Citigroup must face a revived lawsuit accusing the bank of aiding and concealing a major fraud at the now-bankrupt Mexican oil services firm Oceanografia, the U.S. Court of Appeals for the 11th Circuit ruled. A three-judge panel concluded that plaintiffs, comprising vendors, creditors, and bondholders, sufficiently alleged that Citigroup played a significant role in the scheme, and found that the lower court erred in dismissing the long-running case. Citigroup’s Banamex unit advanced $3.3 billion to Oceanografia between 2008 and 2014, while allegedly ignoring warning signs such as forged authorization forms and high debt levels. The court returned the case to U.S. District Judge Darrin Gayles in Miami, who had previously dismissed it in August 2023.
The plaintiffs claim that Citigroup concealed key information and continued to collect interest payments, which gave the bank a financial motive. Circuit Judge Britt Grant noted in the 82-page decision that Citigroup, as a sophisticated financial institution, likely knew of Oceanografia’s misconduct. The bank later uncovered $430 million in fraudulent advances and faced a $4.75 million fine from the U.S. Securities and Exchange Commission for weak internal controls. Citigroup reportedly fired 12 employees, and Mexican authorities identified 10 staff members as criminally liable.
