Fair Proxy Web

Citigroup chairman retires; Rubin to step in

NEW YORK (AP) — Citigroup Inc. Chairman and Chief Executive Charles Prince, beset by the company’s billions of dollars in losses from investing in bad debt, resigned Sunday and is being replaced as chairman by former Treasury Secretary Robert E. Rubin.

The nation’s largest banking company announced Prince’s widely expected departure in a statement following an emergency meeting of its board. Citi also said Sir Win Bischoff, chairman of Citi Europe and a Member of the Citi management and operating committees, would serve as interim CEO. Rubin, a former co-chairman of Goldman, Sachs Co., has served as the chair of Citi’s executive committee, and it was also expected he would take a greater role in leading the company.

In a separate statement, Citi, which took a hit of $6.5 billion from asset writedowns and other credit-related losses in the third quarter, said it would take an additional $8 billion to $11 billion in writedowns.

It was the honorable course, given the losses we are now announcing, Rubin said of Prince’s resignation in an interview with The Associated Press.

Prince joined former Merrill Lynch Co. CEO Stan O’Neal, who resigned from the investment bank last month, as the highest-profile casualties of the debt crisis that has cost billions at other financial institutions as well.

Prince, 57, became chief executive of Citigroup in October 2003. Many shareholders criticized him openly for much of his tenure, as Citigroup’s stock lagged its peers while Prince executed what was called an umbrella model of corporate organization, with several separate lines of business. Shares closed Friday at $37.73, about 20 percent below where they were when Prince became CEO.

Prince’s position looked especially shaky after the company on October 1 estimated that third-quarter profit would decline about 60 percent to some $2.2 billion after seeing nearly $6 billion in credit costs and write-downs of overly leveraged corporate debt and souring home mortgages. At that time, Prince said the bank’s earnings would return to normal in the fourth quarter.

But when Citigroup released its third-quarter results two weeks later, the write-downs and credit costs exceeded $6 billion, and Chief Financial Officer Gary Crittenden indicated the outlook going forward wasn’t as upbeat as Prince had predicted.

Citigroup wasn’t alone in its third-quarter turmoil. When borrowers with poor credit stopped paying their mortgages, many banks not only had to take losses on those subprime mortgages, they also saw instruments in their portfolios backed by mortgages plummet in value.

But Citigroup’s stumbles were particularly grievous, given the bank’s size, history and CEO, who had been telling shareholders for years to give his strategy a chance. Even in October, Prince said in a call to analysts: I think any fair-minded person would say that strategic plan is working.

Fixing Citigroup will take more than just cleaning up bad debt. The umbrella model that Sanford I. Weill created and Prince touted looked like a giant mess compared to its conglomerate counterpart JPMorgan Chase Co. — now led by Weill’s former protege, Jamie Dimon. JPMorgan’s writedowns were smaller, and strength in asset management, security services, card services and commercial banking units made up for weakness in other areas. Having cut costs and built up cash reserves in previous quarters, the bank was better prepared for a tough lending climate.

Meanwhile, Citigroup’s expenses outweighed revenues, it botched its fixed income trading operations, and its cash-to-debt ratio dipped.

The anger toward Prince was so intense that during a conference call last month, Deutsche Bank analyst Mike Mayo told Prince that investors wanted a significant change in management. His supporters, though, argue that he was dealt a tough hand when his predecessor Weill gave him the reins, and that matching the hefty profit gains Citigroup saw in the 1990s would be difficult for any CEO.

Weill was a fairly popular leader, building Citigroup through various mergers and acquisitions over the course of about 20 years into the huge conglomerate that it is today. When he stepped down as chairman in 2006 and handed the position to Prince, Weill — now a board member — got two standing ovations from shareholders and a big blue banner from employees that read, Thank you, Sandy!

Prince, whose compensation came to nearly $25 million last year, is leaving under a much darker cloud.

Citigroup, along with JPMorgan Chase Co. and Bank of America Corp., is trying to create a fund to buy up distressed securities in the tight credit markets, a move some industry experts say smacks of desperation. Citigroup is the only major U.S. bank to manage structured investment vehicles, or SIVs, and may end up having to take losses on them because demand for the assets that fund them has dropped.

Rubin, 69, after 26 years at Goldman Sachs, became President Bill Clinton’s chief economic adviser in 1993 before leading the Treasury Department. His experience steering the U.S. economy during the Mexican and Asian financial crises could come in handy as Citigroup attempts to navigate the tight credit markets.

Bischoff, 66, was the chairman of the British investment bank Schroders PLC, then joined Salomon Smith Barney Inc., a subsidiary of Citi, when it acquired Schroders. He began his current position in May 2000.

There’s no change of strategy that we see, actually, going forward, Bischoff said, noting that the company still plans to focus on international expansion, at least until a new CEO is chosen.

It was not known whether Bischoff was in the running to replace Prince as CEO. Before Sunday’s meeting, many ideas for Prince’s replacement were floated by industry watchers; one name that has come up often is John Thain, who was once president of Goldman Sachs and is now CEO of NYSE Euronext.

In 2004, Citigroup had to close its Japan Private Bank amid allegations of improper activities. And in January, former head of global wealth management Todd Thomson resigned, reportedly having been forced out for extravagant spending and dealings with CNBC anchor Maria Bartiromo.

Citigroup did a minor reshuffling in early October, combining its investment banking and alternative investments businesses into one unit led by Vikram Pandit, who had led Citigroup’s alternative investments unit. Tom Maheras, co-CEO of the investment banking unit, left.

At the time, Rubin and Saudi Arabian Prince Alwaleed bin Talal — Citigroup’s biggest individual shareholder and once a critic of Prince — expressed their support for the bank’s embattled CEO.
found here.

French journalists accused in Chad child row return home

PARIS, France (CNN) — Three French journalists charged in an alleged plot to kidnap African children for adoption in Europe arrived in Paris on Sunday, hours after French President Nicolas Sarkozy held emergency talks in Chad.

But 14 other people remained in custody in the African nation, some facing serious charges that could send them to jail for up to 20 years.

The journalists were among seven Europeans a Chadian judge released Sunday, including a Spanish flight crew, whom Sarkozy dropped off in a brief stop in Madrid on his way back from Chad.

All were arrested last week after workers from Zoe’s Ark — a French-based charity group — were accused of trying to fly 103 children out of Chad in a kidnapping and adoption operation. Watch a report on how the events unfolded

Some of the children may never return to their families because it is too difficult to determine their backgrounds, Red Cross spokeswoman Inah Kaloga told CNN on Friday.

Those who remain under arrest in Chad are six members of the French charity, four Chadians and four remaining members of the flight crew. Some face kidnapping and fraud charges.

Zoe’s Ark leader Eric Breteau testified Saturday to a court in the Chadian capital that the three journalists and the flight crew of seven Spaniards and a Belgian were not involved in the alleged plot, court witnesses told CNN.

At least some of the flight crew are scheduled to testify before a judge on Monday.

The three journalists initially had been charged with complicity in the alleged kidnapping attempt. It’s not clear if the charges against them have been dropped. Watch the freed Europeans leave Chad

In a joint news conference with Spanish Prime Minister Jose Luis Rodriguez Zapatero on Sunday at Madrid’s Torrejon Air Force Base, Sarkozy expressed satisfaction that some of those detained had been released.

At the same time, however, he told reporters, We should respect the sovereignty of Chad.

Zapatero thanked Sarkozy for dropping the four Spanish flight crew members off in their home country, and thanked Chadian President Idriss Deby for allowing them to return.

After his emergency talks in Chad, Sarkozy stressed the scandal would not affect the strong relations between the two countries or affect the planned deployment of a European force to protect refugees from Sudan’s Darfur region who have fled to Chad and the neighboring Central African Republic.

Sarkozy also said he hoped the six remaining French nationals — all from Zoe’s Ark — would face trial in France.

The charity says that the children were orphans from the Darfur region — where the United Nations estimates 200,000 people have been killed in four years of conflict — and that the group was taking them to host families in France.

But after preliminary interviews with the children, aid agencies said Thursday it appeared most of them probably are not orphans and not from Sudan, but instead come from villages on the Chadian side of the border with Sudan.

The children are staying in an Abeche orphanage while aid agencies and government officials try to find out where they came from — a challenge hindered by the number of children, their youth, and the volatile situation in the region.

A father of three of the children allegedly kidnapped told a French newspaper he put his children into the charity’s care after he was told they would be educated at a school under construction in a nearby town.

The Chadian man, who gave his name as Arbab, told Le Parisien on Sunday that workers from Zoe’s Ark had visited his village three times.

They never said they would take away our children, he told the newspaper.
found here.

CNN Student News Transcript: November 5, 2007

(CNN Student News) — November 5, 2007

Quick Guide

Crisis in Pakistan - Learn about a political crisis that’s taking place in Pakistan.

Flooded in Mexico - Hear about rescue and relief efforts in a flooded part of Mexico.

Behind the Mask - Get a peek at a famous face that hasn’t been seen in 3,000 years.

Transcript

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

MONICA LLOYD, CNN STUDENT NEWS ANCHOR: It’s Monday, and we’re kicking off a brand new week of CNN Student News. Hi, everyone. I’m Monica Lloyd.

First Up: Crisis in Pakistan

LLOYD: First up today, Pakistan is in the middle of a political crisis. The Asian country has three main branches of government, just like the U.S.: the executive, legislative and judicial. But right now, the executive branch has suspended the nation’s constitution; next January’s elections for the legislative branch could be on hold for up to a year; and the judicial branch has been put under house arrest. John Lorinc has the details on the tense situation in Pakistan.

(BEGIN VIDEO CLIP)

JOHN LORINC, CNN REPORTER: Troops take to the streets of Pakistani cities, as a nation familiar with political instability got another round on Saturday. Pakistani President General Pervez Musharraf, citing growing lawlessness and violence by Islamic extremists, declared a state of emergency. He said he was forced to take action.

PRES. GEN. PERVEZ MUSHARRAF, PAKISTAN: I personally, with all my conviction and with all the facts available to me, consider that inaction at this moment is suicide for Pakistan.

LORINC: As part of the emergency declaration, the nation’s constitution has been suspended, TV and phone access has been cut and for the second time this year, the same chief justice of the supreme court has been removed. Pakistan’s supreme court, a source of opposition to Musharraf, called the state of emergency illegal. Secretary of State Condoleezza Rice, speaking from Turkey, criticized the move and called on Pakistan’s leadership to make it as temporary as possible.

CONDOLEEZZA RICE, U.S. SECRETARY OF STATE: We would hope that whatever happens, that there would be a quick return to a constitutional path.

LORINC: Besides leading a nation with nuclear weapons, General Musharraf is a key partner with the United States in the War on Terror. I’m John Lorinc, reporting from Atlanta.

(END VIDEO CLIP)

LLOYD: Now, you might be wondering how political instability on the other side of the globe affects anything in America, or if it does at all. But as Tony Harris explains, there are several reasons why the U.S. is paying close attention to what’s going on in Pakistan.

(BEGIN VIDEO CLIP)

TONY HARRIS, CNN ANCHOR: Do we care what happens in Pakistan? Why should we? It’s a relatively small Muslim country half a world away. Their chief export? Textiles. And their one main adversary is India. But there are plenty of reasons why chaos in Pakistan would spell trouble here in the United States. In no order, they are: The troops. Nearly 30,000 American soldiers and Marines are deployed immediately next door in Afghanistan. Remember, most analysts believe Osama bin Laden is somewhere in a rocky range of mountains between the two countries. Al Qaeda would certainly flourish in a country distracted by a worsening state of emergency. Then, there is the issue of the nukes. Pakistan has them. India has them. They’ve already fought three full-on wars, mostly about territory and autonomy, and they still threaten each other all the time. It’s safe to say that the world is safer with steady fingers on nuclear buttons. Next reason: Democracy. Pakistan’s current president, Pervez Musharraf, took power in 1999; literally, took power. He was not elected. He handpicks judges, generalsand lawmakers. His last re-election? He got 98 percent of the vote. That raises eyebrows in Washington, where the White House would prefer to do business with a government of the people. Still, Washington regards Pakistan as an indispensable ally in the war against global terrorism. But it’s a relationship that will only weaken if order and stability is not soon restored in Pakistan. Tony Harris, CNN, Atlanta.

(END VIDEO CLIP)

Shoutout

CARL AZUZ, CNN STUDENT NEWS: Time for the Shoutout! When does a tropical storm officially become a hurricane? If you think you know it, shout it out! Is it: A) When it enters the Gulf of Mexico, B) Barometric pressure reaches 900 millibars, C) Congress declares it a hurricane or D) Sustained wind speeds reach 74 mph? You’ve got three seconds — GO! It’s all about wind speeds here. A Category 1 Hurricane has winds of at least 74 mph. That’s your answer and that’s your Shoutout!

Storm Report

LLOYD: And that’s exactly what happened to Noel. It pounded parts of the Caribbean when it was a tropical storm. But late last week, it strengthened into a hurricane and starting moving north, bearing down on New England. Strong winds and rain brought high waves crashing onto shore, and knocked out power for thousands of people in the area over the weekend.

Flooded in Mexico

LLOYD: Heavy rains have caused major flooding in the Mexican state of Tabasco. Nearly 80 percent of the capital city and three-quarters of the entire region is under water. Harris Whitbeck has more on the situation.

(BEGIN VIDEO CLIP)

HARRIS WHITBECK, CNN REPORTER: Dangling from what looks like an impossibly thin cable, two children are hoisted from the rooftop where they and their family have been trapped since last Thursday. The rest of the family looks, awaiting their turn to be airlifted to a makeshift refugee center. Helicopters criss-cross the skies over Villahermosa, where swollen rivers have completely cut off entire neighborhoods. In El Povenir, a project that houses about a thousand families, people are waiting in line for the helicopters to land. Some hope they are carrying supplies, a bag of rice or water. Others hope for a ride out of town. Authorities estimate at least 65,000 people are still trapped on the rooftops of their homes. They’ve been trapped for days now. The only way to get to them is by helicopter. Those helicopters are used to bring people out. They are also being used to bring supplies to those who need them: water, food and medicine. Helicopters also provide a vantage point for assessing how much this thriving city was affected. Only from the air can one get a true sense of the scope of the damage. Entire chunks of the city are under water. Roads and highways have made way for vast new lakes and lagoons. On the ground, the sense of urgency is more palpable. Long lines form wherever relief trucks park, people carrying away whatever is given to them to try and bring order back to their lives. Harris Whitbeck, CNN, Villahermosa, Tabasco.

(END VIDEO CLIP)

I.D. Me!

AZUZ: See if you can I.D. me! I once called Egypt my home and my kingdom. I ruled there in the 14th century B.C., but my fame exploded in the 1920s. King Tutankhamun, or King Tut, became the object of worldwide fascination when his tomb was found intact in 1922.

Behind the Mask

LLOYD: Part of that fascination has to do with the mystery that surrounds the ancient ruler. You see, King Tut is really good at keeping a secret. His tomb was found more than 80 years ago, and hardly anyone knows what his face even looks like! But Aneesh Raman was in Egypt this weekend when King Tut faced the world once again.

(BEGIN VIDEO CLIP)

ANEESH RAMAN, CNN REPORTER: He’s been dead for three thousand years, but on Sunday, for the first time ever, the world got to see how King Tut was holding up. Gone were the casings and covers as the boy king was unveiled with, yup, bare hands. A low tech approach that faced some precarious moments going up the stairs. In the end, Tut didn’t look too bad tucked away in his new bed, a climate-controlled Plexiglas container. It’s meant to minimize damage done by thousands of visitors who every day pour in to see King Tut’s tomb.

ZAHI HAWASS, GENERAL SECRETARY OF THE SUPERIOR COUNCIL OF ANTIQUITIES OF THE EGYPTIAN GOVERNMENT: The mummy divided into eighteen pieces, and it’s like a stone. And therefore, I thought that the humidity and the heat that 5,000 people a day enter the tomb, that breathing will change the mummy to a powder. The only good thing in this mummy is the face. We need to preserve the face.

RAMAN: And if the face doesn’t look familiar, try this one: King Tut’s golden mask, that is today an icon of Egypt’s pharaonic past. It was exactly 85 years ago this week that, right here in the Valley of the Kings, Howard Carter, a British archaeologist, discovered the entrance to King Tut’s tomb. It was the first found to have virtually everything inside intact. And because of that, the discovery catapulted a little known king, who ruled in the mid 1300’s B.C. and who died at 19, to modern day prominence, even giving him a hit song.

NBC, FROM SATURDAY NIGHT LIVE: Now if I’d known, They’d line up just to see him, I’d've taken all my money, And bought me a museum.

RAMAN: And 85 years later, the boy king is now baring it all.

JEFF RANKID, BRITISH TOURIST: I was very impressed with it. It is something that took my breath away. It is unbelievable.

RAMAN: Maybe. But for others, it’s a bit too much.

BOB PHILPOTTS, BRITISH TOURIST: I saw the tomb, yeah. But really, I think he ought to be left alone, just left quietly, at peace. And leave him here where he was buried, you know. It is as simple as that.

RAMAN: Aneesh Raman, CNN, Cairo.

(END VIDEO CLIP)

Before We Go

LLOYD: Before we go, how about a leisurely weekend drive? The open road can be calming, watching all the different cars out on the… hey, wait a minute. All these cars look alike! Well, no, it’s not a highway hallucination. It’s a Corvette convoy, and these cars aren’t caravanning just for kicks. They’re doing it for charity! Hundreds of Corvette owners revved down this New Jersey expressway on Saturday to help deliver toys for tots.

Goodbye

LLOYD: So, would that make them toy cars? Probably not. Have a great day, everyone. I’m Monica Lloyd. E-mail to a friend

found here.

Gates to press China on Iran nukes

BEIJING, China (AP) — Robert Gates, making his first visit to China as U.S. defense secretary, is expected to press the Chinese to do more to prevent Iran from acquiring nuclear capabilities.

Before he left Saturday for the trip, Gates made it clear that he is pursuing a closer alliance with China, and said he doesn’t see the communist giant as a military threat.

But at the same time, senior defense officials said the Pentagon is still frustrated by China’s failure to be more open about its military ambitions. And Gates will probably push China to better explain its anti-satellite test early this year.

In January, a Chinese missile shattered a defunct Chinese weather satellite, drawing immediate criticism from the U.S. and other countries, who questioned China’s commitment to peaceful development in space. Since then, U.S. officials have struggled to get better answers from the Chinese about it.

Both the U.S. and China are touting the Gates visit as a major event, aimed at improving the two countries’ military relationship and building trust between them.

In a series of annual reports, the Pentagon has voiced growing concern about China’s increased military might and its reluctance to reveal why its annual defense budget has ballooned in recent years.

China raised its military budget by 17.8 percent to about $45 billion this year, the largest annual increase in more than a decade. But U.S. officials believe the spending is even greater than that, and have repeatedly called for greater transparency by the Chinese.

Derek Mitchell, senior fellow at the Center for Strategic and International Studies, said it appears Gates is taking a different approach to his China visit than his predecessor, Donald Rumsfeld, took.

Rumsfeld had no problem accentuating the differences between the two sides, Mitchell said. Gates is much more moderate, and he’s talking more moderately in public.

Mitchell said that while a less aggressive manner may be helpful, you certainly need to deal with China from a point of strength.

You can’t just jawbone it and allow the Chinese to say, ‘Just be patient, we’re working on it,’ he said. Too much patience with the Chinese will get you nowhere.

Gates is scheduled to meet with a number of top Chinese leaders, including President Hu Jintao.

Senior defense officials, who spoke on condition of anonymity because the meetings have not yet taken place, said Gates is likely to bring up the Iranian issue.

We think China could do more on Iran, said one of the officials, adding that the U.S. and China have a common responsibility to do what is necessary to prevent Iran from acquiring a nuclear capability.

The U.S. is looking for China to recognize that weapons it sells to Iran have shown up in other countries — such as Iraq. There is clear evidence that the Chinese can’t trust Iran to behave responsibly with any weapons that they sell them, said the official. That, in our view, should lead China to the conclusion that they shouldn’t sell any weapons to Iran.

Gates’ visit to China kicks off a three-country Asia tour, which will also include stops in South Korea and Japan.
found here.

Juventus fight back to hold Inter

ROME, Italy — Mauro Camoranesi scored with 13 minutes left to earn Juventus a 1-1 home draw with Serie A leaders Inter Milan on Sunday.

Camoranesi picked up a headed knock-down from substitute Vincenzo Iaquinta before seeing his shot deflect off defender Walter Samuel to leave goalkeeper Julio Cesar helpless.

Inter took a first-half lead when Argentine striker Julio Cruz broke Juve’s offside trap and latched onto Brazilian midfielder Cesar’s through ball before firing past Gianluigi Buffon.

The result means Inter retain their unbeaten record this season, despite injury problems that saw the likes of Patrick Vieira, Francesco Toldo, Marco Materazzi and Dejan Stankovic ruled out.

The defending champions are now two points clear of Fiorentina at the top of the table, with Roma a point further behind and Juventus in fourth place.

Earlier in the day, Roma missed out on the chance to close the gap on Inter when a late collapse saw them throw away a two-goal lead to draw 2-2 at Empoli.

First half goals from French winger Ludovic Giuly and Matteo Brighi had put the visiting Romans in charge and for more than an hour they looked set to cruise to victory.

But with 23 minutes remaining Ighli Vannucchi reduced the deficit and Sebastian Giovinco snatched an injury time equaliser to deny Luciano Spaletti’s injury-depleted team.

Siena snatched a share of the spoils from Parma in a 2-2 draw as Daniele Galloppa scored in the last minute while Napoli needed an injury time goal from striker Ezequiel Lavezzi to deny rock-bottom Reggina their first win of the season, forcing them to settle for a 1-1 draw in the south. E-mail to a friend

found here.