Identifier
Created
Classification
Origin
09ABUDHABI1161
2009-12-22 10:10:00
CONFIDENTIAL//NOFORN
Embassy Abu Dhabi
Cable title:
ABU DHABI INVESTMENT AUTHORITY SUES CITI
how-toVZCZCXYZ0000 RR RUEHWEB DE RUEHAD #1161 3561010 ZNY CCCCC ZZH R 221010Z DEC 09 FM AMEMBASSY ABU DHABI TO RUEHC/SECSTATE WASHDC 0057 INFO GULF COOPERATION COUNCIL COLLECTIVE RUEATRS/DEPT OF TREASURY WASHINGTON DC
C O N F I D E N T I A L ABU DHABI 001161
SIPDIS
NOFORN
DEPARTMENT FOR NEA/ARP/BMCGOVERN AND EEB/IFD/OMA
E.O. 12958: DECL: 2019/12/22
TAGS: EFIN EINV ECON AE
SUBJECT: ABU DHABI INVESTMENT AUTHORITY SUES CITI
CLASSIFIED BY: Richard G. Olson, Ambassador, State, Embassy Abu
Dhabi; REASON: 1.4(B),(D)
C O N F I D E N T I A L ABU DHABI 001161
SIPDIS
NOFORN
DEPARTMENT FOR NEA/ARP/BMCGOVERN AND EEB/IFD/OMA
E.O. 12958: DECL: 2019/12/22
TAGS: EFIN EINV ECON AE
SUBJECT: ABU DHABI INVESTMENT AUTHORITY SUES CITI
CLASSIFIED BY: Richard G. Olson, Ambassador, State, Embassy Abu
Dhabi; REASON: 1.4(B),(D)
1. (SBU) On December 15, Citigroup announced that the Abu Dhabi
Investment Authority (ADIA) had filed an arbitration claim based on
Citi's alleged misrepresentation of ADIA's November 2007 $7.5
billion investment. The arbitration claim seeks $4 billion in
damages. ADIA originally agreed to buy Citi securities that
yielded 11 percent annually and would convert to 235.6 million
shares (a 4.9 percent stake) at prices ranging from $31.83 to 37.24
starting in March 2010. Since then, Citi's stock price has fallen
to less than $3.50/share. Adding to ADIA's losses, Citi's recent
issuance of 5.4 billion new shares significantly dilutes ADIA's
original 4.9 percent stake.
2. (C/NF) A well-connected expatriate financial consultant told the
Ambassador on December 16 that this stock dilution finally spurred
ADIA to take action. ADIA Senior Legal Advisor William Brown told
EconOff on December 17 that ADIA, as an investment entity
representing Abu Dhabi's citizens, must exercise its fiduciary
duty. Failure to do so would damage ADIA's reputation as a
sovereign wealth fund for the people of Abu Dhabi. Brown said ADIA
was historically disinclined to take legal action, but advisors
finally convinced the leadership to act. Brown unequivocally
stated that Citi "lied" and must be held accountable.
OLSON
SIPDIS
NOFORN
DEPARTMENT FOR NEA/ARP/BMCGOVERN AND EEB/IFD/OMA
E.O. 12958: DECL: 2019/12/22
TAGS: EFIN EINV ECON AE
SUBJECT: ABU DHABI INVESTMENT AUTHORITY SUES CITI
CLASSIFIED BY: Richard G. Olson, Ambassador, State, Embassy Abu
Dhabi; REASON: 1.4(B),(D)
1. (SBU) On December 15, Citigroup announced that the Abu Dhabi
Investment Authority (ADIA) had filed an arbitration claim based on
Citi's alleged misrepresentation of ADIA's November 2007 $7.5
billion investment. The arbitration claim seeks $4 billion in
damages. ADIA originally agreed to buy Citi securities that
yielded 11 percent annually and would convert to 235.6 million
shares (a 4.9 percent stake) at prices ranging from $31.83 to 37.24
starting in March 2010. Since then, Citi's stock price has fallen
to less than $3.50/share. Adding to ADIA's losses, Citi's recent
issuance of 5.4 billion new shares significantly dilutes ADIA's
original 4.9 percent stake.
2. (C/NF) A well-connected expatriate financial consultant told the
Ambassador on December 16 that this stock dilution finally spurred
ADIA to take action. ADIA Senior Legal Advisor William Brown told
EconOff on December 17 that ADIA, as an investment entity
representing Abu Dhabi's citizens, must exercise its fiduciary
duty. Failure to do so would damage ADIA's reputation as a
sovereign wealth fund for the people of Abu Dhabi. Brown said ADIA
was historically disinclined to take legal action, but advisors
finally convinced the leadership to act. Brown unequivocally
stated that Citi "lied" and must be held accountable.
OLSON