Calpers calls for heads to roll at Citigroup over allegations of poor corporate governance

The US investment bank Citigroup is heading for a collision with Calpers, one of America's most powerful shareholder bodies, after the giant pension fund warned it would not support the re-election of the bank's chief executive and chairman on the grounds of poor corporate governance.

The US investment bank Citigroup is heading for a collision with Calpers, one of America's most powerful shareholder bodies, after the giant pension fund warned it would not support the re-election of the bank's chief executive and chairman on the grounds of poor corporate governance.

Calpers, which has $160bn (£88bn) under management, issued a damning statement about the role of eight Citigroup directors ahead of the bank's annual shareholder meeting next Tuesday.

The move is unusual in America, where companies do not adhere to many of the boardroom rules that UK companies follow. Calpers, which supported Citigroup's directors last year, said its opposition was due to a toughening in its stance on corporate governance.

Calpers' main concern was that five directors, including the chief executive, Charles Prince, were members of Citigroup's audit committee, and had authorised the audit firm to carry out other, potentially lucrative, consultancy work.

It also attacked the chairman, Sanford Weill, saying that as chief executive from 1998 to 2003, Mr Weill "had a significant role in several scandals to negatively impact the company". It added that the bank, the largest in the world, which bought Schroders in the UK, would be better served by a chairman it considered to be independent.

Citigroup was one of a number of US banks which last year was forced to hand over a total of $1.4bn to Eliot Spitzer, the New York attorney general, following allegations of banks issuing biased research and offering shares in popular IPOs to favoured clients.

Calpers, the California Public Employees Retirement System, has 26 million shares in Citigroup, which is only 0.5 per cent of the vote, but the group is often looked to by smaller funds as an activist leader in proxy voting.

Citigroup dismissed Calpers' criticism as "unwarranted". A spokesman said: "Citigroup adheres to the highest standards of corporate governance, business practices, accuracy and transparency in its accounting and financial disclosure."

Calpers is also turning its fire against Coca-Cola, saying certain directors, including Warren Buffett, the billionaire investor who heads Berkshire Hathaway, are not independent.

Calpers said it would withhold a vote to re-elect Mr Buffett and some other directors because they had authorised Coca-Cola's auditor to provide non-audit services, and it would vote against all of them.

Calpers said it had tightened up its guidelines on auditors after a string of corporate scandals in the US such as the collapse of Enron, where the company's auditor, Andersen, was found to have been complicit in the massive cover-up of the true state of its finances.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

The Green Recruitment Company: Investment Associate – Energy Infrastructure

£50000 - £60000 Per Annum Discretionary Bonus: The Green Recruitment Company: ...

The Green Recruitment Company: Graduate Energy Analyst

£20000 Per Annum: The Green Recruitment Company: Summary: The Green Recruitm...

Ashdown Group: Finance Accountant - Financial Services - Central London

£30000 - £35000 per annum + benefits : Ashdown Group: Finance Accountant - Fin...

Ashdown Group: Chief Technology Officer (CTO) - Glasgow

£90000 - £98000 per annum + benefits : Ashdown Group: A truly exciting opportu...

Day In a Page

Solved after 200 years: the mysterious deaths of 3,000 soldiers from Napoleon's army

Solved after 200 years

The mysterious deaths of 3,000 soldiers from Napoleon's army
Every regional power has betrayed the Kurds so Turkish bombing is no surprise

Robert Fisk on the Turkey conflict

Every regional power has betrayed the Kurds so Turkish bombing is no surprise
Investigation into wreck of unidentified submarine found off the coast of Sweden

Sunken sub

Investigation underway into wreck of an unidentified submarine found off the coast of Sweden
Instagram and Facebook have 'totally changed' the way people buy clothes

Age of the selfie

Instagram and Facebook have 'totally changed' the way people buy clothes
Not so square: How BBC's Bloomsbury saga is sexing up the period drama

Not so square

How Virginia Woolf saga is sexing up the BBC period drama
Rio Olympics 2016: The seven teenagers still carrying a torch for our Games hopes

Still carrying the torch

The seven teenagers given our Olympic hopes
The West likes to think that 'civilisation' will defeat Isis, but history suggests otherwise

The West likes to think that 'civilisation' will defeat Isis...

...but history suggests otherwise
The bald truth: How one author's thinning hair made him a Wayne Rooney sympathiser

The bald truth

How thinning hair made me a Wayne Rooney sympathiser
Froome wins second Tour de France after triumphant ride into Paris with Team Sky

Tour de France 2015

Froome rides into Paris to win historic second Tour
Fifteen years ago, Concorde crashed, and a dream died. Today, the desire to travel faster than the speed of sound is growing once again

A new beginning for supersonic flight?

Concorde's successors are in the works 15 years on from the Paris crash
I would never quit Labour, says Liz Kendall

I would never quit party, says Liz Kendall

Latest on the Labour leadership contest
Froome seals second Tour de France victory

Never mind Pinot, it’s bubbly for Froome

Second Tour de France victory all but sealed
Oh really? How the 'lowest form of wit' makes people brighter and more creative

The uses of sarcasm

'Lowest form of wit' actually makes people brighter and more creative
A magazine editor with no vanity, and lots of flair

No vanity, but lots of flair

A tribute to the magazine editor Ingrid Sischy
Foraging: How the British rediscovered their taste for chasing after wild food

In praise of foraging

How the British rediscovered their taste for wild food