Tuesday, June 02, 2009

Citigroup Reneges on $100 Million Contracts, Citing Political Motivation

According to The Wall Street Journal, Citigroup has reneged on payments owed long-term employees in spite of firm contracts that the bank doesn't dispute.

The newest subsidiary of the Obama administration has followed the example of others, choosing between groups paying, those who are politically correct and shorting those who are not. Instead, the bank is betting that employees will be reluctant to pursue their legal remedies. Given that New York law allows treble damages on employment compensation matters, Citi's decision could be more expensive than it seems at first glance.

In addition, the bank also reneged on severance contracts with employees who left the bank after March 31. There's no mention whether employees were informed of the decision to short their pay prior to its effective date or whether decision was announced and applied only retroactively.

President Obama seems well on his way to spreading new ethical standards throughout the country. Unfortunately, the ethical standards he's encouraging are political, where one can say and do anything if doing so advances his or her best intentions.

If Chris Dodd loses his next election, there'll be a senior spot available for a person of his character at the new Citi.

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