Manhattan DA says Citi Abu Dhabi deal 'a sad day'

Reuters) - A high-profile U.S. prosecutor who once led a fraud investigation into an Abu Dhabi-owned bank criticized a $7.5 billion deal between Citigroup Inc (C.N: Quote, Profile, Research) and the Gulf Arab emirate in a Wall Street Journal editorial on Thursday.

"It's a sad day for American financial markets when you've got to turn to Abu Dhabi to get bailed out," Manhattan District Attorney Robert Morgenthau was quoted as saying in an editorial written by the Journal's staff.

In the editorial, the newspaper voiced concerns the deal is not being scrutinized by U.S. officials and that Citigroup's agreement to sell a 4.9 percent stake to the Gulf Arab emirate is a device to avoid scrutiny by the Federal Reserve, which has a 5 percent approval threshold.

"It strikes us as unfortunate, if not a tragedy, that America's largest bank had to go hat in hand to Arab sheiks because of bad management and blundering U.S. monetary policy," the Journal wrote.

Morgenthau, who has been the chief prosecutor in Manhattan for 33 years, once led an investigation into the Abu Dhabi- owned Bank of Credit and Commerce International, which was shut down by regulators around the world in July 1991 on suspicion of massive fraud.

The bank had been owned by Sheik Zayed, the father of the current ruler of Abu Dhabi, the Journal reported.

In the editorial, the Journal reported that Zayed once called to inform the State Department that, if Morgenthau sought an indictment of any member of the royal family in the BCCI scandal, he would pull his billions out of the United States and stop making investments there.

While Morgenthau acknowledged in the editorial that Abu Dhabi "has been responsible" since BCCI, the Journal's editorial said it was concerned Arab interests would now have "inordinate sway" over the largest U.S. bank.

Under the agreement, Abu Dhabi would become Citigroup's largest shareholder. Saudi Prince Alwaleed bin Talal also has a 3.9 percent stake in the bank.

The Abu Dhabi deal, however, will give Citigroup fresh capital as it wrestles with the subprime mortgage crisis and a search for a new chief executive. The company has been hurt by some $6.8 billion of write-downs and losses in the third quarter, and the potential for another $11 billion in the fourth quarter. (Reporting by Emily Chasan; editing by Andre Grenon)

Link: http://www.reuters.com/article/companyNewsAndPR/idUSN2920949120071129

{Only kidding a little}

when reading that Abu Dhabi is earning 11% interest on the deal.

I hope their stock crashes....and I own some of it.

The country is no more than a common street whore, being sold off in bits and pieces to whoever has the money to pay the price. The folks in charge are like drug addicts, who will do anything to get their fix. They don't care who they hurt, what they destroy, or what the collateral damage is.

It's a disgrace, and our country's forefathers are spinning in their graves over what this country has come to. We should all be ashamed for allowing it to get to this point. Lazy, complacent, selfish, me first Americans. A pathetic lot. :(

Thanks for the vivid description.