Shock waves continue to emanate out of Brazil following the arrest of André Esteves, the CEO and founder of BTG Pactual, Latin America’s largest home-grown investment bank, for allegedly obstructing part of the ongoing ‘Operação Lava Jato’ investigation into the massive corruption scandal surrounding Petrobras.
The detention of Esteves jolts - in spectacular fashion - the Lava Jato anti-corruption probe into the sphere of Brazil’s financial services sector.
Hitherto, the findings of Lava Jato had predominantly soiled the reputations of construction giants such as Odebrecht and OAS, Petrobras itself, and a number of Brazilian politicians.
At the request of prosecutors, a judge yesterday upgraded Esteves’ detention status to preventive arrest - essentially, indefinite - prompting the banker’s resignation as CEO.
Esteves, and Delcídio Amaral, leader in the Senate of the ruling PT party and who was also arrested last week, allegedly conspired to pay off a former Petrobras director to not collaborate with prosecutors in the Lava Joto investigation.
BTG Pactual’s other partners are now anxious to buy out Esteves’ 28% stake in the bank to limit further damage to BTG Pactual, both financial and reputational.
But there were suggestions last night that prosecutors had found documents indicating that BTG Pactual itself had made a BRL45m (USD11.7m) payment to Eduardo Cunha, speaker of congress, to pass legislation that favoured the bank in some of its dealings. Cunha has already been indicted as a result of Lava Jato.