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Citigroup fires 12 in Mexico loan fraud

Citigroup said Wednesday it has fired a dozen employees in Mexico, including four senior executives, in connection with a $400 million fraud involving its Banamex unit.

An internal memo to employees from the bank’s chief executive, Michael Corbat, disclosed the terminations.

Two of the managing directors were business heads at Banamex. Citigroup hasn’t fired any U.S.-based employees in connection with the fraud, but the internal investigation isn’t finished.

“Additionally, before our investigation concludes, we expect that several other employees, both inside and outside of Mexico, may receive forms of disciplinary actions as well,” Corbat said in the memo.

Citigroup said in February it had discovered at least $400 million of fraudulent, short-term loans from Banamex to the oil-services firm Oceanografía.

Oceanografia used phony invoices for $585 million as collateral for loans. Only $185 million could be verified.

The fraud trigggered a U.S. investigation by the FBI and the U.S. Attorney’s Office in Manhattan.  

A separate SEC investigation is focusing in part on whether deficiencies in Citibank’s internal controls contributed to the fraud.


Julie DiMauro is the executive editor of FCPA Blog and can be reached here.

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