Billionaire banker arrested in Petrobras corruption probe

Andre Esteves became Brazil's youngest self-made billionaire when he sold Pactual to UBS for $3.7 billion in 2006. 
Andre Esteves became Brazil's youngest self-made billionaire when he sold Pactual to UBS for $3.7 billion in 2006. PHOTO: EUROPEAN PRESSPHOTO AGENCY

BRASILIA • Andre Esteves, the brash banker who once joked his firm's name, Grupo BTG Pactual, stood for "better than Goldman", is the latest high-profile executive to be dragged into Brazil's widening corruption scandal.

The 47-year-old billionaire was arrested on Wednesday in Rio de Janeiro with Senator Delcidio Amaral, police said. Esteves allegedly sought an agreement with Amaral to interfere with testimony from a jailed former executive of oil producer Petroleo Brasileiro, according to a court document.

Esteves made a splash on the international financial stage - and became Brazil's youngest self-made billionaire - when he sold Pactual to UBS for US$2.6 billion (S$3.7 billion) in 2006. 

He and partners bought it back three years later and set off on an expansion drive, snapping up businesses including the Swiss private banking unit of Assicurazioni Generali. The firm sold shares to the public in 2012.

"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.

Shares of BTG Pactual dropped as much as 39 per cent on Wednesday, the most ever.

Esteves joins more than 100 people who have been arrested.  The sweeping investigation into alleged corruption at Petrobras, which began in March last year, has helped make Brazil's real the worst-performing major currency this year, and contributed to an economic contraction. 

Esteves was born in Rio, in the middle-class Tijuca neighbourhood. An only child whose main interests were reading, studying and playing soccer, he became fascinated with computers when he was a teenager, he said in a 2007 interview. He went on to study computer science at the Federal University of Rio de Janeiro.

He started his career fixing computers at Pactual in 1989. Within two years, the bank's founder, Mr Luiz Cezar Fernandes, had assigned him accounting and administrative jobs in the back office of the trading desk. Esteves later teamed up with three partners to engineer a boardroom manoeuvre that toppled his mentor.

Making money was something Esteves said he excelled at, and enjoyed. He oversaw the fixed-income team at Pactual from 1993 to 1996, and became a managing partner in 2002. 

Less than a year after UBS bought the company, it put Esteves in charge of global fixed-income sales and trading.

Before long, the financial crisis swept across the globe, crippling UBS.

After quitting to form BTG, Esteves joined up with some of his former partners to buy Pactual.

He has built the firm into Latin America's largest independent investment bank.

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.


A version of this article appeared in the print edition of The Straits Times on November 27, 2015, with the headline 'Billionaire banker arrested in Petrobras corruption probe'. Print Edition | Subscribe