“Not for the first time, Citigroup has stepped into a mess. The problem is that the lender has been cheated out of the cash in one of the most basic businesses in banking. That should worry Citigroup’s rivals, too. Citigroup’s latest slip emerges from the usually sleepy world of accounts receivable. This is the unit that makes short-term loans while clients wait for money owed to them by other companies to arrive. In this case, by the end of 2013, Citigroup thought it had lent Oceanografia, a Mexican oil-services firm, $585 million to cover any shortfalls while it waited for the state oil company Pemex to pay some bills. Citigroup has now worked out that only $185 million of the invoices were valid.”
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