Executives fold under Lava Jato pressure

Following months of investigations into an alleged construction cartel involving several of Brazil's political leaders, engineering firms and financial institutions, two of Brazil's most influential chief executives have resigned.

Billionaire head of Brazil's top investment bank BTG Pactual (BTG) Andre Esteves was among those arrested in late November for allegedly trying to silence a key witness, former Petrobras executive Nestor Cervero, in the Lava Jato investigation. Within one week, he was formally charged for his alleged role, leading to his resignation as chairman and chief executive of the bank he helped build into one of Latin America's largest as well as the distribution of his controlling shares among the bank's top seven partners. 

BTG replaced Esteves with two co-chief executives, including the head of the bank's asset management unit Roberto Sallouti, and chief financial officer Marcelo Kalim. To fill the vacated role of company chairman, interim chief executive Persio Arida was selected and head of international operations John Huw Jenkins was appointed vice chairman.

According to an early-December report from Goldman Sachs, BTG's assets under management fell by 15 percent in the immediate wake of Esteves' arrest. A filing with Brazilian securities regulator CVM this month shed light on the bank's current struggle to maintain liquidity, with indications that it was seeking to sell equity stakes in companies including BR Properties, Leader, and BodyTech, and that it is open to selling its stakes in recently-acquired Swiss bank BSI as well as Recovery, Brazil's largest debt collector.

Marcelo Odebrecht has been jailed since June 19 as part of the sweeping investigation into improprieties in procurement processes. Despite continued claims of innocence, federal prosecutors believe he was the leader of the alleged construction cartel that is said to have fixed project tenders and provided kickbacks to political leaders in exchange for their cooperation.

In July, Odebrecht was formally charged with corruption and money laundering and earlier this month Brazil's second-highest court voted to continue the pre-trial detention of the now-former executive in the southern city of Curitiba.

Odebrecht's resignation marks the end of a three-generation familial reign at the eponymously-named Brazilian construction giant. To take the helm of the business, holding company Odebrecht SA's board appointed Newton de Souza as chief executive. He will also now formally fill the role of chairman for petrochemical company Braskem, Odebrecht Oil & Gas, Odebrecht Real Estate Developments and Odebrecht Environmental after having served as interim chairman since Marcelo Odebrecht's arrest. 

In a company statement, it was said that Odebrecht chose to step down in order to allow him to “devote himself to his family and concentrate on his defense”. 

Since Operation Lava Jato began in mid-2013, thousands of political leaders and private sector executives have been brought under investigation in the largest corruption probe in Brazilian history.