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Citigroup CEO protests efforts to tax bonuses

india Updated: Mar 21, 2009 08:22 IST

Citigroup Inc's CEO Vikram Pandit has pushed back against efforts in Washington to tax bonuses at financial companies that received federal bailout funds, saying it could result in the loss of valuable employees right when they're most needed.

Pandit, in a memo to employees yesterday, said Citigroup has already removed the executives responsible for Citi's troubles, and that any effort to spread blame "to each and every employee" in the financial industry is unwarranted.

Pandit's remarks came as lawmakers tried to impose punitive taxes on bonuses at financial institutions following outrage over millions paid to employees at the failed insurance company American International Group Inc, which has received USD 182 billion in federal aid.

Efforts to stabilise the financial system "would be significantly set back if we lose our talented people because Congress imposes a special tax," Pandit said, adding that many people will likely "find it difficult, if not impossible, to pay back the bonuses."

Pandit said the company is working with lawmakers to come to an agreement on a "constructive industry compensation system" and to ensure his employees are paid fairly.

Citigroup itself has received three lifelines from the government as it struggles under the weight of bad mortgage-related investments. Last month, the Treasury Department pledged to take up to a 36 per cent stake in the beleaguered bank.