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The Citi Hypocrisy


Now is not the time to turn away legitimate business.

On Wednesday, Citigroup (C) suspended access to funds in a business account that was set up by Jason Goldberg for his new social networking site

Why? He apparently posted "objectionable content" on the Fabulis blog, which a compliance officer at Citi found "offensive."

Oh yeah, Fabulis isn't just any social networking site. It's a social networking site that "helps gay men (emphasis added) connect with amazing experiences nearby and around the world."

Goldberg, who has held positions at the White House, AOL, and T-Mobile, raised seed money for Fabulis from the Washington Post (WPO), and Microsoft (MSFT) co-founder Paul Allen, among others, isn't exactly the type of customer a faltering outfit like Citi needs to be alienating at this point. In fact, Citi (whose chairman, Dick Parsons, is in no position to be throwing stones, having fathered a daughter with a 32-year-old woman while married to his wife of 30 years with whom he has three grown children) can't afford to alienate any customer at all, right now.

Goldberg was finally able to access his account last night. Citigroup investigated the situation and apologized to Goldberg for the three individuals who were responsible.

But this is the second time in a week Citi has inexplicably turned away legitimate business. A Florida entrepreneur was turned away by his local Citi branch when he tried to open an account for his new business, which sells underwear with the words "Too Big to Fail" across the front.

Considering the rogue's gallery of thugs, dictators, and narco-terrorists Citi has done business with in the past, allowing a non-pornographic, decidedly non-offensive lifestyle site for homosexual men to bank with the company would seem to be the least of Citi's concerns.

  • In April of last year, Tehran's Jaam-e-Jam newspaper reported that Citigroup and Goldman Sachs (GS) filed requests to open branches in Iran.

  • Last June, the US District Court for the Southern District of New York ordered Citigroup to freeze more than $2 billion in Iranian assets held in the bank's accounts, the biggest seizure of Iranian assets abroad since the 1979 Islamic revolution.

  • In 2008, Citigroup was fined $16,250 for doing business with Cuba, violating laws imposed as part of the US commercial blockade in place since the Kennedy administration.

  • Citigroup reportedly accepted Libyan government funds in 1999 and 2000, violating US law prohibiting such dealings without express government permission.

  • Citigroup allegedly handled accounts for Yasser Arafat and managed equity fund investments for Arafat's Palestine Commercial Services Co.

  • Reports show that Peruvian strongman-turned-fugitive Vladimiro Montesinos was a Citigroup account holder.

  • Citigroup allegedly moved about $130 million through accounts belonging to Gabonese dictator President El Hadj Omar Bongo, beginning in 1985 -- some of which was reportedly stolen from Gabon's public treasury.

  • Raul Salinas, who was imprisoned for 50 years in Mexico for masterminding the killing of a top ruling-party official, secretly transferred $87 million out of Mexico between 1992 and 1994 using Citigroup accounts.

  • Citibank of New York reportedly transferred Juárez drug cartel money to Uruguay and Argentina for Mexican drug lord Amado Carrillo Fuentes.

  • Between 1991 and 2000, Citigroup allegedly allowed $725 million in questionable Russian funds to flow through the bank to untraceable offshore accounts.

  • Reports show that Citigroup helped Enron set up sham transactions that allowed the Houston firm to hide $4 billion worth of debt.

But, hey--let's look at the bright side:

At least Citigroup never set up an account for NAMBLA -- the North American Man/Boy Love Association. That dubious honor goes to the Apple Bank for Savings in New York City.

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No positions in stocks mentioned.
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