Senator seeks to ground Citi's $50-mn jet purchase

An influential Democrat senator has asked the government to stop Vikram Pandit-led Citigroup from buying a new corporate jet for $50 million, as the bank is dependant on American taxpayers' money and the plane is also being bought from a foreign firm.

"The notion of Citigroup spending $50 million on a new corporate jet, even as it is depending on billions of taxpayer dollars to survive, does not fly," Senator Carl Levin of Michigan said in a statement.

"To permit Citigroup to purchase a plush plane foreign-built no less while domestic auto companies are being required to sell off their jets is a ridiculous double standard," Levin said.

Companies like General Motors and Chrysler have been barred from operating their corporate jets under the bailout package from the administration.

"I have urged Tim Geithner, who will presumably be Treasury Secretary by the end of the day, to do what he can to stop this absurdity from occurring, and I am assured he will look into the matter promptly," the senator said.

Earlier, a report in the New York Post said that Citigroup was upgrading its jet fleet with a brand-new 50-million-dollar corporate jet, even "though the bank's stock is as cheap as a gallon of gas and it's burning through a 45-billion-dollar taxpayer-funded rescue."

Citi is buying a new French-made Dassault Falcon 7X luxury jet, which "seats up to 12 in a plush interior with leather seats, sofas and a customisable entertainment center."

The Post reported that there were just nine of these top-of-the-line models in the US, and Dassault's European factory churns out three to four 7Xs a month.

"Citigroup decided to get its new wings two years ago, when the financial-services giant was flush with cash, but it still intends to take possession of the jet this year despite its current woes," the daily quoted an unnamed source.

The report also noted that Citigroup was "quietly trying to unload two of their older Dassault 900EXs", which are nearly 10 years old and are worth an estimated $27 million each.

Earlier this month, Citigroup reported its fifth straight quarter of losses and split itself into two. With over $8 billion of loss in the latest quarter ended December 31, 2008, the company has lost close to $28 billion in the past five quarters.

As part of the financial aid from the US government, Citi has received two lifelines, totalling about $45 billion, besides guarantees to its toxic assets worth over $300 billion.

Burdened by huge losses, the bank has laid off thousands of employees over the past year in its efforts to keep afloat.

Citi CEO Vikram Pandit recently decided to forego his bonus for the year 2008 and also declined to accept retention and incentive awards, along with a couple of more senior executives.