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 Banamex has zeroed in on Jose Ortega, a middle manager the bank
fired in 2012, as a key person in the fraud involving Mexican oil
pipeline maintenance company Oceanografia, according to two people
familiar with its probe.
But the Mexican bank regulator, Comision Nacional Bancaria y de
Valores (CNBV), has poured scorn on this suggestion and says Ortega
probably played only a bit part. The real problem was with the
bank’s institutional failure to have proper controls in place, the
CNBV says.
Reuters has learned that Banamex accuses Ortega of changing a manual
that employees used when deciding whether to make loans to suppliers
to Mexico’s state-owned oil company Pemex. That meant Banamex staff
stopped calling Pemex to verify invoices, reducing their level of
scrutiny of loans to Oceanografia and other suppliers, the people
familiar with the probe said.
Because Citigroup has different lending protocols for different
types of borrowers, employees are expected to follow steps in
manuals to safely make loans to clients. Ortega, who was in charge
of lending to companies that supply services to Pemex, was the only
employee at his level entitled to edit the Pemex manuals, the two
sources familiar with the bank probe said. Reuters couldn’t
independently verify whether or not Ortega had altered the manuals.
The bank fired Ortega in 2012 for having an outside business
relationship with Oceanografia, creating a conflict of interest,
because it discovered he had received $200,000 from the company’s
CEO Amado Yanez, one of the sources said. Reuters could not
ascertain what the arrangement was between Ortega and Oceanografia.
Ortega told investigators at the time that the payments were for his
wife, a fine art dealer who had sold art and property to Yanez, the
source said. Ortega went to work for Oceanografia as a consultant
after being fired by Banamex, the source added.
Ortega could not be reached for comment. One lawyer said he has been
in touch with Ortega, adding that the former Banamex employee has
not selected legal representation. That lawyer said he passed along
Reuters' request for comment but Ortega did not respond.
The name of Ortega’s wife could not be determined, and Reuters was
unable to reach her to seek comment.
Citigroup’s New York-based spokesman Mark Costiglio declined to
comment.
Calls to Oceanografia's headquarters rang to an outgoing message.
Calls to Pemex were not returned.
REGULATOR CRITICIZES EXECUTIVES
Citigroup executives have not accused Ortega of acting alone. And it
is unclear whether the preliminary findings of the on-the-ground
investigation in Mexico will end up in any Citigroup report on the
fraud.
Citigroup this year has fired about a dozen staff members who either
were directly involved or failed to stop the alleged fraud. One of
the fired employees allegedly spirited away key documents early in
the bank’s internal probe, according to two sources familiar with
the matter. Citigroup CEO Michael Corbat said in a memo in May that
he expected more employees to be disciplined.
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But the people familiar with the Banamex investigation told Reuters
the Mexican bank believes the Oceanografia losses would not have
been possible if not for the actions that they attribute to Ortega.
That is not the view of the regulator. In a report that Reuters has
reviewed, the CNBV said its own investigation found that Banamex
failed to follow internal protocols that hadn’t been changed. That
failure was the main problem, and not material changes to the
procedures, the 77-page report said. The CNBV sent its report to
Mexico’s attorney general’s office.
"They (Banamex executives) should have been more effective, and if
they had been, they would have found these problems beforehand,"
said Jaime Gonzalez, president of the CNBV, in an interview with
Reuters.
In the CNBV report, Ortega is not accused of wrongdoing. He is
barely mentioned.
"Think about what a brilliant guy Ortega is,” Gonzalez said as he
questioned the idea that Ortega was some kind of rocket scientist
behind the fraud. “He deceived everyone from Banamex, he changed the
way of operating ... and no one realizes. He goes to Oceanografia,
and keeps doing the same thing. He is a brilliant guy who should be
at NASA," Gonzalez joked, referring to the U.S. space agency.
Gonzalez said the Banamex protocol was changed to allow Oceanografia
to borrow against estimates of payments from Pemex, instead of being
based on invoices approved by the state oil company. But the
procedure that required Banamex staff to call the state oil giant to
check the documents was still in place – the problem was employees
did not follow it, he said.
Oceanografia collapsed in February, around the time that Citigroup
said Oceanografia had defrauded Banamex of $400 million, a figure
that later rose to more than $500 million. The Mexican government
has taken over Oceanografia’s affairs.
Oceanografia CEO Yanez was arrested in June on charges of fraud and
is currently out on bail, awaiting trial. A lawyer identified as
representing Yanez by Mexican media did not respond to calls from
Reuters seeking comment.
(Reporting by Elinor Comlay and Alexandra Alper in Mexico City and
David Henry in New York; Editing by Dan Wilchins and Martin Howell)
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