Citigroupís Amazing Abu Dhabi Adventure
By William D. Cohan 2012-12-09T23:33:01Z
Off in a small corner of the judicial system is a big-time Wall Street lawsuit that neither side in the dispute wants anyone to know much about.
Thanks, however, to George B. Daniels -- the federal judge in the case -- we can catch a rare glimpse of what happens when a multibillion-dollar investment in a supposed pillar of Wall Street goes terribly wrong.
At issue is the $7.5 billion investment that Abu Dhabi Investment Authority, a large sovereign wealth fund, made in Citigroup Inc. (C) in November 2007, just after the bank fired chairman and chief executive officer Chuck Prince. Michael Klein, one of Citigroupís most senior investment bankers, negotiated the deal; Robert Rubin, the former Treasury secretary, in nearly his first official act after taking over for Prince as Citigroupís chairman, flew off to Abu Dhabi to bless it.
A year later, of course, Citigroup collapsed, and American taxpayers bailed it out to the tune of $45 billion, plus another $306 billion to ring-fence a pile of toxic assets. ADIA, as the Abu Dhabi fund is known, lost nearly its entire investment after Citigroupís shares were diluted down to pennies on the dollar by the rescue financing. (The contract also called for ADIA to get an annual dividend of 11 percent on its stock.)