November 5, 1999
Panel to Focus on Citigroup and Bank Deposits by Africans
By TIMOTHY L. O´BRIEN
itigroup's handling of bank accounts controlled by prominent
African leaders and their relatives is expected to come under
scrutiny in congressional hearings that begin on Tuesday, according
to people involved in the inquiry.
The accounts, none of which are currently active, were
controlled by Gabon's president, Omar Bongo, and by two sons of the
late Nigerian dictator, Gen. Sani Abacha.
Those accounts are part of a broader examination by the Senate's
Permanent Subcommittee on Investigations into how Citigroup, the
financial services giant, and other major banks have handled
private accounts for foreign officials and their relatives.
The primary focus has been Citigroup's handling of accounts
controlled by Raul Salinas de Gortari, the brother of the former
Mexican president Carlos Salinas de Gortari. Raul Salinas, who used
Citigroup accounts to hide millions of dollars that investigators
believe came from illicit activities, is in jail.
Citigroup has not been charged with any wrongdoing, but a
federal investigation of the banking concern and Salinas is
Concern about the role that American institutions may have
played in helping corruption overseas was heightened by the
investigation of Salinas, which began in late 1995. Those concerns
have gained momentum because of the federal investigation of
possible money laundering by Russians through the Bank of New York.
"We don't want American banks being conduits for moving dirty
millions around the world," Sen. Carl Levin, a Michigan Democrat
who heads the Senate subcommittee, said in a telephone interview.
Citigroup officials declined to discuss any specific information
about Bongo's accounts of the Abachas, citing client
But people close to the bank said the Salinas investigation was
an embarrassment that forced the bank to tighten oversight in all
its operations, especially in its private-banking unit. These
people said that since 1996, the bank has improved screening
procedures and extended the scope of the disclosure it requires
from prospective customers.
John Reed, a Citigroup co-chairman, is to testify at the
hearings next week. Although there has been speculation about
Reed's relationship with Raul Salinas, people close to Reed said he
had never met or talked to Salinas. People familiar with Reed's
planned testimony said he would acknowledge lapses in the
management of the Salinas accounts and discuss the steps the bank
has taken since then to stymie the movement of dirty money through
Nonetheless, the reports of problems with the Bongo and Abacha
accounts suggest that the bank perhaps has not yet fully insulated
itself from suspicious funds.
The amount of money in the Citigroup accounts controlled by
Bongo and Abacha's sons could not be determined. But individuals
with direct knowledge of Bongo's Citigroup account said that more
than $20 million was deposited into the account prior to 1998.
Swiss investigators are examining whether Bongo was the recipient
of bribes paid by Elf Aquitaine, the French oil group.
Bongo's account, opened about 30 years ago, was reviewed by the
Federal Reserve and the Comptroller of the Currency in 1997. The
agencies told Citigroup there was no reason to close the account.
Still, the account was closed by the bank last year, but not
liquidated, after news accounts surfaced about the Swiss
The accounts controlled by Abacha's sons were in London and New
York. The New York account was closed in 1997, but the London
account remained open until last year, when it was frozen by
British investigators. It could not be determined why British
investigators were examining the London account.
People close to the bank said the reason for inconsistencies in
how the Abachas' accounts were handled resulted from a lack of
uniform standards throughout the company on how accounts controlled
by public officials and their relatives should be handled. These
people said new steps had been taken to make sure all parts of the
bank maintain the same standards.
The Federal Reserve seemed to support this view. After another
examination of Citigroup's management of its private banking
division in January 1999, the Federal Reserve said, "Significant
progress has been made in correcting control deficiencies noted at
the prior inspection."
To which Levin said Thursday: "I'm glad they've taken new
steps, but they've taken new policy steps before that they've been
very lax in implementing. There are much more recent problems at
Citigroup than Salinas. This is not something that ended with