Brazil’s Grupo BTG Pactual SA scrambled to contain fallout from the arrest of its billionaire boss on Wednesday, tapping cash reserves to cover client redemptions and announcing a stock buyback to prop up plunging shares.
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It’s reportedly the first time a sitting senator has been arrested in Brazil.
The arrest of André Esteves, the billionaire CEO and controlling shareholder of BTG Pactual and Brazil’s most influential dealmaker, sent the bank’s listed shares into a dive that wiped out a fifth of its market value and raised red flags at the central bank. The tape was secretly recorded by Cervero’s son.
BTG Pactual confirmed the arrest of its chief executive and said the bank was available to cooperate with the investigation.
The two year ongoing investigation has thrown the business and political system into disarray in Brazil, and has implicated politicians all the way to the top of brazilian politics, including at the door of Brazil’s President, Dilma Rousseff, who was also the former Chairperson of Petrobras.
“He epitomises the idea of a private, successful, entrepreneurial generation of Brazilian bankers – that’s what he represents”, said Professor Felipe Monteiro at Insead in France.
After his arrest early on Wednesday, police released a recording in which Mr Amaral appears to suggest that the imprisoned former head of Petrobras’ global division should refrain from disclosing any evidence about Mr Amaral and Mr Esteves.
The arrests came as dire news for the country’s markets, which had managed to stabilise after spending much of 2015 in a downward spiral amid the probes. BTG Pactual has been in contact with regulators in Brazil, Chile and Switzerland, some of the countries where the bank operates, to discuss the matter, he told the paper.
Esteves in 2006 sold what was then Banco Pactual to UBS Group AG for $2.6 billion.
Castro said Esteves doesn’t even know Nestor Cervero.
The Petrobras scandal, in which executives colluded with politicians and businessmen to rob the company through bribes for rigged contracts, cost the company more than $2 billion.
On the plus side, the arrests of such powerful men demonstrate something more hopeful for Brazil, the analyst said.
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BTG Pactual’s major deals with Petrobras have drawn the attention of investigators. BTG Pactual teamed up with Petrobras and other partners in 2010 to create the oil-rig supplier, whose former operating chief admitted in plea bargains to crimes of corruption.
