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Citibank hit with second Mexico fraud

Image courtesy of EVYFCitigroup Inc. said it has discovered another alleged fraud by a second company in Mexico, identified in a report by Oil Patch Asia as Representaciones y Distribuciones EVYA.

EVYA, an engineering and construction firm, is a supplier to Mexican state-owned oil company Petróleos Mexicanos, or Pemex.

It specializes in helipads for offshore oil and gas facilities.

Citibank CFO John Gerspach said on a media call Monday the alleged fraud was under $30 million and the bank expects full restitution, Oil Patch Asia said.

In February, the government of Mexico took control of another Pemex supplier, Oceanografia.

The government action followed allegations by Citibank of an alleged $400 million fraud.

New York-based Citigroup said in March a review of loans to Oceanografia showed that the company had actually posted only $185 million in collateral and not the $585 million the bank had relied on.

Citibank said Oceanografia had allegedly submitted nearly $400 million of fraudulent invoices for short-term credit that were processed by a bank employee.

The chief executive of Oceanografía, Amado Yáñez Osuna, is under house arrest in Mexico.

Mexico’s police are also questioning an employee of Citibank’s Mexico unit, Banco Nacional de Mexico, or Banamex, Mexico’s second-biggest bank.

The U.S. Securities and Exchange Commission is also reported to be investigating accounting fraud at Citibank Mexico.

Citigroup was forced to reduce 2013 profit by $235 million because of Oceanografia’s alleged fraud.


Richard L. Cassin is the Publisher and Editor of the FCPA Blog. He can be contacted here.

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1 Comment

  1. The simple answer to this is regulation. There is a duty of care and fiduciary duty imposed on companies and any financial institution. When society permits companies, directors, bankers and lawyers to evade their responsibilities of a duty of fidelity and good faith fraud happens. If there was strong regulation-Wall Street debacle would not have occurred and many bankers would be in jail serving long prison sentences. Today, while the industry is allowed to regulate itself -this is the result. Bankers must face heavy prison sentences.

    That is the answer. In the USA many banks pay fines and get away to start another illegal scheme to make money to the detriment of the customer and taxpayer. Many should have gone to jail with hefty prison sentences-there is nothing too big for the arm of the law or to FAIL! Be rid of bad customers and banks.

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