Citi’s Italian Black Hole

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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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