Citigroup Execs Under Fire from Shareholders

     MANHATTAN (CN) – Dozens of Citigroup’s top execs, including its CEO, were complicit in fraud, corruption and money laundering by the bank’s Mexican operation, leading to hundreds of millions in losses, two stockholders claim in a lawsuit.
     In a 121-page complaint, filed Sept. 23, the Fireman’s Retirement System of St. Louis and individual investor Esther Kogus claim that Citigroup officials knew that Mexico was a high-risk banking environment where “deficient controls” were unlikely to prevent fraud and other legal violations, but they “nonetheless failed to implement anything resembling a true system of internal controls.”
     Those Mexican operations are Citigroup’s Banamex Nacional de Mexico and its affiliate, Banamex USA, which, according to the complaint, “have accounted for more than 10 percent of Citigroup’s revenue in recent years.”
     Instead of implementing and observing the appropriate controls, the complaint says, the Citigroup directors willfully ignored what was going on and permitted a $400 million fraud to continue until 2014.
     In addition, the shareholders claim, the defendants issued false and misleading statements as part of the “March 2013-2015 Proxies,” which, among other things, encouraged them to re-elect the board.
     The shareholders say the illicit activities remained unknown to them until earlier this year when the Federal Deposit Insurance Corporation fined Citigroup $140 million, and the U.S. Justice Department said it found evidence of illegal cross-border transactions.
     The shareholders are asking that Citigroup officials be ordered to pay back their compensation in connection with the 2013-2015 plans, and to void the most recent election of board directors.
     They also ask that Citigroup “take all necessary actions to reform and improve its corporate governance and internal procedures,” including a proposal to strengthen its controls over Banamex.
     The plaintiffs are represented by Thomas Amon, and Brian Robbins, of Robbins Arroyo LLP. Both law offices are in New York.
     Citigroup declined to comment on the lawsuit, and attorneys for the plaintiffs did not immediately respond to a request for comment from Courthouse News.

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