(Reuters) – Citigroup must face a revived demand that alleges that it caused more than 1.00 million dollars in losses to orchestrate and hide a vast fraud in the now broken Mexican company of oil and oceanography gas services, a court of appeals in the United States dictated Thursday.
A panel of three judges of the 11th Court of Appeals of the United States Circuit in Miami said that 30 sellers, creditors and holders of oceanography bonds properly claimed that Citigroup substantially helped fraud, and a judge of a lower court was wrong to dismiss the case of nine years old.
Danielle Romero-Apsilos, spokesman for Citigroup, declined to comment.
Juan Morillo, one of the lawyers of the plaintiffs, said that his clients were satisfied with the decision.
Lee: Oceanography accumulates demands against Banamex for 9,341 MDD
The Citigroup Banamex unit had provided cash advances to Oceanography, which provided Pemex drilling services and charged interests on advances.
The plaintiffs, including shipping companies and lease, investment funds and rabobank, based in the Netherlands, said Citigroup advanced 3.3 billion dollars to oceanography between 2008 and 2014 despite knowing that the company had too much debt and had been falsifying Pemex firms in authorization forms.
Subsequently, Citigroup found almost 430 million dollars in fraudulent cash advances and was fined with 4.75 million dollars that the United States Stock Exchange and Securities Commission imposed in 2018 for the internal controls of Banamex.
The former executive director of Citigroup, Michael Corbat, said the bank dismissed 12 employees and regulators in Mexico said 10 bank employees were criminally responsible according to Mexican law.
Lee: Despite Oceanography Amparo, Judicial Branch will not be able to stop Banamex sale: AMLO
In a decision of 82 pages, the circuit judge Britt Grant found enough accusations that Citigroup conceal key information about oceanography to the plaintiffs and that the interest payments provided a financial incentive.
“Citigroup is one of the most sophisticated financial institutions in the world, and it is difficult to believe that, assuming that the accusations of the plaintiffs are true, Citigroup had no knowledge of the activities (of oceanography),” he added.
The court returned the case to the federal judge of Darrin Gayles district in Miami, who dismissed him in August 2023.
The case is Otto Candies LLC et al V Citigroup Inc, Circuit 11 Appeals Court of the United States, No. 23-13152.
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