May 8 (Reuters) - Citigroup ( C/PN ) must face a revived

lawsuit claiming it caused more than $1 billion of losses by

orchestrating and concealing a vast fraud at the now-bankrupt

Mexican oil and gas services company Oceanografia, a U.S.

appeals court ruled on Thursday.

A three-judge panel of the 11th U.S. Circuit Court of

Appeals in Miami said 30 Oceanografia vendors, creditors and

bondholders adequately alleged that Citigroup ( C/PN ) substantially

aided the fraud, and a lower court judge erred in dismissing the

nine-year-old case.

Danielle Romero-Apsilos, a Citigroup ( C/PN ) spokeswoman, declined

to comment. Juan Morillo, one of the plaintiffs' lawyers, said

his clients were gratified by the decision.

Citigroup's ( C/PN ) Banamex unit had provided cash advances to

Oceanografia, which provided drilling services to Mexico's

state-owned oil company Petroleos Mexicanos (Pemex),

and collected interest payments on the advances.

The plaintiffs, including shipping and leasing companies,

investment funds and Netherlands-based Rabobank, said Citigroup ( C/PN )

advanced $3.3 billion to Oceanografia between 2008 and 2014

despite knowing the company had too much debt and had been

forging Pemex signatures on authorization forms.

Citigroup ( C/PN ) later found nearly $430 million of fraudulent cash

advances, and was fined $4.75 million by the U.S. Securities and

Exchange Commission in 2018 over Banamex's internal controls.

Former Citigroup ( C/PN ) Chief Executive Michael Corbat said the

bank fired 12 employees, and Mexican regulators said 10 bank

employees were criminally liable under Mexican law.

In an 82-page decision, Circuit Judge Britt Grant found

sufficient allegations that Citigroup ( C/PN ) withheld key information

about Oceanografia from the plaintiffs, with the interest

payments providing a financial incentive.

"Citigroup ( C/PN ) is one of the world's most sophisticated

financial institutions, and it strains credulity to conclude

that, assuming the plaintiffs' allegations are true, Citigroup ( C/PN )

lacked awareness of (Oceanografia's) activities," she added.

The court returned the case to U.S. District Judge Darrin

Gayles in Miami, who dismissed it in August 2023.

The case is Otto Candies LLC et al v Citigroup Inc ( C/PN ), 11th

U.S. Circuit Court of Appeals, No. 23-13152.