Citigroup must face $1 billion lawsuit claiming it aided Mexican oil company fraud

Jonathan Stempel

Thu, May 8, 2025, 10:25 AM 2 min read

By Jonathan Stempel

(Reuters) -Citigroup indispensable look a revived suit claiming it caused much than $1 cardinal of losses by orchestrating and concealing a immense fraud astatine the now-bankrupt Mexican lipid and state services institution Oceanografia, a U.S. appeals tribunal ruled connected Thursday.

A three-judge sheet of the 11th U.S. Circuit Court of Appeals successful Miami said 30 Oceanografia vendors, creditors and bondholders adequately alleged that Citigroup substantially aided the fraud, and a little tribunal justice erred successful dismissing the nine-year-old case.

Danielle Romero-Apsilos, a Citigroup spokeswoman, declined to comment. Juan Morillo, 1 of the plaintiffs' lawyers, said his clients were gratified by the decision.

Citigroup's Banamex portion had provided currency advances to Oceanografia, which provided drilling services to Mexico's state-owned lipid institution Petroleos Mexicanos (Pemex) , and collected involvement payments connected the advances.

The plaintiffs, including shipping and leasing companies, concern funds and Netherlands-based Rabobank, said Citigroup precocious $3.3 cardinal to Oceanografia betwixt 2008 and 2014 contempt knowing the institution had excessively overmuch indebtedness and had been forging Pemex signatures connected authorization forms.

Citigroup aboriginal recovered astir $430 cardinal of fraudulent currency advances, and was fined $4.75 cardinal by the U.S. Securities and Exchange Commission successful 2018 implicit Banamex's interior controls.

Former Citigroup Chief Executive Michael Corbat said the slope fired 12 employees, and Mexican regulators said 10 slope employees were criminally liable nether Mexican law.

In an 82-page decision, Circuit Judge Britt Grant recovered capable allegations that Citigroup withheld cardinal accusation astir Oceanografia from the plaintiffs, with the involvement payments providing a fiscal incentive.

"Citigroup is 1 of the world's astir blase fiscal institutions, and it strains credulity to reason that, assuming the plaintiffs' allegations are true, Citigroup lacked consciousness of (Oceanografia's) activities," she added.

The tribunal returned the lawsuit to U.S. District Judge Darrin Gayles successful Miami, who dismissed it successful August 2023.

The lawsuit is Otto Candies LLC et al v Citigroup Inc, 11th U.S. Circuit Court of Appeals, No. 23-13152.

(Reporting by Jonathan Stempel successful New York; Editing by Richard Chang)