March 19, 2009— -- Citigroup, which has received $45 billion in taxpayer bailout money, plans to spend $10 million on new offices at its Park Avenue headquarters for CEO Vikram Pandit and his deputies, according to Bloomberg News.
A Citi source confirmed the renovation plans to ABC News, which were first reported by Bloomberg. The source added that the renovation is part of an overall effort to cut costs by consolidating offices.
Last month, Pandit testified before Congress about the way his company is using taxpayer dollars received through the Troubled Asset Relief Program.
"The American people are right to expect that we use TARP funds responsibly, quickly and transparently to help American families, businesses and communities," he said.
Earlier this year, Citigroup reversed a decision to buy a $50 million corporate jet under pressure from the government.
The Citi source likened the $10 million in office renovations to refinancing a home: You need to put money down so you can save money over time. Permits for the renovations were filed in September 2008, according to the source.
"This office space consolidation is part of a global effort to create greater operating efficiencies and generate millions of dollars in savings in the years ahead," Citi told ABC News in a statement. "Through this project, senior executives in our corporate headquarters are moving from two floors to smaller, simpler offices on a single floor."
"These changes, combined with greater use of shared work spaces and alternative work arrangements, will double the overall occupancy rate on the remaining floor," the company added. "In addition, based on estimates made when the project was initiated, we expect to generate savings in the next few years well in excess of the project costs compared to our current utilization of headquarters executive space."
Bloomberg reported that the company plans to spend at least $3.2 million for basic construction, such as wall removal, plumbing and fire safety, but that the overall cost would be at least three times as high.
Merrill Lynch CEO Spends on Redecoration
Earlier this year CNBC reported that then Merrill Lynch CEO John Thain spent more than $1 million to redecorate his office. The redecoration, which took place in early 2007, became a symbol of corporate extravagance ahead of the financial crisis that has taken over the world economy.
Thain was forced to sell Merrill Lynch to Bank of America in a frantic deal in September 2008. While he was originally expected to stay on as an employee, Bank of America CEO Ken Lewis fired Thain in January 2009, soon after news of the renovations became public.
In a subsequent interview on CNBC, Thain said in hindsight the office renovations were a "mistake."
Thain's purchases went well beyond what an average office space would cost and were reported to have included an $87,000 area rug for Thain's conference room and another area rug for $44,000; a $25,000 mahogany pedestal table; a $68,000 19th-century credenza for Thain's office; a $15,000 sofa; four pairs of curtains for $28,000; a pair of guest chairs for $87,000; a George IV Desk for $18,000; six wall sconces for $2,700; six chairs in his private dining room for $37,000; a mirror in his private dining room for $5,000; a chandelier in the private dining room for $13,000; fabric for a Roman shade for $11,000; a custom coffee table for $16,000; something called a "commode on legs" for $35,000; Regency chairs for $24,000; 40 yards of fabric for wall panels for $5,000 and a parchment waste can for $1,400.
According to Bloomberg, plans for Citi's renovations on file with the city specify the installation of at least one Sub-Zero Inc. refrigerator and icemaker, "premium grade" millwork and a Madico Inc. "Safety Shield 800" blast-proof window film. The project includes 17 private offices, each with space for administrative assistants, two conference rooms and open areas with "soft seating."