Citigroup is adjusting downward its fourth quarter and full-year 2013 financial results from those reported this January by an estimated $235 million after-tax ($360 million pre-tax) as a result of a fraud in its Mexican subsidiary.

Citigroup is adjusting downward its fourth quarter and full-year 2013 financial results from those reported this January by an estimated $235 million after tax ($360 million pre-tax), after fraud was discovered at its Mexican subsidiary.

The financial impact will lower Citi’s 2013 net income from $13.9 billion to $13.7 billion, the firm said in a statement on Friday. The fraud relates to short-term loans made by Citi’s subsidiary Banco Nacional de Mexico, or Banamex, to Mexican oil services firm Oceanografia.

In short, Banamex extended credit to Oceanografia to finance accounts receivables due from Mexican state-owned oil firm Petróleos Mexicanos (or Pemex), to which Oceanografia has been a “key supplier.”

In February, Oceanografia was banned by Mexico’s anti-corruption agency after violating an agreement with Pemex. Citi and Pemex then instigated reviews of their credit exposure to Oceanografia and of the accounts receivable financing programme over the past several years.

The upshot was that a “significant portion of the accounts receivables recorded by Banamex in connection with the Pemex accounts receivable financing programme were fraudulent,” Citi said.

The US firm believes the fraud is “isolated to this particular client within the Banamex accounts receivable financing program.”

“Although our inquiry into this fraud is continuing, we have been responding forcefully over the past week by assessing the overall exposure to Citi, coordinating with law enforcement, pursuing recovery of the misappropriated funds, and seeking accountability for anyone involved,” said Citi's chief executive Michael Corbat.