Citigroup Inc is being sued for fraud by investors and creditors of a bankrupt Mexican oil services firm over claims they were harmed by a loan scheme that also led the bank to cut 2013 profit by US$235 million and fire at least a dozen people.
Citigroup’s loans led to the 2014 collapse of Oceanografia SA and caused Dutch lender Rabobank Groep to lose at least US$1.1 billion, according to the lawsuit filed on Friday in Miami federal court.
Rabobank’s Mexican subsidiary Banamex made short-term loans to Oceanografia, which did work for state-run Petroleos Mexicanos (Pemex).
In turn, Pemex repaid the bank.
Citigroup chief executive officer Michael Corbat in February 2014 said that US$400 million of accounts receivable from Oceanografia were fraudulent.
He said the bank was working with Mexican authorities and would find out “who perpetrated this despicable crime.”
Rabobank and the investors claim Citigroup conspired with Oceanografia to accept falsified work estimates even as the oil services firm became increasingly dependent on cash advances to survive.
Those Citigroup loans propped up Oceanografia, while Pemex repaid the bank with millions of dollars in interest, according to the complaint.
Citigroup has said in regulatory filings that it is cooperating with an investigation by the US Securities and Exchange Commission (SEC) and a US Department of Justice request for information about the fraud.
The SEC inquiry has included requests for documents and witness testimony, the bank on Friday said in a filing.
Mexican authorities placed Oceanografia in bankruptcy and later charged several Citigroup employees with crimes, according to the complaint.
None of the creditors who sued have collected money through the bankruptcy, according to the complaint.
The complaint includes claims that the bank violated the Racketeer Influenced and Corrupt Organization Act and engaged in fraud while breaching its fiduciary duty.
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