Meanwhile, at Citibank

["Ian Murray" <seamus2001@xxxxxxxx>]

Brazil scandal hits Citibank

by Conal Walsh
Sunday September 9, 2001
The Observer

Citibank faces fresh money-laundering controversy after up to $200
million, allegedly looted from Brazil in a major political scandal,
turned up at the bank's Jersey branch.

Brazilian prosecutors will apply to the Channel Island's
attorney-general to freeze a Citibank bank account they suspect
belongs to Paulo Maluf, former mayor of São Paulo and one of the
country's best-known politicians.

Brazil's parliament is investigating allegations that Maluf diverted
money from public coffers into offshore accounts when in office during
the Eighties. Maluf, also a former conservative presidential
candidate, denies wrongdoing and is scheduled to give evidence to the
parliamentary enquiry tomorrow.

In Jersey, police and the island's financial regulator are questioning
Citibank over the suspect account. According to Brazilian reports, the
Jersey account is held by a Cayman Islands company which Maluf is
alleged to own. The money was reportedly transferred to Jersey in 1997
from Citibank's Swiss branch.

The US bank is understood to have become suspicious and alerted
authorities in Jersey and Brazil. A spokesman said: 'We do not comment
publicly on customer matters, including whether somebody is or ever
was a customer.' Clive Jones, head of Citibank in the Channel Islands,
refused to comment.

There is no suggestion of dishonesty on the bank's part, but the
affair is potentially embarrassing: Citibank was criticised by the US
Senate in 1999 over lax private banking controls. Stolen money was
funnelled through the bank by relatives of politicians such as
President Carlos Salinas of Mexico, and the late Nigerian dictator
Sani Abacha.

The episode could also prove awkward for Jersey, which has faced
international criticism over its corporate secrecy laws.