Billion dollar “clerical mistake”
Employees of the credit operations department of one of the largest international banking conglomerates, Citigroup, mistakenly transferred $900 million to organizations that provided a loan to the American cosmetics company Revlon. Its owner is Ronald Perelman, he occupies 221 positions in the Forbes list, and the billionaire’s fortune is estimated at $6.9 billion. After a while, the press service called the incident a “clerical mistake” and asked for a refund.
In a conversation with Bloomberg reporters, a Citigroup spokesman declined to comment, and Revlon said it didn’t transfer funds to its creditors.
Economists call the incident “one of the most expensive mistakes in the history of Wall Street.”
Disputes between the cosmetic company and its creditors have been going on for more than one year. Several funds, including Brigade Capital Management, HPS Investment Partners and Symphony Asset Management, filed a lawsuit against Revlon this week. According to the documents, the company was supposed to repay the loan in 2023, but the applicants claim that Revlon has issued another loan, making its property rights a security, which are already collateral for another loan. Thus, representatives of the funds are confident that Revlon has violated the original agreements.
In this regard, the plaintiffs demanded immediate repayment of the debt, which was precisely the one that was mistakenly repaid by Citigroup employees. It is worth noting that the investment bank was also the defendant in this case in court, as it acted as an agent during the loan processing.
At the moment, the funds refuse to return the erroneously transferred assets. In addition, their chances of repaying the debt were slim, so they got what they wanted.
According to one of Bloomberg’s sources, the bank is conducting an internal investigation, and Revlon plans to challenge the claim, as it is sure that the accusations are baseless.
At the moment, the company is doing its best to restore sales due to the pandemic and high competition in the market. Its main opponents are Estee Lauder Cos, as well as a number of smaller organizations that are attracting more buyers through social media.