'Our job is to set a tone at the top to incent people to do the right thing, and to set up safety nets to catch people who make mistakes or do the wrong thing, and correct those as quickly as possible. And it is working. It is working'.
So, according to The New York Times, said Citigroup's then-CEO, Chuck Prince, in 2006. Emmmmm. And the knives are out now, as investors look for scapegoats to blame for Citi's second US government bailout in as many months. In the line of fire, of course, are current and former senior executives and board members. The media, too, has worked itself into a frenzy over the issue, with The New York Post's headline Tuesday exclaiming: 'Bounce These Bozo Bankers'.
And chief among those bearing the brunt of the anger is former US Treasury Secretary Robert Rubin, a man who has worked at a senior level at Citi for almost a decade, taking some $107m in compensation in the process. It was Rubin, some claim, who pushed the firm's traders into taking more risk and who is largely responsible for Citi's current parlous position (some $65bn in asset writedowns). Former CEO Chuck Prince is also being blamed, with The New York Times quoting one insider who said: 'He didn't know a CDO from a grocery list', and Saudi Prince Alwaleed bin Talal, Citi's largest individual stockholder, confirming that he was 'sorry for appointing' him.
The company's board, too, are in the line of fire, with many, including Richard Parsons, having served for a decade or more. Current Chairman, Sir Win Bischoff, who has bagged millions over the years, has also served in senior positions since 2000. In fact, the only one who seems to be above reproach is current CEO Vikram Pandit who, no matter what you think about his leadership style, is at least trying to right the ship.
And The New York Times has a damning quote about Citi from Lynn Turner, a former chief accountant with US regulator the Securities and Exchange Commission, who said: 'If you don't have controls, if you don't have the right culture and you don't have people accountable for the risks that they are taking, you're Citigroup'.
Some are now wondering just how it is that many in senior positions at Citi can still be in a job, especially as thousands of the firm's employees are losing theirs. And investors, who were in danger last week of seeing their stock ending up worthless, are also beginning to call for those in command to be held accountable. Some of these people need to stand up and take some responsibility.
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