Citigroup is facing scrutiny over its continued operations in Mexico as the country’s judiciary undergoes major changes, including the appointment of elected judges, some of whom have been linked to corruption, abuse, and organized crime.
Mexico’s June 1 judicial elections, the country’s first, installed more than 2,600 judges and magistrates, including all nine Supreme Court justices. Another round of elections in 2027 will determine another 1,000 judges to serve.
The June vote saw just 13 percent turnout and was overshadowed by scandals involving candidates linked to organized crime, according to AP News.
With over 7,000 candidates competing in a rushed and complex process, critics warn the mass turnover and limited preparation risk destabilizing the judiciary, weakening legal consistency and opening the door to political manipulation.
Experts predict that losing experienced jurists may lead to erratic rulings, inefficiency and deeper corruption in Mexico’s already strained legal system.
While Spain’s Iberdrola, Europe’s largest private power company, is selling off nearly $5 billion in assets following the election, Citigroup is digging in.
Citigroup’s long-standing presence in Mexico through Banamex, historically one of the country’s largest financial institutions, has positioned it as a key player in the national economy.
Now, as hundreds of inexperienced or potentially compromised judges take the bench, critics say Citigroup is poised to influence outcomes in a legal system many view as rigged.
Election observers and human rights advocates, including the Organization of American States and national watchdog groups, raised concerns over transparency in Mexico’s June judicial elections, warning that the ruling Morena party appeared to favor politically aligned candidates. President Claudia Sheinbaum defended the process, calling it a historic democratic milestone.
“The vast majority of the roughly 3,400 candidates were largely unknown, many have limited legal experience and some questionable credentials for the seats they are seeking,” said Goldman Sachs’ chief Latin America economist, Alberto Ramos, according to Reuters.
That environment is already proving useful for Citigroup.
In May 2025, a U.S. appeals court reinstated a roughly $1 billion lawsuit against Citigroup—alleging its Banamex unit knowingly financed a decade‑long fraud involving Oceanografía, a now‑bankrupt Pemex contractor. Plaintiffs say Banamex advanced about $3.3 billion between 2008 and 2014 despite red flags, and Citigroup later uncovered $430 million in fraudulent advances and paid a $4.75 million SEC fine in 2018.
U.S. Circuit Judge Britt Grant of the 11th Circuit Court of Appeals said it was hard to believe the bank didn’t know what was happening.
“Citigroup is one of the world’s most sophisticated financial institutions, and it strains credulity to conclude that, assuming the plaintiffs’ allegations are true, Citigroup lacked awareness of (Oceanografia’s) activities,” Grant said in an 82-page decision.
The fallout has raised deeper questions about how Citigroup might be using Mexico’s increasingly politicized courts to protect itself.
Writing for Dinero En Imagen, Mexican financial columnist Alicia Salgado reported that the bank turned to a domestic court to avoid complying with an adverse arbitration ruling against its pension arm, Afore Citibanamex.
Critics argue that in a post-reform legal environment, Citigroup’s connections give it a powerful advantage other foreign investors lack.
Citigroup has long positioned itself as a pillar of Mexico’s financial system.
Its acquisition of Banamex in 2001 gave it deep access to government contracts, regulatory officials and the broader Mexican economy. That legacy, once seen as a strength, is now fueling concerns that the bank can manipulate the very legal system that is driving other companies out.
Legal analysts from Fitch and Global Arbitration Review warn that the new judiciary will likely erode contract enforcement, weaken arbitration protections and tilt the scales toward state-owned companies like Pemex and CFE.
“The proposed judicial reforms in Mexico could negatively affect the investment appetite and business environment of non-financial corporates if their implementation impedes the autonomy and quality of the judicial system,” Fitch Ratings wrote.
Fitch Ratings added that, “Mexican corporates will exhibit resilience amid the uncertainty posed by the recent election, with credit metrics likely to remain within rating expectations.”
Those same Mexican corporate entities have a history of resisting adverse rulings, now with far fewer checks in place.
Already, the new judiciary is facing a crisis of legitimacy. Among those elected were notorious cartel kingpin Joaquín “El Chapo” Guzmán defense lawyer Silvia Delgado, Francisco Herrera Franco, known as the “terror prosecutor,” who is linked to the murders of two journalists and has alleged cartel ties.
Delgado’s victory in particular has sparked outrage among critics who see her past ties to organized crime as emblematic of deepening threats to the rule of law. Human rights group Defensorxs labeled Delgado, who once visited El Chapo weekly in prison, a “high risk candidate” and is urging legal action to block her appointment, citing constitutional concerns.
“What INE is doing is basically eliminating the good reputation requirement which is in the Constitution,” Defensorxs President Miguel Meza told Reuters.
Watchdog groups say the vetting process was rushed and riddled with political interference. The result, they warn, is a system ripe for corruption, impunity and targeted justice.
All of this comes as Mexico faces new economic headwinds from Washington.
President Trump’s extended tariffs under the T-MEC framework are expected to hit Mexico’s auto and steel sectors hard, two industries where Citigroup holds major lending and advisory roles.
A 25% tariff on noncompliant exports could severely disrupt cross-border financing and credit markets.
