Detention extended: André Esteves is now under preventive arrest, which carries no time limit

Brazil’s largest independent investment bank BTG Pactual moved to distance itself from a deepening crisis facing its embattled head André Esteves by replacing him on Sunday night with two co-chief executives.

Roberto Sallouti, chief of BTG’s asset management unit, and Marcelo Kalim, chief financial officer, will take joint control of the bank from Mr Esteves, who is under arrest amid allegations of corruption in relation to state-owned oil company Petrobras.

“André Esteves renounced the positions of executive chairman of the board and CEO,” said BTG.

Mr Esteves was placed under temporary arrest last Wednesday following accusations that he collaborated with three others, including the head of the ruling Workers’ party in the senate, Delcídio Amaral, to interfere in a sprawling investigation into Petrobras.

The initial period of Mr Esteves’ arrest was set to last for five days. However, the Supreme Court on Sunday changed his detention to a preventive arrest, which carries no time limit, after a request by the prosecutors’ office.

Preventive arrest is intended to stop a suspect from interfering with investigations or committing other alleged crimes. In the case of some of those implicated in the Petrobras probe, such as Marcelo Odebrecht, head of Brazil’s largest construction company Odebrecht, preventive arrest has lasted for months.

The detention of Mr Esteves and Mr Amaral, the first sitting congressman to be detained in Brazil’s democratic history, has intensified the investigation into a scandal in which Petrobras executives allegedly conspired with construction bosses and politicians to extract R$6bn in bribes from the company.

BTG said it had also appointed Pérsio Arida, present interim chief executive, as chairman and John Huw Jenkins, head of BTG’s international operations, as vice-chairman.

The high-flying Mr Esteves built BTG into a multinational bank with operations throughout Latin America, Europe and other regions.

He was accused of conspiring with Mr Amaral and two others to persuade a state witness to drop testimony against him in the Petrobras case over an allegedly corrupt petrol station deal.

Mr Esteves and Mr Amaral have denied wrongdoing.

BTG on Sunday also denied a media report that prosecutors had uncovered indications it paid R$45m ($11.7m) to Eduardo Cunha, head of the lower house of congress, to pass a measure favouring one of its businesses, a failed bank, Bamerindus.

“BTG vehemently denies any type of payment for a supposed benefit in reference to the measure,” the bank said.

Mr Cunha said on Twitter: “I’m revolted by this absurd disclosure.”

Listen to the Banking Weekly podcast

Copyright The Financial Times Limited 2018. All rights reserved.