Citi reveals $400m fraud - junior employee said questioned

What's a $400m (alleged) fraud between friends ?

Mexican police questioned a Citigroup employee suspected of participating in the alleged theft of $400m from the bank, according to a person familiar with the matter.

The Wall Street Journal reports that the  employee, described by the person familiar with the matter as junior at the company, worked for the bank's Mexico unit, Banco Nacional de Mexico, or Banamex.

The employee isn't currently in police custody, the person added. It wasn't clear whether the person is still working for Citigroup or when the questioning occurred.

Citi announced on Friday that it had discovered a fraud at Banamex, the wholly-owned Mexican subsidiary that has been one of the bank’s best-performing divisions. Earnings for 2013 were reduced by $235m, Citi said.

The Financial Times reports that Citi said the fraud was tied to loans made to Oceanografia, a troubled Mexican oil services company. Banamex was lending to Oceanografia based on invoices for work it said were approved by Petróleos Mexicanos, the state-owned company, which Citi said turned out to be falsified.

Reuters reports that The U.S. Securities and Exchange Commission is investigating Citigroup for accounting fraud after it disclosed bogus loans in its Banamex unit, a source familiar with the investigation said.

The securities regulator is also examining whether Citigroup violated the Foreign Corrupt Practices Act, the source said.

Mexican Police Question Citigroup Employee Over Alleged Fraud

SEC probes fraud claim at Citigroup’s Mexico arm

SEC investigates Citigroup over fraudulent Mexican loans: source



image: © Horia Varlan

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