Citigroup CEO Charles Prince is having a bad time of it. He took the helm a year or so ago, at a time when Citigroup had been in the mire because of alleged stock research abuses and Enron-related exposures. He was on a mission to clean up his company's act. Judged on his performance to date, he doesn't seem to have done too well.
Firstly Citigroup was stuffed by Parmalat, a milk company. Then we had those ill-fated Euro-bond trades in August and then the private banking disaster in Japan, which last week resulted in three senior Citigroup executives falling on their swords. And now Citigroup seemingly has a mutual funds problem.
Thomas Jones, who headed up Citigroup's asset management business and was one of the three senior executives let go last week, is back in the headlines. According to The Times, Jones and two other unnamed Citigroup executives have been informed by US regulator The Securities and Exchange Commission (SEC) that it might take enforcement action against them. This is said to follow on from an 11 month investigation into a $16m payment made to Citigroup which, it is claimed, was improperly allocated.
Now Jones was dismissed last week for the debacle in Japan and not for any irregularities in his mutual funds unit. But concerns were raised several months ago about the fate of the $16m. If the SEC has found something, one must surely ask why didn't Citigroup itself uncover any irregularities ? You have to move the sofa to hoover under it, Mr Prince.
Bloomberg quotes a Lehman analyst, who said that 'One of Chuck's (Charles Prince's) goals when he took over the bank was to stay out of the headlines. He hasn't been able to do that in his first year. What he needs to do is instill a culture that makes sure they play by the rules'. Prince also needs to make sure that he takes a good look under all those rocks.