Oceanografía Sues Citigroup, Claims Alleged Multi-Million Dollar Fraud at Banamex

Oceanografía, formerly the biggest oil and gas company in Latin America, is accusing Citigroup (C) of using it to detract from probes into the fraud involving Banamex, which is Citibank’s Mexican subsidiary. Oceanografía collapsed in 2014.

Citigroup is accused of granting a $585M credit line to Oceanografía so that the latter could get hundreds of millions of dollars in cash advances for work by Pemex, an oil company owned by Mexico. However in February 2014, Pemex notified Citigroup that about $400M in Oceanografía invoices, which were supposed to secure the cash advances, had been forged, possibly by a Banamex employee. Because of this, Citibank cancelled Oceanografía’s credit line and the oil and gas company collapsed.

Oceanografía maintains that it never forged the invoices nor did it have cause for such illegal action.

This week, Oceanografía sued Citibank in Manhattan federal court and accused Citibanamex of committing bank fraud in both the US and Mexico.

The plaintiff believes that the loan description let the bank book the loans at an AAA rating, allowing it to lend Oceanografía more than it could have had the loans been issued directly.

Oceanografía alleges that because of the scam, Citibank’s profits were millions of dollars more than what it would have been otherwise. The oil and gas company contends that when it was no longer possible to hide the bank fraud, Citigroup opted to allegedly paint itself as the whistleblower and “victim” while placing the blame on Oceanografía.

Courts in Mexico have since turned down Citibanamex’s civil claims seeking debt against Oceanografía. The oil and gas company reported that employees and company officers who been criminally charged related to this matter have since been exonerated.

Oceanografía wants punitive damages.

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The Oceanografía Complaint Against Citigroup (PDF)