SAO PAULO/BRASILIA: Brazilian police arrested the ruling party's leader in the Senate and the head of Latin America's biggest independent investment bank on Wednesday on suspicion of obstructing a sweeping corruption investigation.
Andr Esteves, the billionaire CEO and controlling shareholder of BTG Pactual SA and Brazil's most influential dealmaker, was arrested early in the morning at his home in Rio de Janeiro and taken to federal police headquarters.
In Brasilia, police arrested ruling Workers' Party senator Delcidio do Amaral, a veteran lawmaker who runs the Senate economic affairs committee and has been key to President Dilma Rousseff's efforts to pass unpopular austerity measures.
Brazil's currency fell more than 2 percent, its worst drop in six weeks, as the scandal stemming from corruption at state-run oil giant Petrobras threatened Rousseff's fragile coalition in Congress and her efforts to get public finances under control.
Amaral is among 50 Brazilian politicians under investigation for allegedly taking bribes in the massive kickback scandal at the oil giant known as Petroleo Brasileiro SA.
His arrest, the first ever for a sitting senator in Brazil, sent shockwaves through the capital.
Senate leader Renan Calheiros said Congress would suspend its sessions as senators met to weigh their response. Under Brazil's constitution, the Senate can approve or overturn the Supreme Court decision to arrest a senator.
Supreme Court Justice Teori Zavascki said he authorized the arrest because prosecutors presented evidence that Amaral had planned the flight of Petrobras' former international director, Nestor Cervero, in return for his silence.
Zavaski said evidence also showed Amaral had offered 50,000 reais ($13,000) in monthly assistance for Cervero's family, to be financed by Esteves. Prosecutors alleged Esteves also had a copy of a plea bargain prepared based on Cervero's testimony.
Cervero was sentenced in August to 12 years in prison for corruption and money laundering in connection to bribes paid during Petrobras' controversial 2006 purchase of a refinery in Pasadena, Texas.
Another defendant in the case said in a plea bargain statement that Cervero had passed bribe money to Amaral.
BANK SHARES DIVE
BTG Pactual confirmed the arrest of its chief executive and said the bank was available to cooperate with the investigation.
Esteves' lawyer, Antonio Carlos de Almeida Castro, told reporters that the banker "certainly" had not acted to obstruct the investigation.
Still, the bank's listed units, a blend of shares in its investment banking and private equity divisions, tumbled nearly 30 percent on the Sao Paulo stock exchange.
Court representatives said Esteves had been arrested temporarily for five days, with a potential extension of five days.
Amaral was arrested for an indefinite period.
Esteves, 47, has steered BTG Pactual through turbulent times as the economy plunged into its sharpest recession in a quarter of a century, drawing on powerful connections in politics and global finance.
BTG Pactual's major deals with Petrobras have drawn the attention of investigators.
They including the bank's stake in Sete Brasil Participacoes SA, a supplier of oil-drilling platforms that has been swept up in the probe.
BTG Pactual also bought a stake in Petrobras' Africa unit a few years ago.
Last quarter, credit to oil and gas and infrastructure companies, which are the most impacted industries in the widening graft probe, accounted for about 16 percent of BTG's loan book. That is the largest exposure among Brazil's listed traded banks, according to Thomson Reuters data.
Brazil's central bank said it was monitoring the arrest of Esteves arrest to see whether it would impact operations and trigger regulatory action.
It also said BTG Pactual has solid liquidity indicators and continues to operate normally.
Esteves is worth about $2.2 billion, according to Forbes Magazine.
BTG Pactual is Brazil's sixth largest bank and the largest independent investment bank in Latin America.
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