Shares of BTG Pactual continue to sink after a partnership between a billionaire banker and a government official failed to impede a graft-probe. Senator Delcidio do Amaral is the first Senator to be arrested since the 1988 constitution established parliamentary immunity. Andre Esteves resigned Sunday as CEO and chairman of the large investment bank BTG Pactual, as he won’t be leaving his cell anytime soon. The original investigation revolved around corruption in Petrobras, a giant oil company that is state-controlled. Amaral and Esteves are accused of attempting to persuade a key witness from signing a plea agreement to cooperate in the investigation. (Goy, 2015)
BTG Pactual lost more than $1 billion from their investors, as many began pulling out once Esteves was arrested. The busted obstruction led shares and bonds to drop in value. Moody’s Investor Service and Fitch Ratings are keeping an eye on the floodgates to see how much waste enters the market, incase they have to downgrade the bank’s rating.
The scandal also adds additional pressure to Brazil’s political party. While the party should be focused on dealing with budget deficits and their underperforming currency, leaders of both houses are under investigation. (Raymond Colitt, 2015) Senator Amaral, leader of the upper house, is detained. Eduardo Cunha, speaker of the lower house, denies allegations that he took a bribe to pass legislation benefiting the bank. Eduardo Cunha has not yet been arrested, but is under investigation for taking a 12 million dollar bribe from Andre Esteves. Cunha is also under investigation for some Swiss bank accounts that recently surfaced, but he swears the funding of those accounts is completely legal.
Scandals are never non-reactive. Just as a busted dam fills a river with waste, this busted obstruction will have long-term effects on the Brazilian economy.
Works Cited
Goy, G. P.-B. (2015, 11 26). UPDATE 7-Brazil corruption probe widens; Senate leader, BTG Pactual CEO arrested. Retrieved 11 30, 2015, from Rueters: http://www.reuters.com/article/2015/11/26/brazil-arrests-idUSL1N13K0F220151126
Raymond Colitt, A. S. (2015, 11 29). Forget Esteves, It's the Other Brazil Bust That Worries Insiders. Retrieved 11 30, 2015, from Bloomberg: http://www.bloomberg.com/news/articles/2015-11-30/forget-esteves-it-s-the-other-brazil-bust-that-worries-insiders
BTG Pactual lost more than $1 billion from their investors, as many began pulling out once Esteves was arrested. The busted obstruction led shares and bonds to drop in value. Moody’s Investor Service and Fitch Ratings are keeping an eye on the floodgates to see how much waste enters the market, incase they have to downgrade the bank’s rating.
The scandal also adds additional pressure to Brazil’s political party. While the party should be focused on dealing with budget deficits and their underperforming currency, leaders of both houses are under investigation. (Raymond Colitt, 2015) Senator Amaral, leader of the upper house, is detained. Eduardo Cunha, speaker of the lower house, denies allegations that he took a bribe to pass legislation benefiting the bank. Eduardo Cunha has not yet been arrested, but is under investigation for taking a 12 million dollar bribe from Andre Esteves. Cunha is also under investigation for some Swiss bank accounts that recently surfaced, but he swears the funding of those accounts is completely legal.
Scandals are never non-reactive. Just as a busted dam fills a river with waste, this busted obstruction will have long-term effects on the Brazilian economy.
Works Cited
Goy, G. P.-B. (2015, 11 26). UPDATE 7-Brazil corruption probe widens; Senate leader, BTG Pactual CEO arrested. Retrieved 11 30, 2015, from Rueters: http://www.reuters.com/article/2015/11/26/brazil-arrests-idUSL1N13K0F220151126
Raymond Colitt, A. S. (2015, 11 29). Forget Esteves, It's the Other Brazil Bust That Worries Insiders. Retrieved 11 30, 2015, from Bloomberg: http://www.bloomberg.com/news/articles/2015-11-30/forget-esteves-it-s-the-other-brazil-bust-that-worries-insiders
