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 year's filing.
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 company.
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 bank.
Medina-Mora declined to comment through a Citigroup spokesman.
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 filing.
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.