April 7, 2016 / 1:37 PM / 2 years ago

UPDATE 2-Law firm finds no Esteves wrongdoing in BTG Pactual probe

(Adds comments, share price performance)

SAO PAULO, April 7 (Reuters) - Grupo BTG Pactual SA said Thursday an independent probe found no sign of illicit practices by former Chief Executive Officer André Esteves, who was arrested in November for allegedly obstructing justice in a sweeping corruption investigation.

According to a final report on the internal probe, elaborated by international law firm Quinn Emanuel Urquhart & Sullivan LLP and local peer Veirano Advogados, there was no evidence that BTG Pactual or any of its employees participated in graft or other illicit activities.

The billionaire financier, who was jailed on Nov. 25 and released late in December, had to quit his executive posts at the bank he helped found in the light of the arrest and his alleged involvement in “Operation Car Wash,” Brazil’s biggest ever corruption investigation.

The situation triggered a massive slump in the price of BTG Pactual’s shares and bonds, and huge client fund withdrawals.

As a result, São Paulo-based BTG Pactual sold assets, fired staff and dismantled strategic trading positions to protect cash and reinstill confidence among customers and clients.

“There were no documents or statements coming from anyone that we could call a ‘smoking gun,’ not a single one,” said William Burck, a co-chair of Quinn Emanuel’s Washington D.C. practice for white collar and government investigations, and who coordinated the internal, independent probe on BTG Pactual.


Burck and his team examined over 430,000 documents during their four-month investigation, and had access to Esteves only through his lawyers. Esteves was not interviewed directly by the lawyers because he was indicted in the Operation Car Wash probe, Burck said.

Federal prosecutors in the Car Wash investigation alleged that Esteves had worked along with a senior ruling party senator to obstruct an enquiry involving state-controlled oil producer Petróleo Brasileiro SA, or Petrobras. Esteves, through his lawyer, has repeatedly denied the allegations.

Units in BTG Pactual, a blend of voting and non-voting shares in the firm’s investment-banking and buyout divisions, initially rose more than 2.5 percent after the report was published. But the units reversed most gains in early afternoon trading and were up just 0.1 percent at 16.82 reais.

Units have dropped 38 percent in the past six months.

A significant part of the internal investigation was the role of Esteves in a deal in which BTG Pactual purchased some Africa-based assets from Petrobras, Burck added.

In 2013, Petrobras sold half of an oil exploration unit with projects in Africa for $1.5 billion.

According to bankers with knowledge of the situation, BTG Pactual is trying to sell the stake in PetroAfrica to investors.

Local media recently reported that some justices at the Supreme Court were leaning towards scrapping an ongoing investigation against Esteves because of a lack of evidence that he tried to obstruct justice.

BTG Pactual is not under investigation in the Car Wash probe, the bank has repeatedly said. (Reporting by Guillermo Parra-Bernal; Additional reporting by Tatiana Bautzer and Reese Ewing in São Paulo; Editing by Bernadette Baum)

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