Citigroup said on Friday that it was revising its results for the fourth quarter and 2013 after it discovered fraud at a subsidiary in Mexico.
The company said in a statement that it lent $585 million through Banco Nacional de Mexico, or Banamex, to Oceanografia, a Mexican oil services company, through an accounts receivable financing program. Oceanografia has been a chief supplier to Pemex, the Mexican state-owned oil company.
Citigroup later discovered that Oceanografia had been suspended by the government from winning new contracts and began reviewing the financing program.
Based on that review, Citigroup estimated that only $185 million of the $585 million of accounts receivables owed to Banamex were valid at the end of the year, the bank said in its statement.
As a result, Citigroup said it would book an estimated $235 million after-tax charge against its earnings, reducing net income for 2013 to $13.7 billion from $13.9 billion.
“Although our inquiry into this fraud is continuing, we have been responding forcefully over the past week by assessing the overall exposure to Citi, coordinating with law enforcement, pursuing recovery of the misappropriated funds, and seeking accountability for anyone involved,†Michael L. Corbat, the chief executive of Citigroup, said in the statement.
“We are exploring our legal options and coordinating with law enforcement agencies in Mexico,†he added.
