High-profile arrests ratchet up Petrobras probe

OREANDA-NEWS. November 26, 2015. Two new high-profile arrests tied to systemic corruption at Brazil?s state-controlled Petrobras add fuel to a fire that has been dogging the oil company for more than a year.

Early today Brazilian federal police arrested Brazilian bank BTG Pactual chief executive Andr? Santos Esteves and influential senator Delc?dio do Amaral on allegations of obstruction of justice.

The police confirmed that billionaire Esteves, the bank?s founder, was taken into custody this morning in Rio de Janeiro, while Amaral of the ruling Workers Party (PT) was apprehended in Brasilia.

BTG Pactual has a broad presence across Latin America. The bank?s share price has plunged more than 25pc so far today on the Brazilian stock exchange, amid talk of a government intervention. Brazil?s central bank issued a general statement but declined to comment on the specific case.

Brazil's Supreme Court authorized the arrest of Amaral based on recordings of the senator offering to help Nestor Cerver?, the imprisoned former director of Petrobras? international area, to flee Brazil, in exchange for eluding mention in a plea deal with prosecutors, according to court documents. The senator also offered to pay Cerver?'s family a monthly stipend in exchange for his silence.

The recordings were made by Cerver?'s son, Bernardo, in two meetings with Amaral, and Edson Ribeiro, Cevero's lawyer who was also taken into police custody today.

In the recordings, Amaral said the payments to the Cerver? family would be made through covert agreements between Ribeiro and BTG Pactual.

"BTG Pactual clarifies that is available to the authorities to provide all the necessary clarification and will cooperate with the investigation," a spokesperson for the bank said.

The Supreme Court, the only tribunal with jurisdiction over Brazilian politicians, voted today to approve the continued detention of Amaral.

Amaral and his lawyer were not immediately available to comment.

Executives of BTG Pactual allegedly received bribes for transactions involving Petrobras' distribution subsidiary BR Distribuidora, according to plea deals negotiated with federal prosecutors.

BTG Pactual has provided financing for multiple Petrobras projects, and in 2013 it acquired a 49pc stake in Petrobras upstream assets in Angola, Benin, Gabon, Namibia, Nigeria and Tanzania. The bank is an influential financial actor in other Latin American countries such as Chile and Colombia.

Amaral's arrest is the first of a sitting politician in Brazil's history. Around 50 other active and inactive politicians are currently under investigation for their role in a massive kickback scheme at Petrobras. The senate must still approve the continued detention of Amaral by a majority vote.

Nestor Cerver? has already been convicted for his role in a kickback scheme centered on Petrobras. The scheme diverted funds from inflated Petrobras contracts to the PT, Brazil's Democratic Movement Party (PMDB), and other political allies.

The gargantuan corruption case has led to a crippling political impasse that has impeded the country's efforts to turn the tide on a deepening recession. Today's arrests could revive calls for the impeachment of president Dilma Rousseff, Petrobras chairperson between 2003-10.