Citi’s Italian Black Hole

Posted by John Carney, May 05, 2008, 9:30am

Citigroup goes to trial in New Jersey today to defend itself against a law suit claiming it helped Parmalat in the accounting fraud that eventually led to the Italian dairy company’s collapse. We’ve never managed to get our heads around exactly what Citi is alleged to have done. The plaintiffs lawyers claim Citi knew the company was in trouble but kept lending it money through complicated structured finance deals that allowed Parmalat to temporary conceal its troubles. But Citi lost millions when the company collapsed. That sounds more like incompetence than fraud.

Adding to our suspicions that incompetence was at work here is the report from Breakingviews.com this morning that Citi called the structured finance vehicle “buconero.” That apparently translates as “black hole” in Italian. Great work fellas.


At least it wasn’t Dr. Evil [Breaking Views; subscription required.]

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Posted in: Citigroup
Tags: Parmalat

Comments

Posted by guest, May 05, 2008 9:37AM

"It's a trap!"

Admiral Ackbar

Posted by diablo, May 05, 2008 9:55AM

Officially Citi regrets using the name buconero. And yes there is a level of incompetence when banks lend money to those who might not be able to pay back. But I'm sure some fees were collected up front so those in Citi who collected the fees did well, while those who got shafted on the default didn't. But it's just one happy family, right?

Posted by american bandersnatch, May 05, 2008 10:58AM

While fascinating, how does it impact the price and supply of rice in Thailand?

Posted by StupidEquityGuy, May 05, 2008 11:08AM

Carney,

What are you doing visiting Italian Dark Holes? I am sure Mr Pink would have a comment about now...

Welcome back Sir...

~SEG

Posted by guest, May 05, 2008 11:39AM

I think I know another black hole Citigroup guys were familiar but, now is not the time.

Posted by guest, May 05, 2008 12:43PM

Since the case is in New Jersey, the should have called in Arty Bucco-nero. They could have had a sit-down in the back room with Tony Soprano at Vesuvio's restaurant and straightened the whole thing out. While eating Ossobucco.

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