Below is a full copy of the memo from CEO Michael Corbat:
As you know, in February, we discovered a significant fraud in the Pemex accounts receivable supplier financing program. Since that discovery, we have been proceeding aggressively on several fronts:
First, we conducted a rapid review of accounts receivable financing programs globally. We concluded that none had issues similar to the Pemex supplier program, and we continue to believe this was an isolated incident. Second, we are reviewing our controls and processes in Mexico and are strengthening any area we think falls short of our global standards and best practices.
Third, we have been conducting a rigorous internal investigation, supported by external counsel, to determine how the fraud occurred. I have committed to you that we would hold accountable anyone who perpetrated the crime. We are sharing information with our regulators and law enforcement agencies, which will make any determinations as to criminal liability for the fraud. We've previously said that we terminated one employee, who we believe was directly involved in the fraud. We also said we would hold accountable any employee who enabled it, whether through lax supervision, circumvention of our controls, violations of our Code of Conduct, or otherwise.
While our internal investigation is ongoing, we have unfortunately identified additional employees across business and functional lines whose actions or inactions failed to protect our company from this fraud. As a result, these 11 employees have been terminated. While their roles, responsibilities and levels of seniority vary, they include four Managing Directors, two of whom are business heads in Mexico. Additionally, before our investigation concludes, we expect that several other employees, both inside and outside of Mexico, may receive forms of disciplinary action as well.
The financial impact of this fraud has been significant, causing a reduction of our 2013 net income and increasing our credit costs for the first quarter of 2014. But as I said to you in February, the impact to our credibility is harder to calculate. Arguably, it is more damaging than the financial costs. I expect every one of our colleagues to act with the highest ethical standards and be fully committed to the safety and soundness of our institution.
While the last few months have been difficult, Banamex is an institution with a rich, 130-year history of providing exceptional banking services to its clients. Since becoming part of Citi in 2001, it has contributed significantly to our net income and is an integral part of our global network and a source of great pride for our franchise. I look forward to spending time with our colleagues fin Mexico this week to express my support for their hard work and to encourage them to remain focused on our clients and our mission.
Thank you for your continued focus on serving all our stakeholders.
-- Written by Antoine Gara in New York.