On the first page of Citigroup’s just-issued 139-page proxy statement, Chairman Richard Parsons writes,
The Board would also like to recognize our retiring directors, Sir Win Bischoff, Kenneth Derr, Roberto Hernandez, Robert Rubin, and Franklin Thomas for their many contributions to Citi. The collective wisdom and insight of these directors have been an invaluable source of strength for Citi.
Oh, really? I guess there was no reason for taxpayers to pour $45 billion into the company and prevent a meltdown of the entire financial system. You’d certainly get that impression from the proxy. Nowhere in this thick document is a word of thanks for taxpayers.
In January 2009, Rubin was named by Thomas Kostigen of Marketwatch as one of the “10 most unethical people in business.”
Rubin has been a director and chair of Citigroup’s executive committee since 1999, overseeing a time during which the bank took on huge risks for which taxpayers are paying now. Excluding stock options, Rubin has received $115 million in compensation since that time.
In 2001, Rubin improperly contacted a Treasury Department official and asked if the department could convince bond-rating agencies not to downgrade the corporate debt of Enron, a debtor of Citigroup. The Treasury official refused.
NLPC was a critic of Citigroup’s governance and culture long before the financial crisis.
In 2006 and 2007, NLPC sponsored shareholder proposals asking the company to provide a business rationale for its charitable giving in light of its financial support for groups like Rainbow/PUSH and the Mexican American Legal Defense and Educational Fund (MALDEF).
At the 2006 annual meeting, then-CEO Sanford Weill seemed startled at the loud applause in response to my remarks. To the assembled shareholders at Carnegie Hall, I said,
…shareholders demand transparency and accountability in the operations of publicly held companies. Citigroup management has repeatedly pledged itself to these ideals, but falls short in practice.
What could be so objectionable about Citigroup disclosing which nonprofit groups it supports? Should not the company be proud of its charitable giving? Maybe the company opposes our resolution because it asks for the business rationale for each gift, a point not even addressed in the company’s statement of opposition.
But when you consider some of the so-called charities that Citigroup bankrolls, perhaps it all makes sense. You see, Citigroup is one the biggest financial supporters of Jesse Jackson and his organizations. Citigroup still supports Jackson, even though the New York Stock Exchange itself has ended its support in apparent response to our requests.
Now we can’t expect Citigroup to put in its Citizenship Report that the purpose of certain contributions is to pay shakedown money or something like blackmail, can we?
Corporate assets belong to shareholders. Many shareholders would certainly object to their money going to a controversial and divisive figure like Jesse Jackson. Shareholders deserve to know where their money is going and for what purpose, especially if it is directly contrary to their interests as shareholders.
Another so-called charity Citigroup supports is the Mexican American Legal Defense and Educational Fund (MALDEF). MALDEF opposed the Supreme Court nominations of Chief Justice John Roberts and Justice Sam Alito, perhaps the two most pro-business nominees in history. What could be more important to Citigroup, and the business community as a whole, than those two Supreme Court seats? Yet Citigroup helped bankroll the opposition to these nominations, including the indefensible smear job attempted on Sam Alito.
Corporations sometimes justify support for racial and ethnic activists in terms of marketing. After all, aren’t Hispanics an important and growing group of consumers? Well, when an outstanding Hispanic lawyer named Miguel Estrada was nominated for a federal judgeship, MALDEF opposed him, too. The reality is that Corporate America bankrolls the left in this country, and Citigroup is one of the worst offenders.
I am not aware of Citigroup’s support for any of the outstanding think tanks or public policy groups defending free enterprise, the system that makes possible corporate profits, and that has made Citigroup executives wealthy.
But Citigroup remains one of Jesse Jackson’s primary supporters. At Jackson’s annual Wall Street Conference in January, Citigroup was one of two “Platinum Sponsors,” a designation reportedly costing $150,000. My organization asked Citigroup well in advance not to sponsor this event. We cited the participation of Louis Farrakhan and Harry Belafonte in another corporate-sponsored Jesse Jackson event just a few months earlier in Chicago. At that event, Belafonte made a string of anti-Semitic statements.
This did not stop Citigroup from sponsoring the Wall Street event, or Chairman Sanford Weill from taking part in the event itself. Several years ago, it was speculated in the media that Citigroup’s “charitable” giving did have a business purpose. When Travelers and Citicorp were about to merge, Jesse Jackson said he would oppose the merger. The cash started flowing to his groups and he quickly had a change of heart.
Sanford Weill may be gone, but CEO Vikram Pandit and the rest of Citigroup management is demonstrating the same poor judgment. In November 2008, Citigroup sponsored a Caribbean junket led by House Ways and Means Committee Chairman Charles Rangel (D-NY) that violated House Rules.
This year, Citigroup again sponsored Jesse Jackson’s Wall Street Conference, prompting NLPC to file a formal Complaint with the TARP Inspector General.
photo credit: AP/Wide World