Citigroup CEO Charles Prince has made good on his recent promise that there would be more heads to roll in the wake of the firm's debacle in Japan.
Six relatively lowly ranked staff were chopped before this week because of the firm's problems in that country. Japanese regulators have ordered the group to close its private banking operations by next September because, they have said, they discovered compliance and money laundering regulation breaches. Prince had previously said that he will hunt down the culprits and take action. Well, three senior executives have now fallen on their swords.
According to Reuters, an independent review pointed responsibility to the Citigroup three - Vice Chairman Deryck Maughan, who headed up international operations, Thomas Jones, CEO of the asset management business (which apparently also oversaw the private bank) and Peter Scaturro, who headed up Citigroup Private Bank itself.
Prince no doubt had to act quickly, what with the private banking fiasco following quickly on from that silly series of bond trades in August. And many are now applauding his actions. But is it really right that these senior executives pay the ultimate price for the operational shortcomings which took place on their watch ? And if it's right to go to the top for accountability, then why hasn't Prince himself gone ? Why is he not responsible too ? He is, after all, the boss.
Prince has been CEO for a year or so now and very soon he will be expected to take responsibilty for Citigroup's shortcomings and failures. It's all very well riding around on a white charger, lopping off heads and making examples. The trouble with making examples, though, is that sometimes you become one yourself. Can we now expect Prince himself to pay the ultimate price in the event that there is another major blow-up in his huge global empire ? He is leaving himself very little room to manoeuvre. What's that old Japanese saying about those living by the sword...........