Citibank lost half a billion dollars due to the complex interface in one of the corporate programs
Today the portal Ars Technica spoke about how one of the largest banks in America Citibank lost half a billion dollars due to the complex interface of one of the corporate programs – Flexcube. Even going to court did not help to return the money.
An unpleasant incident happened during the refinancing and processing of payments to creditors of the American cosmetics manufacturer Revlon. Citibank is the firm’s lending agent and has decided to help refinance the many loans that Revlon has been forced to take to provide salaries for its employees.
The cosmetics manufacturer had to take such a step due to financial difficulties caused by the COVID-19 pandemic. The amount of Revlon’s debt to creditors was $ 900 million, and the amount of interest was $ 7.8 million. Part of this debt Citibank was going to repay in order to reform the repaid amount into a new loan. At the same time, it was planned that the repayment of the loan itself will take place only in 2023. However, a subcontractor from India who was supposed to carry out the money transfer operation could not understand the interface of the special Flexcube application and confused the input fields.
In the program interface, it was required to indicate in one field the amount of the entire debt, and in another field – the amount that will be transferred to creditors to a special internal Citibank account. However, due to the confusing names of the fields in the application, everything did not go according to plan, and instead of transferring interest, the creditors were paid the entire debt in full. Remarkably, the operation was confirmed by as many as three high-ranking bank employees, who also did not notice any catch.
Citibank promptly contacted creditors and reported the erroneous payment. Some of them agreed to return the transfer, but most refused. As a result, the amount of $ 500 million remained in the accounts of other banks that issued loans to Revlon. Citibank tried to get the money back through the courts, but failed. It turns out that in the United States there is a law according to which if the creditor was not notified of the erroneous transfer before it was received (usually the transaction processing takes some time), then the replenishment to his account is considered as an early repayment of the debt and nothing else.
However, Citibank officials say they are eligible for the funds and will add their full refund.