniture, artwork and television memorabilia has not to date returned the items
despite repeated requests to do so, and the McMahons do not know where their
belongings are being stored, Browne said.
“They took away 50 years of memorabilia, all of their fine art, all of the couches,
chairs, every stick of furniture, we don’t even know where any of that is located.
The clothes were taken out and they were supposedly cleaned and it took months
to get them back and once they got them back we found out cleaning had been
done improperly. … It’s just been a nightmare,” Browne added.
© Copyright Reuters 2002. All rights reserved. (www.reuters.com)
December 21, 2001
S&P comments on Enron-related
NEW YORK (Standard & Poor’s) Dec. 21, 2001 – Standard & Poor’s today
commented on the insurance industry in the wake of J.P. Morgan Chase & Co.’s
announcement that it has filed lawsuits against several large insurance companies –
including Chubb Corp., CNA Financial Corp. and Travelers Property Casualty
These insurers had issued surety bonds that guaranteed various assets of Enron
Corp., which filed for bankruptcy earlier this month.
At this time, it is unclear what impact, if any, these lawsuits will have on the
ratings on various insurers. Standard & Poor’s will continue to monitor the
situation, particularly with respect to the insurers that are the largest issuers of
surety bonds, and will make further comments when appropriate….
Copyright 2001, Reuters News Service
For more, GO TO > > > The Story of Enron; The Chubb Group; Dirty Money, Dirty
Politics and Bishop Estate; Transylvania Travelers in St. Paul
December 21, 2001
XL exposure to Enron $75 million
(Business News) – Contrary to earlier indications, XL Capital Ltd. said its
exposure to claims arising from the bankruptcy of energy trader Enron Corp (ENE)
might total $75 million, but it said it could not yet estimate its Enron losses.
XL said it faced about $45 million in exposure to surety bonds and could face
further large payouts on liability policies if Enron’s directors are successfully
For more, GO TO > > > The Marsh Birds; Confessions of a Whistleblower
November 30, 2000
Citigroup Called Lax On
By Kathleen Day. Washington Post Staff Writer
Citigroup, the nation’s largest bank, failed to follow federal guidelines to prevent
money laundering and allowed as much as $800 million in suspicious Russian funds
to flow through 136 accounts from 1991 through January of this year, the General
Accounting Office said yesterday.
The GAO, the investigative arm of Congress, said it has referred the matter to
bank regulators and the Justice Department for further investigation. In a letter
to the GAO this week, Citigroup said it has found no evidence that it acted
illegally, but it acknowledged lapses in enforcing its anti-money-laundering policies.
It said it has closed the accounts in question this year and tightened policies to
prevent the problem from recurring.
The GAO report, based on an eight-month investigation, said a second bank,
Commercial Bank of San Francisco, allowed $600 million in suspicious Russian
funds to flow through 100 accounts because of lax enforcement.
“To our knowledge there was no illegality by us,” said Rob Fuller, former president
of Commercial Bank, which has been sold to First Banks America Inc. of St.
Louis. He said the bank closed the accounts in the first half of 1999 and decided in
June to stop taking deposits from “Eastern European sources” completely.
Before the GAO began its investigation in March, he said, “we had already
tightened our know-your-customer rules.”
All told, Citigroup and Commercial Bank accepted more than $1 billion from U.S.
corporations based in Delaware that appeared to be shell companies created to
move money from abroad into the U.S. banking system, the GAO said.
The corporations in Delaware received the money from Russian brokers in Eastern
Europe who were acting on behalf of Russian companies or individuals, the GAO
said. The two U.S. banks then facilitated the corporations’ transfer of most of
the money from the United States back into foreign accounts.
The arrangement presumably was made to evade taxes, according to a source
familiar with the GAO report, but could have involved organized crime in Russia.
In accepting the money, both banks violated the bank industry standard known as
the know-your-customer rule, which requires banks to understand who their clients
are and the source of their funds, the GAO report said.
“These banking activities raise questions about whether the U.S. banks were
used to launder money,” the GAO report said.
It concluded that “it is relatively easy for foreign individuals to hide their
identities while forming shell corporations that can be used for the purposes
of laundering money.”
The GAO report is embarrassing for Citigroup, which has been the subject of
money-laundering probes by the government since the mid-1990s.
Just a year ago, top Citigroup officials were grilled before a Senate subcommittee
about the possible laundering of $100 million in Mexican drug money. At the
time, bank officials promised lawmakers that failures in the company’s policies had
been repaired and that the company was confident it could guard against being
used by foreigners to launder funds.
“As we have said in the past,” Michael A. Ross, general counsel of Citigroup’s global
consumer banking business, wrote to the GAO this week, “Citibank is committed to
being at the forefront of anti-money-laundering efforts.”
The report also is embarrassing for bank regulators and other federal
officials, who have been criticized by Congress and the inspector general of
the Treasury Department for being lax in stopping stop money laundering.
The Treasury has spearheaded a much-publicized effort to crack down on money
laundering, which it has called a scourge of U.S. business, but officials there
repeatedly have declined to comment on why no top bank official or major bank has
ever been seriously sanctioned for money laundering.
The GAO study was done at the request of the Senate Governmental Affairs
Committee’s permanent subcommittee on investigations.
© 2000 The Washington Post Company
The Crimes of Citibank …
More CIA Connections
CITIBANK’S SENIOR MANAGER FOR GOVERNMENT RELATIONS, NORA
SLATKIN PLAYED KEY ROLE IN JOHN DEUTCH INVESTIGATION –
FORMER NUMBER 3 AT CIA
By Michael C. Ruppert – www.copvcia.com
From the May 31, 2001 issue of “From The Wilderness”
Special to NarcoNews – As the remaining unbiased press of the Western
Hemisphere, and especially of Latin America, rises in outrage at the announced
May 17 purchase of Mexico’s giant Banacci Group (Banamex) by Citigroup, more
skeletons come stampeding out of the Citigroup closet.
Both banks have been firmly connected to drug money laundering and Banamex
owner Roberto Hernandez owns land near Cancun, Mexico that is commonly
referred to as “the cocaine peninsula.” President Bill Clinton vacationed on the
Hernandez property in the summer of 2000.
Taken collectively these skeletons reveal a well-defined financial and intelligence
infrastructure that appears tailor-made for the global management of the drug
trade’s billions of dollars in illegal revenue along with the additional billions of
dollars generated annually by the illegal looting of national economies by
One of these skeletons is Nora Slatkin. Having risen to a post as Assistant
Secretary of the Navy for Acquisition in 1995 she resigned and was immediately
appointed as the Executive Director of the Central Intelligence Agency. The
Executive Director is the number three position at Langley and is responsible for
all Agency operations. Her boss was then Director of Central Intelligence (DCI)
and current Citigroup Board Member John Deutch.
The timeline – as compiled from stories in The New York Times, The Washington
Post and AP and the CIA’s web site – around her tenure at CIA and of her
transition to Citigroup is most revealing.
>> May 10, 1995 – John Deutch sworn in as DCI.
>> May 19, 1995 – The Senate announces that Nora Slatkin is leaving the
Department of Defense (Assistant Secretary of the Navy) to join the CIA as
>> December 15, 1996 – Deutch resigns as DCI.
>> December 17, 1996 – A CIA computer security official visits Deutch’s home
and discovers thousands of pages of classified documents on unsecured (CIA)
Macintosh computers. Almost immediately the CIA General Counsel, Tom O’Neil
and Nora Slatkin are advised of the breach. Slatkin advises DCI Tenet.
>> December, 1996 – Deutch joins the Board at Citigroup.
>> Dec. 20 ,1996 – Deutch begins deleting files from his computers.
>> January, 1997 – CIA security officials complain to Slatkin that O’Neil is
dragging his feet. Slatkin takes no action in response, except to “hold discussions.”
Deutch refuses to be interviewed by security staff.
>> Summer, 1997 – The CIA security staff completes a report on Deutch which
languishes in the security office awaiting action.
>> Fall, 1997 – Claiming ignorance of the security office’s investigation, DCI
Tenet grants Deutch new security clearances.
>> October, 1997 – On Deutch’s recommendation Slatkin also joins the Board at
Citigroup. Her current title – Senior Manger of Government Relations.
>> December, 1997 – Because the Justice Department has not been notified, a
one-year statute of limitations for the appointment of an independent counsel to
investigate Deutch lapses
>> March, 1998 – After seven years of service, CIA Inspector General
Frederick P. Hitz retires to assume the Goldman Sachs Chair on International
Intelligence at Princeton University. He later tells The New York Times that he
assumed that his successor, Britt Snider, would advise the Department of Justice
as to Deutch’s possible criminal mishandling of CIA records. Oops!
>> April, 1999 – Janet Reno’s Justice Department declines to prosecute Deutch
while nuclear scientist Wen Ho Lee languishes in jail for similar violations.
>> February, 2000 – After a CIA Inspector General’s report on Deutch’s
conduct leaks to the press Janet Reno reopens the investigation. Prosecutor Paul
Coffey recommends criminal charges.
>> March, 2000 – Slatkin and Hitz contradict Tenet and state that he was much
more involved than previously admitted.
>> Summer/Fall 2000 – The criminal investigation of Deutch inches ahead in
secret. Fears mount that John Ashcroft, as Bush Attorney general, will
aggressively pursue criminal charges.
>> January 20, 2001 – On his last day in office President Clinton pardons
Citibank Director John Deutch.
Given the enormity of documentation on Citibank’s direct involvement with drug
and criminal money laundering and the extraordinarily detailed investigations by
journalist Al Giordano at www.narconews.com, several questions become obvious.
Giordano’s translation of Spanish language reports on the on again, off again
relationship between Citibank and Peruvian CIA backed strongman Vladimiro
Montesinos, suggest that CIA tells Citibank which criminal clients are acceptable
for Private Banking money laundering activities.
Clearly, the timeline implies that Slatkin’s hiring at Citibank was a quid pro quo
for her services in stalling the Deutch investigation. But more so it raises the
question as to whether Slatkin is the CIA liaison at Citigroup to open approved
channels for money laundering.
Also, it must be asked whether or not there is a partisan flavor to Citigroup’s
activities. All of the players here were Democratic Party apparatchiks. Is the
Democratic Party the sole beneficiary of Citigroup criminal money laundering?
Much will be revealed when the Bush Administration weighs in on the Banamex
JOHN DEUTCH AND WALL STREET
John M. Deutch is listed as a current director of the following corporations that
are registered with the SEC:
Ariad Pharmaceuticals Inc.
CMS Energy Corp
Cummins Engine Co Inc
He is also involved with the following ventures (some offshoots of above
corporations) as an investor and/or officer:
Allied Digital Technologies Corp
Analog Acquisition Corp
Buenos Aires Bottling Co Inc
Citicorp Mortgage Securities Inc
CMS Energy Trust II
CMS Energy X Tras Pass Through Trust I
Consumers Energy Co
Cort Business Services Corp
Davco Restaurants Inc
Delco Remy International Inc
Galey & Lord Inc.
GNI Group Inc
Green I Acquisition Corp
Hudson Hotels Corp
Landmark Fixed Income Funds/MA/
Landmark Funds I
Landmark Funds II
Landmark Tax Free Income Funds
Palomar Medical Technologies Inc.
Sybron Chemicals Inc.
Tower Automotive Inc
Travelers Group Inc
~ ~ ~
Michael C. Ruppert
P.O. Box 6061-350, Sherman Oaks, CA 91413
(818)788-8791 * fax(818)981-2847
May 19, 2001
“Dirty Money” Foundation of US
Growth and Empire
Size and Scope of Money Laundering by US Banks
From La Journada [Mexico]
by James Petras – Professor of Sociology, Binghamton University
— There is a consensus among U.S. Congressional Investigators, former bankers and
international banking experts that U.S. and European banks launder between $500
billion and $1 trillion of dirty money each year, half of which is laundered by U.S.
As Senator Carl Levin summarizes the record: “Estimates are that $500 billion to $1
trillion of international criminal proceeds are moved internationally and deposited into
bank accounts annually. It is estimated that half of that money comes to the United
Over a decade then, between $2.5 and $5 trillion criminal proceeds have been
laundered by U.S. banks and circulated in the U.S. financial circuits. Senator Levin’s
statement however, only covers criminal proceeds, according to U.S. laws.
It does not include illegal transfers and capital flows from corrupt political
leaders, or tax evasion by overseas businesses.
A leading U.S. scholar who is an expert on international finance associated with the
prestigious Brookings Institute estimates “the flow of corrupt money out of
developing (Third World) and transitional (ex-Communist) economies into Western
coffers at $20 to $40 billion a year and the flow stemming from mis-priced trade
at $80 billion a year or more. My lowest estimate is $100 billion per year by these two
means by which we facilitated a trillion dollars in the decade, at least half to the
United States. Including the other elements of illegal flight capital would produce
much higher figures.”
The Brookings expert also did not include illegal shifts of real estate and securities
titles, wire fraud, etc.
In other words, an incomplete figure of dirty money (laundered criminal and corrupt
money) flowing into U.S. coffers during the 1990s amounted to $3-$5.5 trillion. This
is not the complete picture but it gives us a basis to estimate the significance of the
“dirty money factor” in evaluating the U.S. economy. In the first place, it is clear that
the combined laundered and dirty money flows cover part of the U.S. deficit in its
balance of merchandise trade which ranges in the hundreds of billions annually.
As it stands, the U.S. trade deficit is close to $300 billion. Without the “dirty
money” the U.S. economy external accounts would be totally unsustainable, living
standards would plummet, the dollar would weaken, the available investment and loan
capital would shrink and Washington would not be able to sustain its global empire.
And the importance of laundered money is forecast to increase.
Former private banker Antonio Geraldi, in testimony before the Senate Subcommittee
projects significant growth in U.S. bank laundering. “The forecasters also predict the
amounts laundered in the trillions of dollars and growing disproportionately to
The $500 billion of criminal and dirty money flowing into and through the major U.S.
banks far exceeds the net revenues of all the IT companies in the U.S., not to speak
of their profits.
These yearly inflows surpass all the net transfers by the major U.S. oil
producers, military industries and airplane manufacturers.
The biggest U.S. banks, particularly Citibank, derive a high percentage of their
banking profits from serving these criminal and dirty money accounts.
The big U.S. banks and key institutions sustain U.S. global power via their money
laundering and managing of illegally obtained overseas funds.
U.S. Banks and The Dirty Money Empire
Washington and the mass media have portrayed the U.S. as being in the forefront
of the struggle against narco trafficking, drug laundering and political corruption:
the image is of clean white hands fighting dirty money. The truth is exactly the
opposite. U.S. banks have developed a highly elaborate set of policies for
transferring illicit funds to the U.S., investing those funds in legitimate businesses
or U.S. government bonds and legitimating them.
The U.S. Congress has held numerous hearings, provided detailed exposés of the
illicit practices of the banks, passed several laws and called for stiffer
enforcement by any number of public regulators and private bankers. Yet the
biggest banks continue their practices, the sum of dirty money grows
exponentially, because both the State and the banks have neither the will nor the
interest to put an end to the practices that provide high profits and buttress an
otherwise fragile empire.
First thing to note about the money laundering business, whether criminal or
corrupt, is that it is carried out by the most important banks in the USA.
Secondly, the practices of bank officials involved in money laundering have the
backing and encouragement of the highest levels of the banking institutions –
these are not isolated cases by loose cannons.
This is clear in the case of Citibank’s laundering of Raul Salinas (brother of
Mexico’s ex-President) $200 million account. When Salinas was arrested and his
large scale theft of government funds was exposed, his private bank manager at
Citibank, Amy Elliott told her colleagues that “this goes in the very, very top of
the corporation, this was known…on the very top. We are little pawns in this whole
Citibank, the biggest money launderer, is the biggest bank in the U.S., with
180,000 employees world-wide operating in 100 countries, with $700 billion in
known assets and over $100 billion in client assets in private bank (secret
accounts) operating private banking offices in 30 countries, which is the largest
global presence of any U.S. private bank. It is important to clarify what is meant
by “private bank.”
Private Banking is a sector of a bank which caters to extremely wealthy clients ($1
million deposits and up). The big banks charge customers a fee for managing their
assets and for providing the specialized services of the private banks. Private Bank
services go beyond the routine banking services and include investment guidance,
estate planning, tax assistance, off-shore accounts, and complicated schemes
designed to secure the confidentiality of financial transactions. The attractiveness
of the “Private Banks” (PB) for money laundering is that they sell secrecy to the
dirty money clients.
There are two methods that big Banks use to launder money: via private banks
and via correspondent banking.
PB routinely use code names for accounts, concentration accounts (concentration
accounts co-mingles bank funds with client funds which cut off paper trails for
billions of dollars of wire transfers) that disguise the movement of client funds,
and offshore private investment corporations (PIC) located in countries with strict
secrecy laws (Cayman Island, Bahamas, etc.)
For example, in the case of Raul Salinas, PB personnel at Citibank helped Salinas
transfer $90 to $100 million out of Mexico in a manner that effectively disguised
the funds’ sources and destination thus breaking the funds’ paper trail.
In routine fashion, Citibank set up a dummy offshore corporation, provided
Salinas with a secret code name, provided an alias for a third party intermediary
who deposited the money in a Citibank account in Mexico and transferred the
money in a concentration account to New York where it was then moved to
Switzerland and London.
The PICs are designed by the big banks for the purpose of holding and hiding a
person’s assets. The nominal officers, trustees and shareholder of these shell
corporations are themselves shell corporations controlled by the PB. The PIC then
becomes the holder of the various bank and investment accounts and the
ownership of the private bank clients is buried in the records of so-called
jurisdiction such as the Cayman Islands.
Private bankers of the big banks like Citibank keep pre-packaged PICs on the shelf
awaiting activation when a private bank client wants one. The system works like
Russian Matryoshka dolls, shells within shells within shells, which in the end can be
impenetrable to a legal process.
The complicity of the state in big bank money laundering is evident when one
reviews the historic record. Big bank money laundering has been investigated,
audited, criticized and subject to legislation; the banks have written procedures to
Yet banks like Citibank and the other big ten banks ignore the procedures and
laws and the government ignores the non-compliance.
Over the last 20 years, big bank laundering of criminal funds and looted funds
has increased geometrically, dwarfing in size and rates of profit the activities in
the formal economy. Estimates by experts place the rate of return in the PB
market between 20-25% annually.
Congressional investigations revealed that Citibank provided “services” for 4
political swindlers moving $380 million: Raul Salinas – $80-$100 million, Asif Ali
Zardari (husband of former Prime Minister of Pakistan) in excess of $40
million, El Hadj Omar Bongo (dictator of Gabon since 1967) in excess of $130
million, the Abacha sons of General Abacha ex-dictator of Nigeria – in excess
of $110 million.
In all cases Citibank violated all of its own procedures and government guidelines:
there was no client profile (review of client background), determination of the
source of the funds, nor of any violations of country laws from which the money
accrued. On the contrary, the bank facilitated the outflow in its prepackaged
format: shell corporations were established, code names were provided, funds
were moved through concentration accounts, the funds were invested in legitimate
businesses or in U.S. bonds, etc.
In none of these cases – or thousands of others – was due diligence practiced by
the banks (under due diligence a private bank is obligated by law to take steps to
ensure that it does not facilitate money laundering).
In none of these cases were the top banking officials brought to court and tried.
Even after arrest of their clients, Citibank continued to provide services, including
the movement of funds to secret accounts and the provision of loans.
Correspondent Banks: The Second Track
The second and related route which the big banks use to launder hundreds of
billions of dirty money is through “correspondent banking” (CB). CB is the provision
of banking services by one bank to another bank. It is a highly profitable and
significant sector of big banking. It enables overseas banks to conduct business
and provide services for their customers – including drug dealers and others
engaged in criminal activity – in jurisdictions like the U.S. where the banks have no
A bank that is licensed in a foreign country and has no office in the United States
for its customers attracts and retains wealthy criminal clients interested in
laundering money in the U.S. Instead of exposing itself to U.S. controls and
incurring the high costs of locating in the U.S., the bank will open a correspondent
account with an existing U.S. bank. By establishing such a relationship, the foreign
bank (called a respondent) and through it, its criminal customers, receive many or
all of the services offered by the U.S. big banks called the correspondent.
Today, all the big U.S. banks have established multiple correspondent relationships
throughout the world so they may engage in international financial transactions for
themselves and their clients in places where they do have a physical presence.
Many of the largest U.S. and European banks located in the financial centers of
the world serve as correspondents for thousands of other banks. Most of the
offshore banks laundering billions for criminal clients have accounts in the U.S.
All the big banks specializing in international fund transfer are called money
center banks, some of the biggest process up to $1 trillion in wire transfers a
For the billionaire criminals an important feature of correspondent relationships is
that they provide access to international transfer systems – that facilitate the
rapid transfer of funds across international boundaries and within countries. The
most recent estimates (1998) are that 60 offshore jurisdictions around the world
licensed about 4,000 offshore banks which control approximately $5 trillion in
One of the major sources of impoverishment and crises in Africa, Asia, Latin
America, Russia and the other countries of the ex-U.S.S.R. and Eastern Europe, is
the pillage of the economy and the hundreds of billions of dollars which are
transferred out of the country via the corresponding banking system and the
Private Banking system linked to the biggest banks in the U.S. and Europe. Russia
alone has seen over $200 billion illegally transferred in the course of the 1990s.
The massive shift of capital from these countries to the U.S. and European banks
has generated mass impoverishment and economic instability and crises. This in
turn has created increased vulnerability to pressure from the IMF and World
Bank to liberalize their banking and financial systems leading to further flight and
deregulation which spawns greater corruption and overseas transfers via private
banks as the Senate reports demonstrate.
The increasing polarization of the world is embedded in this organized system of
criminal and corrupt financial transactions. While speculation and foreign debt
payments play a role in undermining living standards in the crisis regions, the multi-trillion dollar money laundering and bank servicing of corrupt officials is a much
more significant factor, sustaining Western prosperity, U.S. empire building and
The scale, scope and time frame of transfers and money laundering, the centrality
of the biggest banking enterprises and the complicity of the governments, strongly
suggests that the dynamics of growth and stagnation, empire and re-colonization
are intimately related to a new form of capitalism built around pillage, criminality,
corruption and complicity.
“This Goes Straight to the Top.”
— James Petras is a Professor of Sociology at Binghamton University in Binghamton, New York. He is the
author of 57 books. His latest, Globalization Unmasked: Imperialism in the New Millenium
May 25, 1999
CITIBANK LIKELY TO GET
SIA’S SINGAPORE HOME
By Peter Wagner, Star-Bulletin
A $4.5 million Singapore residence belonging to Indonesian businessman Sukamto
Sia will likely be recovered by Citibank N.A. Hong Kong, not a trustee looking for
assets to liquidate in Sia’s bankruptcy.
Guido Giacometti, the court-appointed trustee in Sia’s Chapter 7 case in Honolulu,
last week dropped opposition to the bank’s effort to claim the property, still under
the jurisdiction of U.S. Bankruptcy Court.
But even if U.S. Bankruptcy Judge Lloyd King frees the property, the bank still
must seek clearance from a Singapore court also claiming jurisdiction over Sia’s
The unoccupied residence, at 16 Bishopsgate, is one of two Singapore properties
shown among Sia’s assets in his November bankruptcy filing. The case, which began
as a Chapter 11 reorganization before being converted to a Chapter 7 liquidation
last week, shows Sia with $9.3 million in assets and $296.4 million in debts. The
second property, at 5 Balmoral Road, is valued at about $800,000.
The more valuable property, held by Citibank as collateral of $7 million in loans to
Sia, contributes nothing to his assets because Sia has no equity in the property,
the bank says.
Among Sia’s biggest properties in Hawaii are the Bank of Honolulu and Executive
Centre Hotel. Sia holds 76 percent of shares in the bank, pledged to two foreign
banks: Commerzbank and Societe Generale….
Executive Centre, meanwhile, is the subject of two foreclosure lawsuits.
April 11, 2000
CITIBANK POISED TO ASSUME CONTROL
OF EXECUTIVE CENTRE
By Peter Wagner, Honolulu Star-Bulletin
A sleek downtown high-rise once owned by international investor Sukamto Sia
would change hands, yielding about $500,000 to his bankruptcy estate, under a
plan to be considered in U.S. Bankruptcy Court next week.
It won’t put much of a dent in Sia’s $296.4 million debt, but the deal offers the
largest payout to date in a difficult effort to find the high-spending businessman’s
unencumbered assets around the world.
The plan would transfer the ownership on the heavily mortgaged Executive Center
on Bishop Street to prime lender Citibank N.A., holding $56.6 million in loans
against the 41-story tower.
If approved, the plan would avoid a pending foreclosure suit filed against the
property by Citibank a month after went into bankruptcy in November 1998.
“It isn’t much,” said Guido Giacometti, trustee in Sia’s ongoing Chapter 7
bankruptcy. “Everybody’s taking a haircut.”
None more so than Citibank, which agreed to reduce outstanding debt from $56.6
million to $39 million, a $17.6 million loss if the plan is approved.
“Life is not always fair,” said Citibank attorney Tom Roesser….
The $500,000 to be paid into the bankruptcy estate would come from Executive
Centre’s cash reserves in settlement of a dispute over a $3 million secondary
The mortgage, transferred by Sia to a British Virgin Islands corporation called A-B-C Pacific Ltd. shortly before his 1998 bankruptcy, had been sought as part of
the estate by the bankruptcy trustee.
Executive Centre, formerly owned by MKS Executive Partners, a Sia holding, is
one of Sia’s two major holdings in Hawaii. The high-rise houses a 120-room Aston
hotel, several retail outlets including Long’s Drugs and Ross Dress For Less, and
379 residential units.
The other key property is Sia’s 74 percent stake in the Bank of Honolulu, 307,964
shares now held and being marketed by Giacometti…..
Those efforts, which include reclaiming international properties, have so far
yielded modest results….
Sia filed for bankruptcy protection from his creditors in November 1998, claiming
$9.3 million in assets and more than $296 million in debts. His bankruptcy came
weeks after his arrest in Las Vegas for allegedly writing $13.5 million worth of bad
checks to pay gambling debts.
Formerly known as Sukarman Sukamto, Sia was a high-profile investor in Hawaii
during its “bubble” economy of the 1980s.
Besides buying Executive Centre and numerous residential properties, Sia acquired
and later sold to the state the site that now houses the Hawaii Convention Center.
For more, GO TO > > > Sukamto Sia: The Indonesian Connection
Michael C. Ruppert
P.O. Box 6061-350, Sherman Oaks, CA 91413
(818)788-8791 * fax(818)981-2847
© COPYRIGHT 1998, 1999, 2000, 2001 MICHAEL C. RUPPERT. ALL RIGHTS RESERVED.
From the Multinational Monitor:
DECEMBER 1999 – VOLUME 20 – NUMBER 21
T H E C O R P O R A T E C E N T U R Y
The Ten Worst Corporations of 1999
by Russell Mokhiber
As we move to the end of the millennium, it is important to remind ourselves that
this has been the century of the corporation, where for-profit, largely
unaccountable organizations with unlimited life, size and power, took control of the
economy and the political economy — largely to the detriment of the individual
consumer, worker, neighbor and citizen.
Let us again remind ourselves that corporations were created by the citizenry.
(Thanks here to Richard Grossman and the Project on Corporations Law and
Democracy for resurrecting and teaching us a history we would have collectively
In the beginning, we the citizenry created the corporation to do the public’s work
— build a canal or a road. >
We asked people with money to build the canal or road. If anything went wrong,
the liability of these people with money — shareholders, we call them — would be
limited to the amount of money they invested and no more. This limited liability
corporation is the bedrock of the market economy. The markets would deflate like
a punctured balloon if corporations were stripped of limited liability for
And what do we, the citizenry, get in return for this generous public grant of
limited liability? Originally, we told the corporation what to do. Deliver the goods.
And then let humans live our lives.
But corporations gained power, broke through democratic controls, and now roam
around the world inflicting unspeakable damage on the earth.
Let us count the ways: price-fixing, chemical explosions, mercury poisoning, oil
spills, destruction of public transportation systems. Need concrete examples?
These could be five of the most egregious of the century . . .
The standard in political corruption
Every once in a while, a major piece of legislation passes the U.S. Congress and
even old hands are left shaking their heads. This happens only when new standards
of legalized bribery are achieved, when more money corrupts the political process
in more egregious ways than had recently been witnessed.
Those old hands were left shaking their heads this fall, after Citigroup and the
rest of the financial services industry (banks, insurance companies and securities
firms) succeeded in ushering the Financial Services Modernization Act through
both houses of Congress and winning President Clinton’s signature.
The finance, insurance and real estate industries together as a sector are
regularly the largest campaign contributors and invest more in lobbying than any
other sector. They spent more than $200 million on lobbying in 1998, according to
the Center for Responsive Politics — a number almost sure to be topped in 1999 —
and donated more than $150 million in the 1997-1998 election cycle — a total sure
to be exceeded in 1999-2000. Giant campaign contributions flowed especially to
the members of the Congressional banking committees as well as the other
committees with direct jurisdiction over financial services legislation.
Even more grotesque was the intimate involvement of banking lobbyists in the
legislative process. With Citigroup’s co-chair Sandy Weill and lead lobbyist Roger
Levy leading the charge, industry executives and lobbyists badgered the
administration and swarmed the halls of Congress until the final details of a deal
were hammered out, effectively vetting all drafts before they were formally
As the deal-making on the legislation moved into its final phase — and with fears
running high that the entire exercise would collapse — into the breach stepped
Robert Rubin. The recently retired Treasury Secretary, Rubin would be announced
as the new de facto co-chair of Citigroup just after the legislation passed
Congress. He apparently had negotiated the terms of his hiring while negotiating
over the legislation.
Citigroup played such a decisive role in the legislative process because its very
existence hung in the balance. The product of a merger between Citibank and
Travelers, the combination of banking and insurance companies had been illegal
under existing law (but excused due to a loophole which provided a two-year review
The new legislation repeals the revered Glass-Steagall Act, and will allow such
Glass-Steagall had reflected the long-standing understanding of the political and
economic dangers of financial industry concentration. Its repeal and enactment of
the “Citigroup Authorization Act,” will:
1. Pave the way for a new round of record-shattering financial industry mergers,
dangerously concentrating political and economic power;
2. Create too-big-to-fail institutions that are someday likely to drain the public
treasury as taxpayers bail out imperiled financial giants to protect the stability of
the nation’s banking system;
3. Leave financial regulatory authority spread among a half dozen federal and 50
state agencies, all uncoordinated, that will be overmatched by the soon-to-be
4. Weaken the Community Reinvestment Act (CRA): there will be no ongoing
sanctions against holding company banks that fail to meet CRA standards, it will
lessen the number of CRA examinations, and provisions of the bill will discourage
community groups from challenging banks’ CRA records.
5. Facilitate the rip-off of mutual fund insurance policy holders by permitting
mutual insurance funds to switch domicile states — thereby enabling them to
locate in states where they can convert to for-profit, stockholder companies
without properly reimbursing mutual policyholders (a conversion of tens of billions
6. Aggressively intrude on consumer privacy (and promote a still-greater
intensification of direct marketing), thanks to provisions permitting the new
financial giants to share finance, health, consumer and other personal information
among affiliates; and
7. Allow banks to continue to deny services to the poor (Congress rejected an
amendment requiring banks to provide “lifeline accounts” to the poor, so they would
have refuge from check-cashing operations and the underground economy).
Citigroup and the financial services industry insist the new law will benefit
consumers by giving them efficient, one-stop shopping for financial services….
[Just as the Vampire promises eternal life to its prey!]
February 22, 2001
GRAFT FOCUS ON ESTRADA’S WIFE
The couple could be charged for perjury
The wife of the deposed Philippines president, Joseph Estrada, made a massive
withdrawal from one of her bank accounts earlier this month, according to
investigators looking into corruption allegations against Mr Estrada.
Luisa Ejercito, who is running in Senate elections in May, withdrew 109 million
pesos ($2.3 million) from a local branch of CITIBANK, shortly before the internal
revenue bureau froze her family’s accounts.
The couple could be charged for perjury for failing to declare these assets.
The government ombudsman Aniano Desierto said the confirmation of the
withdrawal came from records provided by the bank.
A popular uprising toppled Mr Estrada
Mr. Estrada himself is accused of amassing $400m in unexplained wealth.
On 7 February, opponents of Mr Estrada asked the ombudsman to file a case to
recover up to 20 billion pesos ($42.2 million) in property and bank accounts
allegedly held by the ousted president and his wife, his mistresses and cronies.
Mr Desierto said Mr Estrada’s acknowledged mistresses are not being
investigated, but added that there was evidence some of them had millions of
pesos deposited in their accounts.
Earlier this week, the Supreme Court barred the ombudsman from filing any
charges in court against Mr Estrada for 30 days.
The order was intended to allow the Supreme Court to resolve the issue of his
claim that he is still the country’s legitimate leader and therefore immune from
Mr. Estrada was impeached for allegedly embezzling state funds and taking
bribes from gambling bosses last year.
But prosecutors failed to win a conviction at the Senate that would have thrown
him out of office.
A popular uprising spurred by a growing corruption scandal and the apparent
collapse of the corruption trial toppled him last month. . . .
From FOREST CONSERVATION NEWS TODAY:
CITIGROUP FUNDING DEFORESTATION
July 30, 2001
OVERVIEW & COMMENTARY, by www.forests.org
Rainforest Action Network and others have launched a major campaign against
Citigroup – the largest U.S. financial institution.
Citigroup is an international leader in the financing of destructive oil and gas,
mining, and commercial logging operations.
In Indonesia, Citigroup has been a major funder of companies engaged in oil palm
and paper pulp production, leading to massive deforestation of these globally
critical rainforest ecosystems. If the World’s rainforests are to be conserved it
is important that rainforest activists go beyond railing against globalization in
general, and hold corporations responsible for such specific instances of ecological
Holding Citigroup, Boise Cascade, ExxonMobil (Esso) and others responsible for
activities that threaten the world’s forests, climate and other ecosystems is an
excellent eco-activist strategy. . . .
One of Citi’s top business partners in the region is Indonesia’s most infamous palm
oil company, London Sumatra (Lon Sum).
Lon Sum has been implicated in illegal logging and human rights violations, and is
suspected of being among the palm plantation companies that deliberately and
illegally set fires in Indonesia in 1997.
The devastating fires destroyed vast areas of rainforest, which the government
then allocated to forest corporations. Many of these companies sought the
increased operating area in order to pay off debt to foreign investors, such as
Citi. Overall, palm oil plantations have claimed nearly eight million acres of native
forest in Indonesia, and every year close to one million additional acres of forest
are targeted for conversion.
Pulp and paper operations are another key factor in the decimation of Indonesia’s
forests. Citi is a top investor in Asia Pulp and Paper (APP), one of Indonesia’s
largest pulp and paper operators. Since the late 1980s, foreign investment in
Indonesia’s pulp and paper sector has grown by 700 percent. The increase in pulp
and paper processing has far outpaced the development of sustainably managed
pulpwood plantations, resulting in the widespread destruction of natural forests.
APP has reportedly expanded its processing operations in order to resolve
outstanding debts with foreign creditors.
Indonesia harbors 10 percent of the world’s remaining old growth forests. An
estimated 72 percent of the country’s original frontier forest has already been
destroyed. Today, the destruction continues unabated, posing an increasing threat
to the country’s indigenous peoples, who face displacement from their traditional
The forestry sector also poses a grave danger to Indonesia’s wildlife, including
tigers, elephants, rhinos, and the endangered orangutan, which is found only in the
remaining intact forests of Borneo and Sumatra. The orangutan population has
declined by 50 percent in the last decade, primarily due to destruction of its
forest habitat, up to 80 percent of which has been lost in the past twenty years.
Less than twenty-five thousand orangutans now remain in the wild.
Both Lon Sum’s and APP’s operations threaten habitat that is critical to the
For much more, GO TO > > > The Indonesian Connection
$ $ $
From Maestro: Greenspan’s Fed And The American Boom, by Bob Woodward:
ON AUGUST 2, 1990, Iraqi President Saddam Hussein invaded and took over
neighboring Kuwait. President Bush declared, “This will not stand,” and it looked as
if the nation were on the verge of war.
Greenspan had done enough work on the economics of the Vietnam War to know it
took months or more to build up forces and supplies to fight a war on a far-off
continent. He consulted with his longtime friend Secretary of Defense Dick
Cheney, who had been the White House chief of staff during the Ford
Despite the saber rattling, war was far off in time but likely at some point, Cheney
said, essentially giving Greenspan a top-secret summary. The gravest problem
was the vulnerability of the initial small wave of U.S troops who had been sent to
the Middle East. They could be crushed by Saddam’s forces.
Greenspan convened the FOMC August 21, 1990, at a time of incredible tension,
uncertainty and speculation about military action. The Mideast crisis had also sent
oil prices surging….
Greenspan was facing another problem, which was perhaps even bigger, but partly
secret. The nation’s banks, the foundation of the credit system, were in big
trouble. Bad loans, especially those made in real estate and in Latin America, were
taking their toll. Some of the largest commercial banks were on the verge of going
The depth of the problem was a big secret within the Fed, which had a regulatory
role. But it wasn’t just the banks. A number of big securities firms and insurance
companies were in trouble as well. Greenspan was so alarmed that he rose at 6 a.m.
each morning to check the overnight financial news on TV. He was deeply worried
about a collapse in the financial markets….
Surveying the situation from his paneled office at the New York Fed, Gerald
Corrigan could see the making of an economic calamity for the entire financial
system and the nation.
Citibank, which six years earlier had been the biggest, strongest and mot powerful
bank in the world, was closest to collapse. The Federal Deposit Insurance
Corporation (FDIC), which insured deposits, examined Citibank and on their
grading scale gave it a 4. A 5 was the lowest grade and indicated complete
Headed by John S. Reed, a problem-solving manager of some genius, the bank had
gone though a vast expansion. Now the stock had fallen to a new low because of
bad real estate and foreign loans. Corrigan arranged a come-to-Jesus meeting
with Reed and informed Greenspan of his plan.
Greenspan didn’t second-guess Corrigan and gave his tacit approval.
The day before Thanksgiving 1990, Corrigan met with Reed. They got into a big
argument about Citi’s likely losses. Reed insisted that the bank’s losses would total
only $2-$3 billion.
“Goddammit,” Corrigan shouted, it would be $5-$6 billion and Reed had better get
used to it. Corrigan figured that Citi had about six months to raise $5 billion in
capital, or else they’d go under. At that time, raising $5 billion was almost
unheard-of, virtually impossible….
Prince Alwaleed bin Talal, a young, flamboyant Saudi Arabian of extreme wealth
who already owned a considerable amount of Citibank stock, was willing to invest
another $1.2 billion. It would give him about 14 percent of the Citibank stock and
make him by far the largest single stockholder.
Corrigan flew to Saudi Arabia for a secret meeting with the prince. During a two-hour meeting, he laid out the rules….
Reed wrote a 600-page memorandum of understanding outlining his plans to
improve performance and cut costs dramatically. He shared a copy with the Fed,
which, along with the FDIC and the comptroller of the currency, acted as Citi’s
overseer and de facto board of directors as Reed tried to save the bank.
Eventually, Reed turned the bank around….
On top of the problems with the banks, the separate savings and loan collapse had
depressed the real estate market. Greenspan was on the board of the Resolution
Trust Corporation, which was the government agency created to dispose of the
insolvent S&Ls and their real estate. He applauded and supported the eventual
effort to unload a large block of real estate – billions of dollars’ worth from all
around the country – to get the real estate market primed. There had to be
significant real estate sales to revive the market and get prices up. That meant
bargain-basement prices, creating vast fortunes for those who got in on it.
The largest buyer of RTC assets was Joe Robert, a Washington D.C.-area
entrepreneur. He spent about $8 billion and ended up making a total $3 billion
As Greenspan said in a private meeting, “We endeavored to galvanize on the
greed of a number of people in the business, who when seeing their
counterparts making big profits, dived in, and they virtually cleaned out our
The real estate market was recovering….
Outline for . . .
Citibank: Lords of Corruption
by William Meyers
[No publication date set]
1. The beginning: born in a hothouse of corruption
Citibank did not invent corruption. It was brought to America from Europe; the
Revolution and new Federal government changed little. Banks were considered by
many to be corrupt in and of themselves, like usury, and there were no banks in the
Colonies at the time of the Revolution. Citibank was born in 1812 to serve the
interests of a few New York City merchants who bribed the New York State
legislature to get a charter.
2. 19th Century Robber Banking: Moses Taylor and James Stillman
Citi’s money did not come from nowhere. In the 1800’s it came from the usual
places: stolen Native American lands, raping the environment, defrauding small
investors, and corrupt deals with the local and federal governments. Moses Taylor
was a pillar of the infamous Tammamy Hall and James Stillman consorted with the
most corrupt Robber Barons and politicians of his era.
3. Citibank and Mexico, Cuba and Puerto Rico
When Congress (and the Presidency) succumbed to systematic corruption in the
1880’s, Citbank was there. The system perfected by Senator Nelson Aldrich
traded high tariffs on imported goods for campaign contributions and stock
Central to it was Henry Havemeyer, who owned the Sugar Trust. He engineered
the annexation of Hawaii and soon afterwards Cuba, Puerto Rico and the
Philippines, to get his hands on their sugar plantations.
Havmeyer served on only one board outside of the Sugar Trust: National City
Bank’s (now Citibank). Using Citibank money, he and James Stillman bought most of
the plantations of the conquered colonies.
Citibank was also a chief supporter of the corrupt pre-revolution (1910) regime in
Mexico. Citibank and the corruption of the PRI (the current governing party).
Citibank’s connection to the NAFTA, GATT, and the Chiapas rebellion.
4. Citibank, Mutual Funds, and The Great Depression
During the 1920’s Citibank encouraged investors to buy stocks at vastly inflated
prices. In 1932 the Senate Banking Committee found that Citibank knew the stocks
were overvalued, and that the 1929 stock market crash was largely a result of
stock prices falling to their real values. Banking law reforms were enacted to
protect citizens from Citibank’s greed. . . .
5. Citibank, the Federal Reserve, and Human Misery
How the Federal Reserve works. The creation of money. Various economic theories
and their relation to Federal Reserve manipulations. Citibank’s relation to the Fed.
Profiting on human misery: the 1980-1982 depression and other examples. The new
electronic money and its consequences.
6. Bonds and Corruption
Why governments, and the rich, prefer bonds. Citi’s role in the bond market. Why
bonds should never be used to finance government projects like schools and
7. Citibank and War, War, War
Citibank and the War of 1812, Mexican-American War, Civil War, Spanish
American War, Philippines War, World War I, World War II, Vietnam, and Persian
Gulf wars, plus some small wars in countries with “American interests.”
8. The House Always Wins: Credit Cards I
Citibank did not invent credit cards, but it was the first to make them a financial
success. Spending money using a credit card is always a gamble, because the banks
and Federal Reserve structure unemployment into the economy. Statistically
Citibank and other issuers can count on people getting behind in payments; the
profits from usurious interest rates on balances have fueled Citibank’s latest
round of expansion.
The economic disenfranchisement of America, the credit card, and the new
peonage: how Citibank planned and executed an economic counter-revolution.
9. The House Always Wins: the 1980 SEC Investigation
During the 1970’s Citibank successfully manipulated the foreign currency markets
for its own profit, often adversely affecting U.S. interests. Laws were broken on a
massive scale, but an SEC investigation resulted in a mere “stop doing that”
directive when Ronald Reagan (a close friend of then Citibank CEO Walter
Wriston) took office. Germany, Italy, and Switzerland, however, settled with
Citibank for millions of dollars in penalties.
10. Financing global catastrophe: Citibank and the ecocrisis
How Citibank continues to finance the rape of the environment.
11. Citibank and Deregulation
What Citibank wants now, and how they plan to get it through their politicians.
12. Who Owns Citibank; Who Citibank Owns
Who owns Citibank and other big banks. Who and what else they own.
Walter Wriston, Citibank CEO, was a close friend and supporter of Reagan. Ties
between Citi, other banks and industrialists, and prominent politicians.
13. Banking on the New World Order
Most of Citibank’s biggest historic losses came as a result of war and revolution.
It favors one world government because it would be insured against such losses. It
would be able to penetrate every market in the world and suck the economic
blood out of every citizen.
This is also critically important to Citi’s allies, international corporations and other
14. 1998: The Travelers Merger & Other Updates
15. The End: America’s biggest bank (Summary & conclusions)
Today Citibank is the richest bank in the U.S., and, depending on exchange rates,
at times is the richest in the world. It effectively controls Visa and Mastercard.
It has branches in every country of the world, and can make and break nations with
its investments and exchange rate manipulations. Its tentacles are everywhere,
and it seeks to write laws to its own satisfaction, including the current push to
“deregulate” the banking industry. . . .
(Catbird: Can’t wait to read the book.)
# # #
For more Bloodsuckers, GO TO > > >
American Express: The Dark Side
The Bad Faith Buzzards
The Bankruptcy Buzzards
Carlyle Group: Birds that Drink from Cesspools
Confessions of a Whistleblower
Claims By Harmon
Dirty Gold in Goldman Sachs
Dirty Money, Dirty Politics & Bishop Estate
The Eagle Hooded: The 9-11 Coverup
New Songs by The Whistler
Of Vampires and Daisies
The Silence of the Whistleblowers
Spotting the Big Five
Sukamto Sia: The Indonesian Connection
The Kissinger of Death
The Puna Connection
The Stephen Friedman Flock
The Story of Enron
Tracking the Tyco Flock
Transylvania Travelers in St. Paul
Zeroing In On Zurich Financial Services
CITIGROUP: The Mating Dance of Dinosaurs
The Citigroup Watch
For more TALES OF TERROR, GO TO > > >
THE NESTS OF OSAMA BIN LADEN
AND WATCH FOR MORE BLOOD FLOWING DOWN
CITY STREETS SOON….
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Last update October 9, 2006, by The Catbird