updated 5/5/2004 7:49:44 PM ET 2004-05-05T23:49:44

Citigroup Inc., the nation’s largest financial institution, on Wednesday disclosed that the Securities and Exchange Commission has begun an investigation of the bank’s accounting treatment of 2001 and 2002 operations in Argentina.

At the time, Argentina was in financial turmoil after a four-year recession drove the country to devalue its peso and limit dollar conversions. Argentina eventually defaulted on more than $140 billion in public debt, though has since worked out a new repayment program.

Citigroup said in its quarterly filing with the SEC that the agency “is conducting a nonpublic investigation, which the company believes originated with the company’s accounting treatment regarding its investments and business activities .... with respect to Argentina in the fourth quarter of 2001 and the first quarter of 2002.”

The filing also said the probe was “addressing the timing and support documentation for certain accounting entries or adjustments.”

It did not say what they were, but Citi — along with other major banks with operations in Argentina — increased reserves and took some write-offs related to the country’s financial turmoil.

Citi said the SEC requested accounting and other information for 2001, 2002 and 2003 and will take testimony on the matter this month.

“The company is cooperating with the SEC in its investigation,” the Citi filing said.

Citi spokeswoman Leah Johnson declined to comment beyond the comments in the disclosure. SEC officials were not immediately available for comment.

Citigroup, which is headquartered in New York, operates in more than 100 countries and has assets of more than $1.3 trillion.

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