Predators in Paradise?

In a rambling two-story house hidden by mango and chicle trees on the industrious island of Trinidad lives an unlikely watchdog against corporate greed. Ved Seereeram, a financial consultant and former banker, has been working for years to expose what he describes as a prestigious U.S. lender aggressively marketing financial instruments to governments that didn't really understand them. Tens of millions of dollars in excessive fees and interest, he says, have been diverted from poor Caribbean countries into the coffers of Citibank, now a unit of Citigroup. Until recently, no one really listened.

But with the unraveling of Enron and WorldCom and recent allegations of legal and ethical lapses at Citigroup, Seereeram's cries are finally being heard. As a result of his investigations, Trinidad's tiny island neighbor Dominica has filed suit against the Citibank unit, alleging that it secretly and aggressively overcharged the government of Dominica on a bond issue to finance the island's first international airport. "We believe the allegations are without merit," says Lula Rodriguez, a Citibank spokeswoman. Seereeram hopes Dominica's lawsuit will bring renewed scrutiny to a case closer to home: a 1993 deal to refinance a natural-gas exploration project, in which he claims Citibank overcharged Trinidad's government. Citibank has denied any impropriety in that transaction.

With his clipped cadences and precise, impatient manner, Seereeram talks like an accountant of the green-eyeshade era. But in his eight years as a merchant banker at Citibank Trinidad, he helped bring the island into the world of structured finance, which involved complex deals that aided Trinidadian businesses in minimizing their tax liabilities and hedging against swings in interest rates. "Citi had the reputation of being innovative, sailing close to the wind and dominating the capital market," says Richard Young, managing director of Scotiabank, a Canadian institution with a division in Trinidad. Seereeram rose to managing director at Citibank's merchant banking arm, but he left in 1998 after clashing with management over bonuses and marketing strategy, he says.

He started working as a consultant and soon realized that Citibank Trinidad had begun marketing the structured finance instruments that he had developed to such state-owned entities as Trintomar, a joint venture of Petrotrin and NGC, Trinidad's oil and natural-gas authorities. It bothered Seereeram that Citibank was taking complex financial vehicles intended for private companies, in part to reduce their taxes, and selling them to a struggling public entity that at the time paid minimal taxes. He began to investigate, hoping to take a fee from any money recovered. "They were not disclosing the true nature of the product," he says.