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Is Sandy Weill using last days with CitiGroup perks to get perks for his charitable foundation?

18 March 2009 No Comment

As the uproar soars over taxpayer bailout dollars paying bonuses at AIG, last week, Sanford “Sandy” Weill, the former Chairman and CEO of Citigroup Inc. penned a fawning op-ed to the Obama Administration in Business Week entitled, “Obama’s Tax Plan Will Hurt Non-Profits.” Weill wrote: “Given [Obama’s] popularity, the best thing we have going for us is President Barack Obama. (I believe if there had been an election for President of the world in November, he would have been victorious by multiples of his winning margin in the U.S. election.)… Still, I’d like to add my voice to those in Congress who worry that the proposed philanthropic tax deductions in Obama’s budget will bring a decline in gifts to charities.”

Weill wrote: “Given [Obama’s] popularity, the best thing we have going for us is President Barack Obama. (I believe if there had been an election for President of the world in November, he would have been victorious by multiples of his winning margin in the U.S. election.)… Still, I’d like to add my voice to those in Congress who worry that the proposed philanthropic tax deductions in Obama’s budget will bring a decline in gifts to charities.”

Weill, the man once revered as the mastermind behind turning Citigroup into the biggest U.S. financial institution now holds the dubious distinction as one of the “25 People to Blame for the Financial Crisis,” according to Time Magazine.

He is also less than two weeks away from reportedly relinquishing an approximate $3 million annual Citigroup package on April 1st. Since leaving Citigroup’s helm in April 2006, Weill and his wife Joan have also enjoyed perks like a “company car and driver and use of the company’s private jet.” A posh private office in the General Motors Building located across the street from Central Park with staff has been the Weill Family Foundation’s headquarters. New York Post

Is Weill using his Citigroup perks to rehabilitate his image from economy crasher to statesmanlike philanthropist to benefit his Weill Family foundation? Even more troubling—is there a conflict of interest?

In an email interview with this reporter, Weill confirmed: “The Weill Family Foundation did invest an undisclosed amount in Citigroup preferred shares in January 2008,” but he declined to disclose the specific amount. Typically foundations do not invest in for-profit companies, especially those with the appearance of personal enrichment.

A little history here is necessary. Recall it was last November after Citigroup’s shares tumbled more than 60 percent when doubts over its survivability reached critical mass. The U.S. government stepped in and bailed out Citigroup twice to the tune of $45 billion. But the government bailouts were not Citigroup’s first. In November 2007, Citigroup received a $7.5 billion cash infusion from Abu Dhabi after mortgage losses wiped away almost half its market value, then less than three months later, the Weill Family Foundation invested an “undisclosed amount” into Citigroup.

Now back to Weill’s op-ed to the Obama administration.

Lots of people are duly concerned over Obama’s proposed array of tax increases arguing they will keep the economy in the tank. Weill feels Obama’s plan to reduce the charitable deduction to 28% will hurt philanthropy. On its face, Weill’s proposal to increase charitable tax deductions seems noble: “Why not raise the proposed top ordinary income tax rate by one percentage point, to 40.6%, [from the 39.6% tax rate during President Bill Clinton’s time in office he apparently agrees with] and at the same time lift the cap on charitable deductions to 40.6%? The increase in the top tax rate could make up for the decrease in tax revenues resulting from the bigger deduction for charitable giving. It’s win-win…” and so he suggests. Read op-ed here.

Weill said he has “had conversations with the Administration,” but has “not spoken with anyone since the BusinessWeek piece.” Weill also said: “Being involved with philanthropy for close to 30 years has made the transition from business to what I am doing now a lot easier. My wife Joan and I make long term investments in the organizations that we support. I am currently the Chairman of Carnegie Hall (since 1991); Chairman of Weill Cornell Medical College (since 1996); and Founder and Chairman of the National Academy Foundation (since 1980). My wife is Chairman of Alvin Ailey American Dance Foundation and Chairman of Paul Smith’s College of the Adirondacks. Together, Joan and I are Co-Chairs of the Board of the White Nights Foundation of America. We have always believed that philanthropy is more than just donating money, but also generously giving one’s time, passion, enthusiasm and brains to the causes one is passionate about. Education is the key element in everything we do because we believe it is the key to unlock the door to one’s future. We also believe that music and the arts are a way to bridge cultural divides that unfortunately exist in our society.”

But are Weill’s suggestions to the Obama administration about philanthropy or another perk? Because according to the Internal Revenue Service, the Weill Family Foundation is a category 4 charity, “A private foundation, generally with a 30% deductibility limitation.”

If Obama’s plan passes as is, Weill appears to be quibbling over a 2% tax deduction for his foundation. If Obama takes Weill’s advice, the Weill Family Foundation could garner a 10% tax deduction increase.

An ex-Weill colleague told me, “That is so vintage Sandy. His whole philanthropy effort, while admirable, has been a P.R. exercise. He has lived by two rules. Be cheap and get me publicity. The publicity was his adrenaline. I was approached by a New York Magazine writer in 2007 for background on a proposed article on Weill’s philanthropy when I asked the writer how it had come about, I was told his magazine had been approached by a member of the Citi P.R. person assigned to Weill’s office. I told him the same thing and I think he agreed. He never wrote the article!”

With days left to go on Weill’s Citigroup perk package, one can’t help but wonder whether Weill’s philanthropic proposals for President Obama are meant to benefit the needy and taxpayers or the Weill Family Foundation. In any case, at minimum, he appears determined to get a better deduction for his foundation.