U.N. financial nominee Zeitlin withdraws amid problems with his Indian firm
Thursday, December 31, 2009
UNITED NATIONS -- President Obama's nominee to oversee financial reform at the United Nations has withdrawn his name from consideration for the job, several weeks after revelations that a wireless company he owns in India faced legal and financial troubles, according to U.S. officials.
Jide J. Zeitlin, a former Goldman Sachs executive, informed the White House in a letter this week that he had withdrawn for personal reasons. His decision comes amid indications that Zeitlin may have understated his company's financial and legal troubles in a Nov. 4 congressional hearing.
The move leaves the Obama administration nearly a year into its term without a point person to press for financial accountability at the United Nations and sets the stage for a potentially lengthy effort to replace him. White House spokesman Tommy Vietor said, "We appreciate his willingness to serve and wish him the best of luck in the future."
Zeitlin declined a request for comment.
Zeitlin's company, Independent Mobile Infrastructure Ltd. (IMIL), has been embroiled in a dispute with dozens of Indian contractors who say they have not been paid for building wireless towers throughout India. Angry vendors have staged protests, filed criminal and civil lawsuits against the company and held at least one executive hostage for 24 hours, according to internal e-mails and other documents.
The account that emerges from those documents contrasts with the one Zeitlin presented to a Senate Foreign Relations subcommittee last month. Zeitlin said that his company "is financially strong and is living up to its contractual obligations and commitments" in India. He characterized one legal dispute with a contractor who sued him for more than $2.4 million in contested charges as a "garden-variety commercial dispute" without merit.
An India-based representative of Zeitlin's company, who spoke on the condition of anonymity because he is still involved in sensitive talks with vendors, said that many of the contractors have submitted grossly inflated bills for services, which he described as a common practice in the Indian telecommunications industry. Officials insisted that the company is still financially strong and that the delays in paying vendors stemmed from inadequate bookkeeping. The company is auditing its books to determine how much the vendors are actually owed.
Internal records from Zeitlin's firm show that he was aware that the company had been plagued by financial woes and that efforts to raise capital to meet his financial obligations were being hampered by his labor dispute.
On Aug. 12, Zeitlin held a tense meeting with vendors in Chennai, India, in which he acknowledged that his top management team in India was responsible for "some serious mistakes, including poor financial controls and accounting," according to an internal account of the meeting. Those "leadership failings," Zeitlin added, were only worsened by "the global credit crunch, and with each passing months things deteriorated," according to the account.
Zeitlin assured the vendors that IMIL possessed "valuable" assets and that he was optimistic that its fortunes would improve. But he also "expressed his sadness about the situation at IMIL and the pain that vendors have endured over the past year," according to the minutes of the meeting prepared by IMIL.
The Washington Post first reported on Zeitlin's legal dispute in India on Nov. 4, citing claims by contractors that IMIL had still not paid its vendors. Zeitlin's decision to withdraw his candidacy was first reported late Tuesday by the Cable, a blog at ForeignPolicy.com.
Last summer, Zeitlin's representatives stepped up efforts to settle, offering contractors 50 cents on the dollar to drop their lawsuits. Some accepted the offer.
One representative "said that if the company goes into liquidation the most you will get is 15 to 20 percent," said M.Q. Aslam, director of Nexus Engineers, who says he is owed about $60,000 for tower foundations and electrical work. "I told him I'm very glad to get only 10 percent."