- So-called Zelotes probe targets alleged fraud in tax cases
- Analyst: accusations bring ‘uncertainty to overall market’
Banco Bradesco SA Chief Executive Officer Luiz Carlos Trabuco Cappi and two other company executives were accused by Brazil federal police in the so-called Zelotes fraud probe.
The action against Trabuco, 64, was confirmed by a representative of federal prosecutors in Brasilia who declined to identify the two other executives. The case is tied to alleged corruption and money laundering, O Estado de S.Paulo newspaper reported earlier Tuesday, without specifying the accusations against the executives.
Bradesco is the third Brazilian bank to become mired in scandal since November, as corruption probes in Latin America’s biggest economy show no sign of abating amid a political and economic crisis that led to the temporary removal of President Dilma Rousseff. The two-year Zelotes investigation centers on exposing fraudulent activities involving Brazil’s board of tax appeals, a unit of the finance ministry, and has ensnared other business leaders in the country.
“The news about the investigation weighs on Bradesco, for sure, but also brings uncertainty to the overall market,” said Fernando Goes, an analyst at Clear Corretora brokerage. “Every day we see politicians involved in the cases, but now it’s getting to the companies as well. Nobody knows who else could be involved.”
The other two Bradesco bankers accused in the case are Executive Managing Director Luiz Carlos Angelotti, 51, and Executive Vice President Domingos de Abreu, 57, said a person familiar with the situation who asked not to be identified because the matter isn’t public. In a statement, Bradesco denied hiring a company that prosecutors are investigating and said its CEO didn’t participate in meetings with that entity. Angelotti and declined to comment, and the bank wouldn’t make the other executives available for comment.
Bradesco shares tumbled 5 percent to 22.80 reais, the biggest one-day drop since March 15. The bank’s $1.1 billion in subordinated notes due 2022 dropped 1.99 cents to 101.78 cents on the dollar, the most for a single session since September. Its bonds due 2019 and 2021 also fell.
On Nov. 25, Andre Esteves, 47, the billionaire founder of investment bank Grupo BTG Pactual, was arrested in connection with a pay-to-play corruption probe called Operation Carwash that has engulfed state-run oil giant Petroleo Brasileiro SA and some of the country’s largest builders. Esteves denied wrongdoing through his lawyers, while the bank said it wasn’t part of the investigations. He was released from prison in December and remained under house arrest until April 25, when he was freed by Brazil’s Supreme Court.
Billionaire Joseph Safra, 77, was accused of corruption in the Zelotes probe in March, allegations that were accepted by a Brasilia court the following month. In May, police leveled allegations against 19 people in a phase of the operation tied to steelmaker Gerdau SA.
“There have not been any improprieties by any of the businesses of the Safra Group,” the company said in an e-mailed statement in late March, when the allegations first surfaced. “No representative of the group offered any inducement to any public official and the group did not receive any benefit in the judgment of the tribunal.” Gerdau also denied wrongdoing, saying none of its employees has ever tried to bribe officials to influence tax rulings.