Citigroup's top executive in Japan endured unprecedented questioning by lawmakers on Tuesday over a scandal at the firm's private bank in the country, the latest turn in a high-profile case that has embarrassed the world's biggest financial company. Citibank Japan CEO Douglas Peterson told a parliamentary finance committee that lax corporate governance and an "aggressive sales culture" were behind abuses at the private banking unit, ordered to be closed by regulators in September.
"What's very important now is that we learn from those mistakes," Peterson said after repeating a public apology issued by Citigroup Chief Executive Charles Prince in Tokyo last month.
It was the first time the Upper House committee had called a non-Japanese witness, reflecting the intense public interest generated by the case.
The private bank was cited for widespread violations including manipulative sales practices and a failure to screen out money laundering, and its closure was one of the harshest punishments issued to a foreign financial firm in Japan.
Lawmakers grilled Peterson over the failure of Citigroup's internal controls and one committee member suggested the bank should have been slapped with criminal penalties - the fate meted out earlier this year to UFJ Holdings, Japan's fourth-biggest bank, for evading a government inspection.
Peterson emphasised Citigroup's efforts to fix the "very serious failures" in its compliance system. "It's a very important cultural issue within Citibank Japan," he said.
He said six employees in Japan had been fired outright over the scandal, including three managing directors, and another eight had been "asked to leave".
Citibank had previously said 12 employees had left, without giving details.
A team of more than 100 people was reviewing transactions conducted by the private bank to determine whether any further violations occurred, he said.
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