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Citigroup: Keeping the ‘pay czar’ happy

“Defusing a potential showdown with the Obama administration,” Citigroup will sell its Phibro commodities trading unit to Occidental Petroleum, said David Enrich and Ben Casselman in The Wall Street Journal. Citi accepted a “bargain-basement price” of $250 million for the lucrative operation, indicating its eagerness to avoid further controversy over Phibro’s star oil trader, Andrew Hall, who earned $100 million last year and stands to make about the same this year. Kenneth Feinberg, the Treasury Department’s overseer of executive pay at bailed-out firms, was poised to issue a report criticizing Hall’s pay as “encouraging excessive risk-taking.”

Feinberg’s fingerprints are all over the Phibro deal, said Steve Eder and Karey Wutkowski in Reuters.com. The pay czar “made it clear to Citigroup that Hall would not be able to keep earning his eye-popping paychecks.” As the recipient of $45 billion in government bailout assistance, Citi is subject to tight federal supervision of its pay practices. The decision to jettison Phibro and Hall “demonstrates the extent of Feinberg’s power” over Citi and other bailed-out firms.

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Legal affairs: Prosecuting the market meltdown

The first—and so far only—criminal trial to emerge from last year’s market meltdown began this week in federal court in Manhattan, said Aaron Smith in CNNmoney.com. Former Bear Stearns hedge fund managers Ralph Cioffi and Matthew Tannin are accused of “painting a rosy picture of their portfolios” for investors, despite knowing the portfolios were stuffed with toxic subprime mortgage securities. Prosecutors will rely on e-mails from Tannin in which he worried that the fund “was going to subject investors to ‘blow-up risk.’”

Autos: GM sells Hummer to Chinese manufacturer

General Motors will sell its ailing Hummer unit to China’s Sichuan Tengzhong Heavy Industrial Machine Co. for $150 million, said Stephanie Wong and Katie Merx in Bloomberg.com. Under the agreement, Tengzhong has pledged to protect “more than 3,000 U.S. corporate, manufacturing, and dealership jobs.” Tengzhong also said it would “introduce more fuel-efficient models, including electric vehicles.” The deal represents China’s first major move into the U.S. auto market.

Air travel: Lufthansa tries again with Wi-Fi

Lufthansa said this week it would provide wireless Internet service aboard long-haul flights beginning next year, said Nicola Clark in The New York Times. Lufthansa tried a similar offering three years ago, but quickly scuttled it, citing “insufficient demand.” The new service, dubbed FlyNet, lets passengers surf the Web “even when flying over the ocean, thanks to a satellite-based technology provided by Panasonic.” Passengers will pay about $10 an hour for the Internet connection, or $27 for an entire flight.

Sports business: Cubs file for bankruptcy

The Chicago Cubs have filed for Chapter 11, becoming the first Major League Baseball team to seek bankruptcy-court protection since the Seattle Pilots did so in 1970, said the Associated Press. The move is intended to facilitate the Cubs’ sale to billionaire Joe Ricketts; under bankruptcy law, Ricketts would be shielded from claims by creditors of Tribune Co., the Cubs’ owner. Tribune Co., which owns the Chicago Tribune and the Los Angeles Times, itself filed for bankruptcy in December 2008, but the Cubs were not included in the filing.