Wolves in Sheep's Clothing, Part I

Earlier this week, President Obama's administration pressured Citigroup to reverse the company's decision to accept delivery of a new $45 million corporate jet. Citigroup initially declared on Monday that it could not comment on the purchase of the airplane due to security reasons. A few hours later, Citigroup reversed its stance by claiming that the company signed a contract in 2005 for a replacement aircraft as part of a plan to decrease the amount of company planes and reduce operating costs. The company's Public Relations Department alleged that "Refusing delivery now would result in millions of dollars in penalties". However, the next day, a spokesperson from Citigroup informed CNN that "We have no intent to take delivery of any new aircraft".

It is extremely important to keep a couple of things in mind when it comes to Citigroup: (1) The company has received $45 billion in economic assistance from the federal bailout plan and (2) Aside from the 23,000 jobs already eliminated last year, the company has announced plans to cut 52,000 more positions. By the way, the luxury jet that Citigroup planned to purchase is a Dassault Falcon 7X, which is extremely rare and only seats twelve passengers.

The news from Citigroup is right on the heels of the resignation of John Thain from Merrill Lynch for various offenses. First, the media has reported that Thain personally approved $1.22 million to be spent in the renovation of his office shortly after he was named Chairman and CEO. Aside from spending $800,000 to hire celebrity designer Michael Smith, Thain's decorating expenses included, among other things, $131,000 for area rugs, $87,000 for a pair of guest chairs, $68,000 for a nineteenth century credenza, $35,000 for a toilet, $25,000 for a mahogany pedestal table and $1,400 for a trash can. Thain also used $230,000 in company money to pay the annual salary of his personal chauffeur. Even more dastardly than those actions are the fact that Thain authorized annual bonuses (typically issued in January) to be paid in December of last year. The primary issue with this is that these bonuses were extracted from the money provided by the federal government for the economic bailout.