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Citigroup Reduces Profit for 2013 After Fraud at Mexico Unit

Citigroup Inc., the third-biggest U.S. lender, said it discovered fraud on loans to a Mexican oil-services company that forced the bank to lower last year’s profit by $235 million.

The loans to Oceanografia SA were backed by payments from state-owned oil producer Petroleos Mexicanos, known as Pemex, Citigroup Chief Executive Officer Michael Corbat said in a memo to staff today. Invoices from Oceanografia processed by a bank employee were falsified to represent that Pemex had approved them, Corbat said, without explaining who was responsible. Citigroup suspects the employee participated in the fraud, according to a person briefed on the bank’s internal probe.