SAO PAULO (Reuters) - Brazilian police conducted raids on Wednesday as part of an investigation of state-controlled Caixa Econômica Federal’s purchase of a stake in a consumer lender six years ago, the latest scandal rocking the nation’s largest mortgage lender.
The federal police said they are investigating whether the purchase of a stake in Banco PanAmericano SA led to losses for Caixa’s clients. The court that authorized the raids froze 1.5 billion reais ($483 million) of assets belonging to some of the investigation’s targets, according to a police statement.
The probe is the latest case raising questions about Caixa’s governance and investment protocols in recent years. Politically appointed management long held sway at Caixa, which was a key instrument of policy under the leftist Workers Party that ruled Brazil between 2003 and 2016.
The central bank’s current director of oversight, Anthero Meirelles, was among those targeted by the search warrants authorized by Judge Vallisney De Souza Oliveira. The judge also authorized investigators to check the personal bank records of Meirelles, who was director of norms and organization for the financial system at the time of the deal.
The central bank confirmed that it provided information about the Banco PanAmericano deal to police on Wednesday, but declined to comment on the director’s role in the investigation.
Police said in their statement that they suspect civil servants, consultants and businessmen involved in the transaction played a part in “giving legitimacy” to the deal.
The PanAmericano transaction allowed Caixa to enter some consumer lending segments that were thriving at the end of the last decade. After years of accounting irregularities, the central bank seized control of PanAmericano from its owner and put it under the administration of the privately held deposit guarantee fund FGC late in 2010.
Banco PanAmericano was later renamed Banco Pan SA (BPAN4.SA), when investment banking firm Grupo BTG Pactual SA BBTG11.SA bought a stake from PanAmericano’s original owner, Grupo Silvio Santos, with FGC backing.
Banco Pan’s preferred shares fell as much as 7 percent on Wednesday, before paring losses to close down 4 percent, at 1.90 reais, the lowest level since early February.
In a separate statement, Banco Pan acknowledged it was a target of police raids earlier in the day, and said that current management is not under investigation. Caixa and Banco Pan are also cooperating with the investigation, both said.
Earlier on Wednesday, BTG Pactual said it was not involved in Caixa’s purchase of the PanAmericano stake in 2009. Documentation related to the bank’s 2011 transaction with Grupo Silvio Santos is available at Brazil’s central bank, it said.
Police also searched the headquarters of auditing firms Deloitte & Touch LLP, KPMG and investment bank Banco Fator SA. The banking and tax record secrecies of former Caixa Chief Executive Officer Maria Fernanda Coelho and Chief Financial Officer Márcio Percival also were lifted as part of the investigation, federal prosecutors said in a separate note.
The home of André Esteves, who was BTG Pactual’s CEO at the time of the PanAmerican bailout, also was raided on Wednesday, the note said. His lawyer denied any wrongdoing.
($1 = 3.1070 reais)
Reporting by Pedro Fonseca and Aluisio Alves; Writing by Guillermo Parra-Bernal and Ana Mano; Editing by Bill Trott and Leslie Adler