Hank and Citibank--A Case in Point

Citigroup proclaims that its "private bankers act as financial architects, designing and coordinating insightful solutions for individual client needs, with an emphasis on personalized, confidential service." That is so colorless. It might better boast, "We set up shell companies, secret trusts and bank accounts, and we dispatch anonymous wire transfers so you can launder drug money, hide stolen assets, embezzle, defraud, cheat on your taxes, avoid court judgments, pay and receive bribes, and loot your country." It could solicit testimonials from former clients, including sons of late Nigerian dictator Sani Abacha; Asif Ali Zardari, husband of Benazir Bhutto, former prime minister of Pakistan; El Hadj Omar Bongo, the corrupt president of Gabon; deposed Paraguayan dictator Alfredo Stroessner; and Raul Salinas, jailed brother of the ex-president of Mexico. All stole and laundered millions using Citibank (Citigroup's previous incarnation) private accounts.

One lesser-known client, Carlos Hank Rhon of Mexico, has been the object of a suit by the Federal Reserve to ban him from the US banking business. Hank belongs to a powerful Mexican clan whose holdings include banks, investment firms, transportation companies and real estate. Hank bought an interest in Laredo National Bank in Texas in 1990. Six years later, when he wanted to merge Laredo with Brownsville's Mercantile Bank, the Fed found that Citibank had helped him use offshore shell companies in the British Virgin Islands to gain control of his bank by hiding secret partners and engaging in self-dealing, in violation of US law. One of the offshore companies was managed by shell companies that were subsidiaries of Cititrust, owned by Citibank.

The Fed says that in 1993, Hank's father, Carlos Hank González, met with his Citibank private banker, Amy Elliott, and said he wanted to buy a $20 million share of the bank with payment from Citibank accounts of his offshore companies, done in a way that hid his involvement. Citibank granted him $20 million in loans and sent the money to his son Hank Rhon's personal account at Citibank New York and to an investment account in Citibank London in the name of another offshore company.

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