NEW YORK — Citigroup is letting go its $100 million man, Andrew Hall, and the lucrative energy trading business he ran after the federal pay czar threatened a public showdown over his nine-figure bonus.

The bank effectively handed over Phibro to the oil and gas giant Occidental Petroleum, avoiding one of the most closely watched clashes with the Obama administration over executive compensation. Hall’s $98 million bonus, and a $30 million bonus to another Phibro trader, posed a thorny problem the Treasury Department’s special compensation master, Kenneth Feinberg, who must approve the largest pay packages at Citigroup and six other companies that received multiple government bailouts. The outsize bonuses have also been a public relations nightmare for Citigroup, which has received about $45 billion in federal aid.

Citigroup officials maintained that the Phibro bonuses should be exempt from Feinberg’s scrutiny since they stemmed from a pay agreement struck before the new compensation rules took effect. Feinberg disagreed, putting the bank on notice that he would issue advisory opinion claiming the contracts promoted excessive risk-taking that ran counter to the public interest.

After several meetings with Feinberg, Citigroup officials concluded that their position was politically untenable and accelerated plans to sever the bank’s ties with Phibro, according to a person briefed on the situation. With Friday’s sale to Occidental, Hall and the other Phibro trader’s compensation will be absolved from pay czar’s review.

Hall and the other Phibro traders will get their 2009 bonuses, but they will defer them until they join Occidental, which faces no restrictions on pay, and reinvested in the fund. Phibro’s returns are up about 20 percent this year, resulting in another round of mammoth paydays, according to a person briefed on the situation. Occidental said it will defer “significant portions” of any future payouts.