In a major legal setback for global banking giant Citigroup, a U.S. appeals court has revived a long-standing lawsuit alleging the bank’s significant role in facilitating a billion-dollar fraud tied to the now-defunct Mexican oil services firm Oceanografía. The court’s decision breathes new life into accusations that Citigroup not only financed the fraud through its Mexican subsidiary Banamex but also concealed key information, causing massive financial losses to vendors, creditors, and investors. As the case returns to a lower court for further proceedings, the spotlight is once again on Citigroup’s internal practices and oversight failures.
Key Highlights:
✅ Court Ruling: A U.S. appeals court has revived a lawsuit accusing Citigroup of aiding a massive fraud at Mexican oil services firm Oceanografía, resulting in over $1 billion in losses.
🧑⚖️ Legal Proceedings: A three-judge panel of the 11th U.S. Circuit Court of Appeals in Miami ruled that 30 vendors, bondholders, and creditors had sufficiently alleged Citigroup’s role in the fraud.
🏦 Citigroup’s Involvement: The bank’s Mexican unit, Banamex, provided $3.3 billion in cash advances to Oceanografía between 2008 and 2014, despite knowledge of the company’s forged documents and mounting debt.
🕵️♀️ Alleged Concealment: Plaintiffs claim Citigroup withheld crucial information, even as it collected interest payments, giving it a financial incentive to ignore fraudulent practices.
⚖️ Past Penalties & Actions: In 2018, the SEC fined Citigroup $4.75 million for Banamex’s internal control failures. The bank fired 12 employees, while Mexican authorities held 10 criminally liable.
📜 Judge’s Statement: Circuit Judge Britt Grant criticized the notion that a bank as sophisticated as Citigroup could be unaware of the fraud, assuming the plaintiffs’ claims are true.
🔄 Next Steps: The case is now remanded to U.S. District Judge Darrin Gayles, who had previously dismissed it in 2023.
📂 Case Details: The case is titled Otto Candies LLC et al v. Citigroup Inc, No. 23-13152.