Billionaire Andre Esteves Arrested By Brazilian Police In Connection With Petrobras Scandal

Brazil’s 13th richest man Andre Esteves was recently arrested by police outside his home in Rio de Janeiro this morning. Documents supposedly connected to the Brazilian Petrobras scandal were also seized from his home and investment bank Grupo BTG Pactual.

Bloomberg reports that Esteves has been arrested for obstructing the course of an investigation into corruption involving state oil giant Petrobras. Police also arrested Delcidio Amaral, Workers Party leader, in connection with the scandal.

Andre Esteves arrested for alleged involvement of Petrobras corruption scandal.
Brazil's government-run oil company Petrobras. [Photo by Mario Tama/Getty Images]

Prosecutors believe Amaral encouraged Nestor Cervero to withhold information from investigators regarding his and Esteves’ involvement with Petrobras. Cervero is the former head of the oil company’s international division and is currently imprisoned for his involvement in the scandal.

Allegedly, Amaral and Esteves would help Cervero escape from Brazil and hide in either Europe or Venezuela in exchange for not disclosing information to authorities. The deal also allegedly included a sum of money to be paid to Cervero’s attorney while Cervero’s family would receive $13,000 (50,000 Brazilian reais) every month.

According to prosecutors, Amaral implicated Esteves in the scheme in a taped recording obtained by police.

Attorney for Esteves, Antonio Carlos de Almeida Castro, said the business mogul did nothing wrong and his arrest was unwarranted. Castro said Esteves doesn’t even know Nestor Cervero.

Involved around the globe in the exploration, production, refining, and sale of oil and gas, Petrobras is one of South America’s biggest companies. It is the sixth-biggest energy company by assets and up until 1997 held a monopoly over the Brazilian oil industry.

The Petrobras scandal involves company executives who purportedly paid politicians for contracts using as much as $1.6 billion (4 billion reais) of company money. The oil company has not commented on the allegations, but have agreed to allow independent auditors to review company finances. The Brazilian Federal Police is also investigating.

So far, more than 110 people have been arrested for their involvement in the bribery scheme. Most have been released, yet three Petrobras executives still remain in custody.

Dilma Rousseff implicated in Petrobras scnadal along with Andre Esteves.
Brazilian President Dilma Rousseff [Photo by Spencer Platt/Getty Images]

Even the current Brazilian President, Dilma Rousseff, is implicated in the scandal. Although there is no indication of personal gain, she was the head of the board of directors for Petrobras when the illegal payments were being made.

Despite the lack of evidence, thousands of protesters gathered in several Brazilian cities calling for the impeachment of Rousseff earlier this year. As previously reported by the Inquisitr, her past involvement with Petrobras, along with other top government officials, has many blaming her directly for the scandal.

With many analysts estimating inflation rates near 10 percent, Brazil’s economy has been in serious trouble and most experts predict it to shrink more than 3 percent this year. The nation’s currency has been in free fall and only recently has begun to stabilize. According to CNBC, experts are predicting the Petrobras scandal and recent arrests will only push the already struggling economy further down.

Nicholas Spiro, managing director at Spiro Sovereign Strategy in London, sees this as a major setback for Brazil.

“The arrest of Mr. Esteves, the most high-profile figure in Brazilian finance, takes the Petrobras probe to a whole new level and shows the depth and breadth of a scandal that’s engulfing Brazil’s political and corporate establishment. The scandal is becoming more debilitating by the day and is severely undermining the prospects for any kind of meaningful economic reform.”

Esteves is the founder and current chairman of BTG Pactual and is worth an estimated $2.5 billion. BTG Pactual is the largest independent investment bank in Latin America, and its financial ties to Petrobras is what caught the attention of investigators.

Shares of the investment bank plummeted 39 percent after news of the billionaire’s arrest broke. Clients quickly began withdrawing funds, prompting the bank to tap into cash reserves to cover the redemptions.

Since the arrest of billionaire Andre Esteves, most analysts believe the stability of BTG Pactual is in jeopardy. Without his leadership, investors fear the bank will not be able to meet its debt obligations.

Alcir Freitas, a senior bank analyst at Moody’s Investors Service, said, “Esteves is a key manager at BTG and a prolonged absence could be credit negative for the bank.”

[Photo by JP Yim/Getty Images]