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