Citigroup's recent troubles

Citigroup's Broad Goals: Expanding the international franchise, making targeted acquisitions rather than "transformative" ones, continuing Sandy Weill's (former Chairman) practice of keeping a keen eye on the bottom line, and taking a series of steps aimed at beefing up the bank's corporate-governance practices.

However, Citigroup has been unable to institute an adequate system to monitor behavior across its far-flung global empire. That is primarily because of the bank’s:

1. Disclosures about involvement with Enron Corp. and WorldCom (now MCI Inc.) and the honesty of its stock research.

2. Recent $242 million charge related to the collapse of Italian dairy giant Parmalat SpA.

3. Hefty $4.95 billion after-tax charge to settle a lawsuit brought by investors in the former WorldCom and to increase reserves because of other pending litigation, wiping out one quarter's worth of earnings, and exacerbating fears that various scandals could become a "bottomless pit."

4. String of further embarrassments: a Securities and Exchange Commission probe into Citigroup's accounting treatment of its Argentine operations; a $70 million settlement of Federal Reserve allegations of consumer-lending abuses; and a $250,000 fine by the National Association of Securities Dealers for failure to produce documents in investor-complaint cases.

5. Infuriation of rivals, at the London bond desk, by dumping more than $13 billion of European government bonds, then buying a chunk back within the hour at a profit. Competitors complained that it had violated unwritten trading conventions. The United Kingdom's Financial Services Authority launched an investigation, and Citigroup apologized.

Also, this month, Japanese regulators ordered Citigroup to close its private bank by next September, after a multiyear investigation turned up numerous violations in its dealings with customers. Citigroup issued a public statement "sincerely apologizing" for the problems.