Mexican authorities issued an arrest warrant for the chief executive officer of Oceanografia SA, the oil services provider seized by the government after Citigroup Inc. (C)’s local unit alleged a $400 million loan fraud.
Amado Yanez, 49, is under police supervision while recovering in a hospital after undergoing emergency surgery last week, Mexico’s attorney general said today in an e-mailed statement. He was accused of participation in crimes including violations of the country’s credit-institutions law.
Mexico took control of Oceanografia in February, putting it under the supervision of the Finance Ministry, after Citigroup said it lost $400 million on loans that were granted to the company based on fraudulent invoices. The Oceanografia case briefly stalled legislative talks this year to open the state-controlled oil industry to private investment, after the main opposition party’s leaders complained that some party members had been wrongly singled out for involvement in the fraud case.
“This may be the government showing that it’s cleaning up the energy sector ahead of the oil opening,” Javier Oliva, a political and security analyst at Mexico’s National Autonomous University said by phone from Mexico City.
Yanez declined to comment on the charges when reached by phone. In March, a federal judge had placed Yanez under house arrest for questioning.
The case is under investigation by banking regulators in Mexico as well as the U.S. Securities and Exchange Commission and Justice Department.
Mexico’s anti-corruption agency banned Oceanografia on Feb. 11 from bidding on government contracts for 21 months after saying it violated agreements with Petroleos Mexicanos, known as Pemex, the national oil company. Oceanografia gets 97 percent of its revenue from Pemex.
The contract ban prompted Citigroup to review its loans with Oceanografia, and determined that only $185 million of the collateral backing $585 million of loans could be verified. The discovery forced Citigroup to reduce previously reported earnings for 2013 by $235 million.
The bank, which conducted an internal inquiry, has fired a dozen employees, including 11 dismissed earlier this month for failing to prevent or discover the wrongdoing. One worker was dismissed after being apprehended as he tried to take documents related to the fraud.
Citigroup CEO Michael Corbat had promised staff in a memo in February that there would be “accountability for those who perpetrated this despicable crime and any employee who enabled it.”
Ciudad del Carmen, Mexico-based Oceanografia, which provides maintenance and support services for offshore oil projects, had more than 11,000 employees and 69 ships prior to the seizure.
Yanez controlled 80 percent of Oceanografia and has run it since 1994 after taking over from his father. According to a bond prospectus, he has bachelor’s and master’s degrees in engineering from Texas A&M University.
He owned the Mexican professional soccer league’s White Roosters franchise in the central city of Queretaro, after buying the team in May 2013. League officials have said he could lose the franchise if convicted of a crime.
“It is important that the Mexican law enforcement authorities agree there is fraud here perpetrated by at least one person,” David Hilder, an analyst at Drexel Hamilton LLC in New York, said in a phone interview. He has a buy rating on the shares. “That’s important for demonstrating that Citi was truly a victim of criminal fraud and not merely careless.”
To contact the editors responsible for this story: Brendan Walsh at firstname.lastname@example.org Bradley Keoun