Leading pension fund drawn into Brazilian corruption scandal

by Ryan Smith27 Jun 2016
One of Canada’s biggest publicly traded pension funds has found itself drawn into a sweeping Brazilian corruption scandal, according to a Financial Post report.

Ontario Teachers’ Pension Plan is one of a group of global investors who own a stake in Grupo BTG Pactual SA, the largest independent investment bank in Latin America. That bank’s founder and chief executive, billionaire Andre Santos Esteves, was arrested last year in connection with a corruption probe that has led to dozens of arrests and the impeachment of Brazilian President Dilma Rousseff.

The probe began as an investigation into money laundering at gas stations and laundromats, but quickly ballooned as politicians and top executives at Petrobras, Brazil’s state-controlled oil company, were alleged to have accepted bribes from “a cartel of companies,” the Financial Post reported.

Esteves allegedly attempted to obstruct the probe. The highest-profile exec accused in the scandal, he has denied the charges but was forced to resign from his executive roles at BTG Pactual, according to the Financial Post.

Shares of the bank collapsed in the wake of the scandal, losing more than 50% of their value. They have since regained ground, but are still down 42%, according to the Financial Post. That leaves Techers’ original $206 million investment, made in 2010, worth less than $150 million.

The Financial Post reported that Teachers’ declined to discuss its investment in the bank and its association with Esteves.

“We rarely discuss the mechanics of our decisions and rationale for specific investments in companies or assets,” a spokesperson told the Financial Post in an email. “We’re a global and well diversified long term investor, and we operate with the principles of investment risk.”