BUSINESS ETHICS, LAW AND

SUSTAINABILITY
Collections and Crime : The Case Of Citibank In Indonesia
Azwimar Putranusa

29114335

Anindya Prawita Sari

29114337

Syachriani Syam

29114384

Anugrah Tri Padma

29114397

Case Resume
The case of Citibank in Indonesia describes several scandals faced by Citibanks operations
in Jakarta, Indonesia and its range from the embezzlement of millions of dollars by Citigold
manager to the tragic collections related death of a Citibank credit card holder.
Matt Lelander is an operation and ethics officer for Citibanks International division. He
review and analyze the political and economic situation in Indonesia, Citibanks dealings in
Asia and Indonesia, and the two ethical and legal scandals plaguing citi in Indonesia, to
develop an action plan to deal with the current scandals and prevent future problems in the
region.
1. Political and economic situation in Indonesia. Indonesia has strong GDP growth rates,
despite a slow global economy, balance of payment surpluses, and low volatility of
exchange rate. But Indonesia still struggles with poverty and unemployment, inadequate
infrastructure, corruption, a complex regulatory environment, and unequal resource
distribution among regions.
2. Citibank in Asia and Indonesia.

The American subprime loan fiasco has taken its toll on Citibank and Citigroup has
agreed to pay $590 million over claims that it deceived investors by hiding the extent of
its dealings in toxic subprime debt, and make the Citigroup market value has dropped
significantly losing close to 173 billion.

The business of Citibank in Indonesia is good and its has return on equity of 23.8% with
net income increasing 4.8%. But the slight increase in percentage of non-performing
loans to total loans. The number was up to 2% from 1.5% the previous year.

3. Scandals plaguing Citi in Indonesia. There are two ethical and legal scandals involving
embezzlement and death on Citis premises.

The first scandal involves a Jakarta socialite and the manager for Citigold Citibanks
wealth management division, Melinda Dee. She is accused of stealing between 2
million and 4.4 million from clients, and she was arrested on charges of embezzlement
and money laundering.

The credit card Irzen Okta (the victim) bill was Rp 48 million (around $5.500) and who
was found dead by debt collectors. But the debt collectors involved were independent
contractors and not Citibank employees. The family of Irzen Okta has filed a ($346
million) lawsuit against Citibank.

These crises has hit Citi groups bottom-line just as foreign banks are making a
significant push into Indonesia. Because of the robust domestic demand in Indonesia, their
profits jump 70% in the first half of 2012. The stark contrast in profit trends between
competitors makes it imperative that Citibank take corrective actions.

Questions & Answers

1. What has led to this recent outbreak of scandals in the banking industry ?

Negligence regulations and loose corporate governance would have to contribute, and
there seems to be a growing of conduct gap between a corporations beliefs and its
action.

2. Are Citibank employees still adhering to Citis Code of Conduct ? Matt himself ?

The Code of Conduct provides an overview of the key policies of which need to be
aware. Through their own individual commitment to the Code are uphold Citis legacy
and ensure Citis future as a premier banking institution.

The four key principles in its corporate Citis Code of Conduct :

1. Common Purpose-Citis goal is to serve their clients and stakeholders
2. Ingenuity-Citi aims at improving clients lives though innovation
3. Leadership-Citi strives to employ talented people
4. Responsible Finance-Citis conduct is transparent, prudent, and dependable

The two ethical and legal scandals involving embezzlement and death on Citis premises
by employees indicated that the employees are not adopt the Code of Conduct. In Code
of Condact there are some of the condacts How Citis do Business :
1. Fair and Free Markets
2. Protecting Citi Assets
3. Anti-Bribery and Corruption
4. Suspicious Activity Reporting
5. Anti-Money Laundering Compliance
6. Anti-Boycott Laws
7. Sanctions and Embargoes
8. Antitrust and Fair Competition
9. Tied Business Dealings
10. Privacy and Security of Client Information, and
11. etc.

Matt Lelander is an operation and ethics officer for Citibanks. He is considered a rising
star in the banking world and he will soon be sitting on Citigroups board of directors.
But he has drinking problem and driving while intoxicated. Matt driving citation and if
the information becomes public his job could be in jeopardy. Matt also not adopt the
Code of Conduct.
Based on Code of Conduct Drug-Free Workplace, Citi maintains a work environment
that fosters the health and safety of its employees and protects the integrity of its
business practices. Being under the influence of illegal drugs or other substance abuse
which renders you unfit for duty is prohibited in the workplace or while performing
work-related duties.

3. Is Citi responsible for the actions of outside contractors ? What is Citis potential liability ?

Yes, Citi is responsible for the scandal that makes one of the creditors Mr. Octa death.
That makes a massive scandal in Indonesia, because in this country that most of the
population have a religion especially Muslim. Even Citibank want to responsible by
wrote off Mr. Octa debts and offered to pay his widow a monthly stipend and the
education of his daughters, Mr. Octa family was refused and filed $346 million lawsuit
against Citibank. This scandal becoming large because it making politicians angry with
the news about that. So, After that incident Citibank given punishment such as Bank
Indonesia ordered Citibank to stop taking on new credit card customers for two years
and has barred it from opening new branches or recruiting new priority banking
customers for one year.

4. What are the appropriate courses of action for Mr. Lelander with regards to these scandals
and how can future ethical lapses be avoided ?

Matt Lelander as hypotetical Citibank officer must confront, identify, and resolve
Reviews These dilemmas continually developing. At an Earlier time, Lelander have
been faced with two Scandals that are owned by Citibank, embezzlement and death.
Scandal in the past should be a lesson for Citibank to avoid and minimize the scandal
further. It needs to be done with regard to this scandal that strengthen the ethics and
culture of Citibank itself. On the issue of embezzlement posed by Melinda Dee, should
be resolved by the parties concerned. Also with the problem of death. To overcome the
scandal that already exist, Citibank need to improve performance so that with the
scandal that has been circulating, does not reduce public confidence in the performance
of Citibank. The scandal has happened indeed worsen the company's image, but
professionalism was instrumental in easing the scandals that have occurred. So that the
incidence of scandal does not happen again, then it needs to be made more stringent
regulations to apply appropriate sanctions.

5. How should Matt respond to Jenny ?

We think that Matt should not discuss about Citibanks pricing strategies with Jenny, as
matter of fact discussion of pricing policies with competitors is violation of U.S.
Antitrust laws. Its responsibility to be truthful with Citibank regarding his driving
citation. But considering Jenny is kind of politely blackmailing him, Matt should refuse
this request of Jenny with a bit of intimidation too, like stating that she also in the car
with Matt and he doesnt want anyone find out about that incident too.

6. How should he handle the dinner tonight with the Indonesian officials ?

The Foreign Corrupt Practices Act (FCPA) prohibits payments or gifts to foreign official
in exchange for a favorable ruling, regulation, or business advantage. It has a broad
application and will be applied to U.S. citizens operating abroad. So based on this
regulation, its clearly forbidden to receive any gift.

7. Does Joan have any obligations under Citis code of conduct to report Matts unusual
behavior ?

We think Joan does not have any obligations under Citi code of conduct, citi only
recommend to speak to any of the contact provided if the person feel it needed be. Joan
does not know what is really going on with Matt so the best thing she could do is ask
Matt himself and help him resolve whatever it is Matt facing.