Mexico Authorizes Arrests in Fraud at Citigroup Unit
The corporation Citigroup has taken a huge hit after a $400 million loan loss was discovered from their Mexican subsidiary Banamex. This incident was due to Oceanografia, a marine oil services company that borrowed $585 million from Banamex against contracts that it had with Pemex, another oil enterprise. This perpetuated an investigation that discovered $400 million of nonexistent contracts. The repercussions that followed were eleven employee firings from Citigroup that included four managing directors. This unmoral act cultivated from a variety of motivations. Due to four managing directors being fired, some assumed that they were the root cause of this fraudulent affair since they had the position to take advantage of their power to influence the credit decisions. However, I believe this affair occurred through several layers of failure. The key problems that sparked this fraudulent act was negligence from the bank employees from top to bottom and financial greed.
Banamex has its compliance problems. It seems that Citigroup, the parent company, has not effectively watched over its Mexican subsidary’s operatios. This lack of oversight has formed a negligence from the managing directors and their employyes. They have not done their due diligence in reviewing all of OCeanografia’s invoices and financials. Furthermore, there has been indications that some government officials may have been involved in this to gain financial interest. Through these heinous crimes, it has not only broken their own integrity in the business world, but also tarnished the reputation of Citigroup’s global bank image.
Bibliography
“Mexico Authorizes Arrests in Fraud at Citigroup Unit.” DealBook Mexico Authorizes Arrests in Fraud at Citigroup Unit Comments. N.p., n.d. Web. 22 Sept. 2014. <http://dealbook.nytimes.com/2014/06/01/mexico-issues-arrest-warrants-in-banamex-fraud-inquiry/?_php=true&_type=blogs&module=Search&mabReward=relbias%3As%2C%7B%222%22%3A%22RI%3A15%22%7D&_r=0>.
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