Citigroup Inc (NYSE:C) Fraud Case

by Paul Wilson | Monday, Mar 24, 2014 | 966 views

Northern, WI 03/24/2014 (usastockreport) – The progress has been made in fraud case which forced Citigroup Inc (NYSE:C) to cut its profit in 2013. In this case Oceanografia, CEO a major Mexican oil field services was held for questioning on Saturday. This was reported on Sunday by attorney general’s office.

Investigation has been Initiated

The CEO Amado Yanez major stake owner in Oceanografia voluntarily presented himself for questioning. The AG requested for temp detention order that stops Yanez from any movement or travelling. Going by the local media, who reported that interrogation session was on till Sunday?

The Pemex (Petroleos Mexicanos) state run oil giant of Mexico is taking the services of Oceanografia from last few decades. It has awarded Oceanografia billion dollar of contracts for the supply and maintenance service of oil platforms and pipelines from Pemex .

Unearthing the Fraud

In the last month Citigroup Inc (NYSE:C) reported, a case has been came to light which is related to bogus loan amounting to $400 million was given by Banamex, a Mexican subsidiary of Citigroup to Oceanografia. The bank further said the case was unearthed when invoices were reviewed. The Oceanografia said it belongs to Pemex, but on further investigation it was found that they were not valid invoices. After matching with Pemex, Citigroup found that out of $585 million of loans of collateral backing only $185 million could be verified and rest were frauds. The Mexico unit of Citibank Banamex is the second largest bank in Mexico with around 1700 branches.

The Mexican government has started a criminal investigation and has taken control of Oceanografia. The assets of Oceanografia have been confiscated. The state run anti-corruption agency has already banned Oceanografia from taking part in bidding on government contracts for 21 months. The US FBI (Federal Bureau of Investigation) and Securities and Exchange Commission have started interrogating people in connection with fraud.

Lesson Learnt

The investigation of the fraud and the corresponding punishment will stop many companies from going this path. It is good finally it was unearthed and will serve as a lesson for Citigroup Inc (NYSE:C) to tread with cautious.

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