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Citibank US Top Brass at HQ named in Indian FIR by Top Investor Sanjay Aggarwal of Helion Funds in the Gurgaon Branch Wealth Management Fraud…stirs angry memories of this Bank

This Wealth Managment Fraud of over Rs 300 Crs, claimed to be the ingenuity of a relationship manager of Citibank at it’s Gurgaon Branch in Delhi is now being widened in investigation scope to include even the role of the World Head, Mr Vikram Pandit and Chairman,Mr William Rhodes and ten other Bank Officers in New York.

They have been named by Individual Investor Mr Sanjay Aggarwal in a FIR filed at the Gurgaon Police Station.Mr Aggarwal is the co founder of India’s leading BPO Daksh and currently is the MD of Helion Venture Partners….one can meet him in a fireside chat at the Angel Investors Forum to be held on January 20,2011 in New Delhi    

Mr Aggarwal has lost Rs 32.43 crs in the Fraud committed in the Wealth Managment Division of Citibank in their Gurgaon Branch…..his FIR includes the names of Citibank’s top brass…his contention is that the fraud could not have been committed without the knowledge of the Bank and it’s top officers…bank has to take responsibility for the fradulent actions of it’s officers involved in this fraud as a bank is expected to have checks and balances in place to prevent such frauds occuring

Mr Aggarwal stirs angry memories that I harboured against ‘Citibank’…On November 23, 2008 I had even blogged on  several incidents and experiences with the bank that that created these sour memories over the years

‘citi never sleeps’…well ! Citigroup should !

Sunday, November 23rd, 2008

Citibank must have spotted that something was amiss when some Investors or Potential Investors approached it on the Bank offering Investment Proposals with a higher rate of Return….they rubbish the FIR including the names of the Banks Top Brass as being baseless…the criminal charges are strong against the bank and it’s top honchos…cheating…criminal breach of trust….misappropriation of funds 

My Point is simply this….Citibank is responsible……if checks and balances and internal control systems and processes were in place then this fradulent situation would not have been created….that it has, points to either of two situations…both in which the bank has to be responsible

  • strong checks and balances were not in place…in which case Citibank is responsible
  • checks and balances were in place but there has been collusion within the bank itself to perpetrate this fraud….difficult to believe that one guy could have done it all !…..if this is true then there are no checks and balances in place !……in any case Citibank is responsible for employees actions while being employees and representing the bank…this is the point under debate…..ofcourse the bank  will take action against these employees….but can it escape responsibility ?

Investors are dealing with the Bank and not just it’s employee and relationship manager,Shivraj Puri who has been accused of masterminding this fraud….of course it is too stretched to say Mr Pandit and Mr Rhodes who reside in USA and preside over the whole Bank were aware of this Operation in question at their Bank’s Gurgaon branch…the question raised by Mr Aggarwal’s accusation in his FIR is one of ultimate responsibility read more

‘citi never sleeps’…well ! Citigroup should !

Their Ad Tag line says it all ‘ citi never sleeps’…. Well ! Citigroup should !… so that others too can !

Citigroup is facing serious survival issues

It’s share price has dipped below US $ 4, closing on Friday at US $ 3.77, from over US $ 30 just a year ago when Vikram Pandit, of Indian origin, took over to try and save the bank. This past week itself it crashed 60%. On Friday it even reached a low of US $ 3.05 before recovering. It’s now quoted at a fraction of the Book Value and may look very attractive as it does to it’s major shareholder and saviour more than once, Prince Alwaleed bin Talal of Saudi Arabia who announced that he is raising his stake to 5% in Citigroup

The Bank has showed losses in the past four quarters. It’s profits dived to US $ 3.6 Billion in 2007 from US $ 21.5 Billion in 2006. The Balance Sheet at September 30, 2008 shows total liabilities in excess of US $ 1.9 Trillion supported by an asset side of US $ 2 Trillion with Shareholders Equity at US $ 126 Billion.

However cash and Cash equivalents and Short Term Investments make up just under US $ 400 Billion. A major asset chunk is US $ 1.3 Trillion in Long Term Investments of which reportedly over US $ 700 billion are related to mortgage securities and of which many are suspect… The Bank would probably require close to US $ 200 billion to bail-out of troubles… The Share Price is now below Book Value and the Market Cap has dramatically dropped to US $ 20 Billion from over US $ 200 Billion a year ago.. It has made huge losses of Billions of Dollars in Hedge Fund SIVs and is now closing nine of them them to prevent further loss

Should Citicorp be bailed out ?

It never sleeps because it cannot !…having created such a mess it’s now trying to clean it up……. Like Lehman, Citigroup too needs to finally go to sleep…. that’s my personal opinion based on both the deep financial malaise and the deep rooted arrogant and condescending psyche within the bank for decades now

I am not really anti Citigroup but my reservations on it have grown over many years now.Have a look at some of the reasons why these reservations came about.Some  have involved my clients in  India…..The Issues are varied in nature

  • A client had an account in Citibank and had issued a cheque which bounced… He said this was not posssible and obtained a letter from Citibank which acknowledged their mistake and asked me not to judge the financial position of the client adversely
  • A Non Resident Client has Deposits with BCCI, a notorious bank which collapsed. He had given Citibank the Deposit Receipts with the authorisation to them to present them to BCCI on due dates and have these deposits transfered to Citibank… Citibank forgot to do this and BCCI went bust and the clients monies got locked up … I had to personally intervene and fire the Bank for this… would you beleive it that the Bank said they reserved the right to file a case against their own concerned Division responsible for this crisis… Fortunately, the Citibank CEO, Mr Jerry Rao, intervened into this issue and personally requested the liquidator to let Citibank release the Monies to my client and they would later claim the clients BCCI deposits
  • Before the Dematerialisation of Shares, all shares sold had to be physically delivered to the Markets. A Client had sold shares which were pledged against an overdraft in Citibank. He had already applied to the bank to withdraw the share certificates…. Citibank failed to deliver on their stated due time to collect the same… I had to personally go and fire the Bank offcials and warn them that if they do not give the shares the same day they would be liable for the auction costs and price differentials… The Bank’s safe custody facilities were located elsewere… but they urgently despatched their officer to get  the shares
  • In 1991/92 just before the late Harshard Mehta’s Bank and Stock Scam was exposed, I had approached the bank to place Certificates of Deposit of Good Amount with the Bank for  Clients… The Bank refused to entertain me because, as I later learnt, they preferred to restrict their association and involvement with only a certain cartel of leading Brokers who were on the other side of the Road of the Big Bull, the  Late Harshad Mehta… When Hell broke lose and the Big Bull Banking Receipt (BR) Scam unfolded in April 1992, it is strongly rumoured that Citibank hired Hotel Rooms and had shredders installed in them and Day and night, their employees destroyed evidence of questionable deals… The Bank’s Operating License in India was under threat….. the Citigroup Global CEO at the time, John Reed, had to personally fly in and, I believe, warn our Government that if they took away the License then Citibank would withdraw Deposits of Billions of Dollars from India…at the time we were very precariously poised with our FX reserves which at one point had dipped to just US $ 1.7 Billion  
  • When I was on an assignment in Doha, Qatar last year, I learnt that Citigroup was lobbying hard to enter Qatar in a big way as huge gas reserves and rising prices were proving to be a goldmine for the country and the bank wanted to tap into this wealth… Qatar was not to keen as when it was facing financial issues, Citigroup had disdainfully refused to support the country… banks which did support Qatar when it needed it most, rightfully were allowed to scale up in Qatar and reap the advantage of tapping into the growing wealth 

Citibank had this very transparent policy of hiring young Indian Professionals whose parents were either well known Industrialists or held top and influencing and powerful positions in Private and Public domain… the lure was material… wisely, many realised that they were being used and expoited and left the bank… a close friend was man enough to show them his middle finger when they blatantly told him they would offer a job if he got along with him the account of a Leading Indian Company which his father headed    read more

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