Tuesday, December 15, 2009

Abu Dhabi SWF Sues Citigroup for Fraud

Abu Dhabi Investment Authority, a United Arab Emirates sovereign wealth fund (SWF), sued Citigroup for fraudulent misrepresentation regarding its multi-year investment agreement, executed in 2007. ADAI is obligated to purchase "a total of $7.5 billion of common equity on specified dates in 2010 and 2011." The claim seeks rescission of the agreement or damages in excess of $4 billion.

Citigroup is a ward of the state, like AIG. Will Uncle Sam make Abu Dhabi whole like it did Goldman Sachs et al? And where do sovereign wealth funds sit in financial reform?

Not long ago, Sen. Evan Bayh carried their water. This is from Lou Dobbs interview with the good Senator on foreign investment in the U.S.:

BAYH: Number two, with regard to these sovereign wealth funds there needs to be some kind of rules that guarantee that their investments are made solely on economic grounds rather than for political reasons.

And you know what, Lou, I -- when we get accused of being Sinophobes or protectionists or that kind of thing.

DOBBS: Right.

BAYH: That has nothing to do with it. I would be having these same concerns if our own government were trying to get five seats on the board of CSX.

DOBBS: The same people who would be accusing you and me of being Sinophobes or whatever are the ones railing about Abu Dhabi buying the Chrysler building.

Who care? It's not a strategic asset.

BAYH: Right.

DOBBS: Buy it as you wish.

DOBBS: We thank you very much. It's also nice to see a few dollars come back for the country.

Senator Evan Bayh, thanks for being here. Good luck.

The Senator is now front and center defending for-profit health insurers. Surely oil rich Arabs are as compelling as health insurance executives to the people of Indiana. How many billions will America give Abu Dhabi? Uncle Sam already gave billions to Citigroup, directly and indirectly. How might that make its way to the UAE?