Word: dominica
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...government of Dominica filed suit against Citibank in July, accusing it of extracting "secret profits" of about $1.8 million from the transaction, on a bond issue that lacked proper security and provided, in effect, only $14.2 million in financing, the lawsuit alleges. Citibank is expected to submit its formal response in the case next month. Dominica's airport, hampered by bureaucratic struggles, has not been built...
...with the unraveling of Enron and WorldCom and recent allegations of legal and ethical lapses at Citigroup, Seereeram's cries are finally being heard. As a result of his investigations, Trinidad's tiny island neighbor Dominica has filed suit against the Citibank unit, alleging that it secretly and aggressively overcharged the government of Dominica on a bond issue to finance the island's first international airport. "We believe the allegations are without merit," says Lula Rodriguez, a Citibank spokeswoman. Seereeram hopes Dominica's lawsuit will bring renewed scrutiny to a case closer to home: a 1993 deal to refinance...
Seereeram contacted Dominica's government after seeing documents related to the bonds. According to the terms of the deal, outlined in documents obtained by Time, the airport was to be financed in part by bonds to be secured by a $2.8 million "sinking fund," or money loaned in excess of construction needs and managed by Citibank. But instead of investing the sinking fund elsewhere, the documents show, Citibank used the fund to buy up the airport bonds and convert them into a different kind of bond that reaped a higher premium, without telling the borrower...
Seereeram hunted for other transactions in which Citibank had used financial instruments like those in the Trintomar deal, which, he says, "made them [Citibank] feel like they could get away with this." His chase led him to the nation of Dominica, a speck of island 300 miles north of Trinidad. Dominica depends on connecting flights on small planes from larger islands, and its minor tourist trade is struggling. The government sought bond financing from Citibank Trinidad to build Dominica's first major airport, which would be able to handle larger jets from the U.S. and Europe...
Christmas says he already has a house in Dominica waiting for him—a purchase he made with money he and his wife had saved...