It’s a potent recipe—take a household name in global financial markets, grill over the heat of a mortgage meltdown, marinate in the mystery sauce of West Asian money, and garnish with the spice of an Indian CEO. Each of these ingredients by itself would be sufficient for heated dinner-table debates among the cognoscenti, but taken collectively, this dish is hot.

For the uninitiated in the cuisine of the financial markets: The bank—Citibank. The West Asian bailer-outer—the $850 billion Abu Dhabi Investment Authority (Adia), which took a $7.5 billion stake in the bank. The Indian CEO—Vikram Pandit.

The situation begs so many questions that I’ve clubbed them into four categories.

About the CEO

•Why did Vikram Pandit take the job? What’s the motivation for someone already worth a few hundred million dollars to step into a near-impossible situation?

•What are the odds that he will succeed? (See the next question on mega-banks)

About institutions

•Is a global full-service bank with businesses in investment banking, brokerage and consumer products spread across hundreds of countries actually possible to be run as a single entity, with sustainable value accretion to shareholders?

•What’s the role of governing boards? Adia’s investment does not give it a seat on Citibank’s board, but so what. There is an interesting story in The Wall Street Journal about Robert Morgenthau, a US public prosecutor who—in the 1990s—pursued the scandal around the collapse of BCCI, a West Asian bank funded by the Abu Dhabi emir. The report states, “Sheikh Zayed called to inform the state department that, if Morgenthau indicted anyone in the royal family over the scandal, he would pull his billions out of the US." Can Citi’s board of directors actually call the shots?

•Even if independence of the board were possible, is this how we want capitalism to work, that key investors are separated from governance? How does this gel with the argument for private equity funds who use their stakes to drive organizational change?

About national interests

•Does the Federal Reserve have one more reason to feel nervous? Just a few weeks ago, chairman Ben Bernanke told the US Congress that he supports a code of conduct for sovereign wealth funds (SWFs) to promote transparency and accountability. Very little is known about Adia—its website,, is an electronic Fort Knox. Will the Fed demand more disclosure, given that Citibank is a “too big to fail" institution linked to systemic financial stability?

•What’s the likely political backlash, especially in an election year? The Dubai Port trust investment in several US ports was shot down by the US Congress, after criticism that national interests were being sold out. Can this issue also mushroom into a political one? How will an Indian CEO answer these?

•What are national interests anyway? Is Citibank really a US bank any more? How would we measure this—origin of deposits, domicile of shareholders, source of revenues?

About global markets and governments

•What does the growth of SWFs mean for global financial governance? National regulators are increasingly finding themselves hobbled by transnational flows, like using mosquito nets to protect against the flu. The voices for a global regulatory regime are getting louder. But can this really work, given that political power—and hence true decision-making leverage— is created and harnessed only within national boundaries?

•What is happening to the relationship between market economies and democracy? Over the past two decades, the trend seemed inevitable—or at least was projected as such—that one would drive the other, and the sum of the two was good for things such as liberty and freedom. Francis Fukuyama wrote in The End of History and the Last Man of the “universalization of Western liberal democracy as the final form of government". This hypothesis may come under fire. The United Arab Emirates falls far short of acceptable global standards in democracy—it doesn’t even have adult franchise for its citizens. And yet it runs an investment fund that gives it access to the crown jewels of the capitalist system, at the heart of the mature democracies of the world. Are we seeing a new order emerge?

Citibank was often ahead of the pack in the banking industry. This time around, its actions are unleashing a torrent of questions that go well beyond the sector. It’s too early to be talking of answers. Seems like this dish is going to be on the menu for some time to come.

Ramesh Ramanathan is co-founder, Janaagraha. Möbius Strip, much like its mathematical origins, blurs boundaries. It is about the continuum between the state, market and our society. We welcome your comments at