Mexican Oil Executive Under House Arrest On Suspicion Of Defrauding Citibank Up To $US400 Million


A judge placed the head of a Mexican oil services firm under house arrest due to suspicion that his company defrauded US bank Citigroup in a multi-million-dollar case.

Amado Yanez, chief executive and majority shareholder of Oceanografia, will be held for up to 40 days as prosecutors determine what charges he might face, Attorney General Jesus Murillo Karam told a news conference.

Citigroup said late last month that it was slashing $US235 million from its 2013 financial results due to the fraud committed against its Mexican subsidiary, Banamex.

The US banking group said up to $US400 million of $US585 million in credit given to Oceanografia by Banamex was based on bogus invoices from the energy firm, which is a major supplier of Mexico’s state-run oil monopoly Pemex.

The scandal prompted the Mexican government to take control of Oceanografia, a company that employs 11,000 people and has a fleet of around 70 ships.

The government has also taken over a first division football team owned by Yanez, the White Roosters of Queretaro, as part of the investigation.

Murillo Karam defended the decision to detain Yanez for up to 40 days without charges, a practice known as “arraigo” that has been criticised by human rights groups.

The procedure allows prosecutors to renew the arrest for another 40 days for a total of 80 as they investigate a case.

Murillo Karam said the government has been against abusing the use of “arraigos” but that this was a case where “superior interests” must be protected.

In this case, he said, the authorities needed to place Yanez under house arrest to gather evidence as well as ensure that the government can protect Oceanografia’s 11,000 employees and top client, Pemex.

“These are the reasons why we have decided to use ‘arraigo’ as an extraordinary measure in this occasion,” Murillo Karam said. “As we have before since we have been in the attorney general’s office, solely to protect superior interests.”

The attorney general also denied that there was any political motivations behind the investigation.

The conservative National Action Party (PAN) has walked out of negotiations in Congress on legislation to implement energy reform, accusing President Enrique Pena Nieto’s government of using the Oceanografia scandal to get its way.

Oceanografia was already a top supplier of Pemex during the 12 years that the PAN held the presidency from 2000 to 2012.

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