March 12 Citigroup Inc has reduced the
annual compensation of high-ranking executive Manuel Medina-Mora
following problems with controls against money laundering at the
Mexico subsidiary he oversees.
Medina-Mora, 63 and co-president of Citigroup, was paid $9.5
million in total compensation for 2013, according to a proxy
statement filed by the company on Wednesday. That was down from
the $11 million he received for 2012, which was reported in last
The latest filing said that a factor in Medina-Mora's pay
was control issues at Banamex USA. Last year, regulators
sanctioned that unit of Citigroup's Mexican bank for lax
controls against money laundering. The same unit is the subject
of a federal criminal investigation over money laundering,
Citigroup disclosed earlier this month.
Citigroup's board of directors, which issued the filing
ahead of it the company's annual meeting April 22, also said it
may cut 2014 pay and claw back some prior compensation because
of a $400 million loan fraud at Banamex in Mexico that was
disclosed Feb. 28.
Citigroup said it discovered the fraud in loans to
Oceanografia, a supplier to Pemex, the
state-owned oil company of Mexico. The loans were based on
invoices Oceanografia said it was owed by Pemex, but Citigroup
found that the invoices were not valid.
Citigroup has said it is continuing to investigate how the
fraud happened and that it has gone to law enforcement
authorities with information in hope that a criminal action
against the perpetrators will increase its chances of recovering
some of its losses.
Future paycuts and clawbacks for the loss in Mexico will be
considered as the company carries on its review of the fraud,
the filing said. The company has already reduced variable
compensation for Banamex employees by $40 million as a direct
result of the loss, the filing noted.
The company has been reviewing other loans to suppliers,
which total $14 billion worldwide, and believes the losses on
the Oceanografia loans are an "isolated" event.
Medina-Mora came to Citigroup through its purchase of
Banamex in 2001. While continuing to oversee the Mexican
operations, he has risen to also become the CEO of Citigroup's
Global Consumer Banking unit, which is essentially half of the
Medina-Mora is known to many in the bank as "Mr. Mexico"
because of his history with the franchise and his standing in
his home country as chairman of the Mexico's second-biggest
Medina-Mora declined to comment through a Citigroup
James Forese, who is Citigroup's other co-president, was
paid $14 million for 2013, his first year with the title and
with responsibility for all of Citigroup's corporate, capital
markets and investment banking businesses, according to the new
CEO Michael Corbat was paid $14.5 million, up from $11.5
million, according to the new and previous year's filings.
Corbat became CEO in October 2012 when directors ousted Vikram
Pandit from the post.
Chief Financial Officer John Gerspach's compensation rose to
$7.5 million from $7 million, according to the filings.