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Citigroup Faces Criminal Investigation For Fraud In Mexico: NYT

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CITIGROUP MEXICO
An Oceanografia SA worker stands in the maintenance yard at the company's facility in Ciudad del Carmen, Mexico, on Thursday, March 27, 2014. Mexicos government took control of closely held Oceanografia after Citigroup Inc. alleged fraud on loans to the oil-services company and requested an investigation, Attorney General Jesus Murillo Karam said on Feb. 28. Invoices from Oceanografia processed by an employee of Citigroups Mexican unit, known as Banamex, may have been falsified to show that Petr | Bloomberg via Getty Images


April 3 (Reuters) - Federal authorities have opened an investigation into a $400 million fraud involving Citigroup's Mexican unit, the New York Times reported, citing people briefed on the matter.

Citigroup disclosed in February it had discovered at least $400 million in fraudulent loans in its Mexico subsidiary, Banco Nacional de Mexico, known as Banamex, and said employees may have been in on the crime.

The bad loans were made to Mexican oil services company Oceanografia, a contractor for Mexican state-owned oil company Pemex.

The investigation, overseen by the FBI and prosecutors from the United States attorney's office in Manhattan, is focusing on whether holes in Citigroup's internal controls contributed to the fraud in Mexico, the New York Times said. (http://link.reuters.com/gat28v)

The FBI and prosecutors are questioning whether Citigroup was equal parts victim and enabler, the newspaper said.

Reuters reported in February that the U.S. Federal Bureau of Investigation was aware of Citigroup's loan losses due to fraud by a Mexican company and was monitoring the situation for possible criminal activity.

FBI in New York and Preet Bharara, the U.S. attorney in Manhattan, could not immediately be reached for comment outside regular U.S. business hours. Citigroup spokesman Mark Costiglio did not immediately respond to an email seeking comment.

Banamex fired two bond traders after uncovering rogue trading last year, two sources close to the matter told Reuters on Tuesday, raising fresh questions over what controls the troubled unit had in place to police employees. (Reporting by Supriya Kurane in Bangalore; Editing by Gopakumar Warrier)

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