A $4 Billion Bit of Pique

When a bank fouls up, an unhappy customer may yank his money and deposit it across the street. Oil-rich Kuwait has done the same thing, only it took $4 billion with it. New York's Citibank had managed investment funds for Kuwait since 1974, putting nearly $4 billion into stocks of about 350 U.S. companies, including AT&T, Atlantic Richfield and Phillips Petroleum.

Citibank did not trade the portfolio of stocks heavily on a day-to-day basis, which upset Sheik Salem Abdullah Al-Ahmed Al-Sabah, Kuwait's director of U.S. investments. "If you do not do it our way," he wrote to the bank in December, "we'll transfer the funds. There are lots of good banks who want a chance to help us." The Kuwaiti government became more disturbed with Citibank when some confidential memos and the lists of its holdings were leaked to Financial Writer Dan Dorfman. In retaliation, Kuwait last month transferred the $4 billion stock portfolio, which earns a $4 million-a-year management fee, from Citibank to Morgan Stanley Asset Management.

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