Citigroup's Japan boss apologises

Mr Peterson faced some tough questions

Citigroup's top Japanese executive has faced tough questioning over a scandal that caused the closure of the firm's private bank in the country.

Douglas Peterson told a parliamentary finance committee that lax corporate governance and an "aggressive sales culture" were the cause of the abuses.

"What's very important now is that we learn from those mistakes," he said.

Japanese regulators ordered the banking unit to be closed down in September, a big embarrassment for Citigroup.

Multiple failures

Mr Peterson, Citigroup's Japan chief executive, also repeated a public apology issued by Citigroup boss Charles Prince in October.

Citigroup's Japanese private bank was cited for widespread violations including manipulative sales practices and a failure to screen out money laundering, and its closure was one of the harshest punishments issued to a foreign financial firm in Japan.

Japanese lawmakers on Wednesday grilled Mr Peterson over the failure of Citigroup's internal controls and one committee member suggested the bank should have been slapped with criminal penalties.

Mr Peterson emphasised Citigroup's efforts to fix the "very serious failures" in its compliance system.

Sackings

"It's a very important cultural issue within Citibank Japan," he said.

Mr Peterson said six employees in Japan had been fired outright over the scandal, including three managing directors, and another eight had been "asked to leave".

Citigroup has also ousted three top New York executives over the scandal, including its vice chairman, Deryck Maughan.

Under a clean-up plan submitted to Japan's Financial Services Agency (FSA) last month, the bank pledged tighter integration and local control of its Japanese units.