Citygroup All Washed Up with Nowhere to go
Alcuin Bramerton
Abu Dhabi’s biggest sovereign wealth fund has accused Citigroup of tricking it into agreeing to pay $7.5 billion (£4.6 billion) for overpriced stock. The Abu Dhabi fund believes that the bank’s senior executives withheld information about Citigroup’s dwindling financial strength in order to secure funding. The sovereign fund will pursue its legal rights fully. Citigroup’s shares were trading at $34 at the time of the deal in November 2007.
On Thursday 17th December 2009 Citigroup’s $20 billion attempt at equity raising collapsed in humiliation. Billed as America’s largest-ever equity raising, the new Citigroup shares were priced at $3.15, more than twenty per cent below the closing share price before the offer was announced. The US Treasury was forced to scrap its plan to offload a $5 billion stake in Citigroup and said it would wait 90 days, rather than 45, to begin selling the rest of its holding. The Treasury, which paid $3.25 per share in July 2009 when it agreed to swap $25 billion of the bailout money for a stake in the bank, had planned to sell $5 billion of this stock in a simultaneous secondary share sale.
Only two weeks earlier, Kuwait's sovereign wealth fund announced that it had booked a profit of $1.1 billion by selling the stake it took in Citigroup less than two years ago. The Kuwait Investment Authority sold the preferred shares after converting them to common stock for $4.1 billion. Kuwait's move was a surprise. In September 2009, it said it had no intention of selling its holdings in either Citigroup or Bank of America in the short term because its investment policies were based on a long-term vision.
Citigroup has had a bad year. Back in February 2009, European Interpol identified a criminal conspiracy to disguise and launder Citibank toxic derivatives. On the evening of Thursday 26th February 2009, an attempt was made to repackage $700 trillion of worthless Citibank derivatives as short positions in major Asian Tiger currencies. Thus disguised, the toxic papers were taken off Citibank's books and illegally converted into Taiwan dollars and Euros at the Citibank FOREX trading platform in Singapore. These funds were then illegally wire-transferred to currency trading platforms at the Chicago Mercantile Exchange and to George Soros' personal currency exchange in Budapest, Hungary. President Barack Obama, President George Bush Snr, President George Bush Jnr, US Secretary of State Hillary Clinton, US Treasury Secretary Timothy Geithner, former US Treasury Secretary Henry Paulson, former Federal Reserve Chairman Alan Greenspan, hedge fund manager George Soros, and András Szász, head of the Hungarian Chamber of Commerce, were actively involved in the conspiracy. More here (18.12.09), here (06.12.09) and here (28.02.09). And more background about major top-end corruption at Citigroup here.