Citigroup, America’s biggest U.S. bank, desperate for cash in the mortgage crisis, is arranging to get a $7.5 billion investment from Abu Dhabi, raising eyebrows and serious questions.

For the tiny but super-rich emirate on the Persian Gulf, $7.5 billion is small change. Its “sovereign fund,” a state-owned financial fund, has assets estimated at $875 billion, the world’s largest. It gets its money from surpluses produced by its oil industry, which has the fifth-largest reserves in the word.

Abu Dhabi is also getting a good deal on its investment. It will buy securities that convert into Citigroup stock that will yield 11 percent a year – nearly twice what the bank’s bonds pay.

But there are problems. First, there is Abu Dhabi’s past. Sheik Zayed, father of the present ruler, owned the notorious Bank of Credit and Commerce International, known as BCCI. It engaged in fraud, bribery, money laundering and other corruption around the world in the 1980s, involving prominent Americans including former Defense Secretary Clark Clifford and Sen. Stuart Symington. New York District Attorney Robert Morganthau prosecuted the bank for evasion of U.S. banking laws and forced it to pay hundreds of millions of dollars in settlement.

Morganthau recalled to The Wall Street Journal that Sheik Zayed once told the State Department that if anyone in the royal family was indicted in the scandal he would pull his billions out of the United States and make no further investments here. The Journal quoted Morganthau as saying that Abu Dhabi under the current emir, Sheik Khalifa bin Zayed al Nahyan, “has been responsible” since BCCI.

Still, The Journal has called the deal with Citigroup “unfortunate, if not a tragedy, that America’s largest bank had to go hat in hand to Arab sheiks because of bad management and blundering U.S. monetary policy.”

Citigroup got deeper into the subprime mess in September with its purchase of AMC Mortgage Services, which held $45 billion in the questionable mortgages. And the federal government was slow to warn of coming foreclosures and defaults and bankruptcies as well as the AAA credit ratings

bestowed on sellers of risky mortgage investments.

The Journal pointed out that Abu Dhabi’s 4.9 percent stake in Citigroup plus an earlier Saudi Arabian stake of 3.9 percent, as well as uncounted smaller Middle Eastern investments, puts Arabs in a powerful position in the huge American bank. Citigroup says that Abu Dhabi will have “no role in the management or governance of Citi,” but that’s much like what the old American Bank said in the 1980s when BCCI had secretly bought it.

By keeping this new investment below 5 percent, Citigroup and Abu Dhabi are avoiding federal scrutiny of the deal. Transparency would be preferable, especially when tracking money transfers is so important in combating terrorism.