Thursday, October 29, 2009
Parsons of Citigroup
"The eminent Richard Parsons, former chairman of Time Warner (the parent of Fortune's publisher), is chairman of the board of directors of Citigroup, the immense, troubled financial entity. As such, he owes an unequivocal, clear-cut fiduciary duty to Citi's shareholders. This duty means, among other things, that Parsons must put the interests of Citi's shareholders ahead of his own or anyone else's. He must avoid any conflict of interest in any situation involving Citi. ... One of Citi's millions of clients is a large private equity firm called Providence Equity Partners. ... Citi is involved as principal and/or lender in many private equity transactions with many other private equity firms, to which it owes, at the minimum, a duty of good faith and fair dealing. Now get this: It was announced last month that Parsons will-simultaneously with his being chairman of Citi--serve as a senior adviser to Providence. He will be paid by Providence, and if normal private equity practice governs, he could get a bonus depending on how much money Providence makes. That means Parsons will be chair of a huge lender to Providence and will at the same time be an employee of Providence. How can this be allowed--how it cannot be a severe conflict of interest--is impossible to understand. ... Yet how can any official of Citi possibly go against a deal in which his boss is involved? ... Maybe I'm wrong. Parsons clearly does not see a problem. It is a bit stunning that Citi's lawyers do not see one", Ben Stein at Fortune, 26 October 2009.
Citi's lawyers either: stink or are afraid to speak "truth to power" and refuse to admit Citi's emporer "has no clothes". What has Sarbox to say about this? Did Citi officially change its' name to "The Immense, Troubled Financial Entity"? If not, it should.