New probe investigates PanAmericano Bank for illegal transactions

New police operation investigates PanAmericano Bank for illegal transactions

Operation "Conclave" blocks $483 million in bank assets
Brazil Business

Brazil’s federal police launched Operation “Conclave” Wednesday morning. The operation investigates possibly fraudulent acquisitions between the PanAmericano Bank and federal bank Caixa Ecônomica. About 200 police officers are carrying out 46 search warrants in major state capitals across the country.

Caixa had created its subsidiary CaixaPar specifically to buy shares of PanAmericano worth $238 million between 2009 and 2010. However, just months later, PanAmericano lost $1.38 billion through fraudulent transactions.

Originally, “Conclave” was thought to be tied to Operation “Greenfield”, which investigated a loss of $2.6 billion in national pension funds. But investigators have now clarified that there is no link between the two operations. Rather, the operation focuses on managers of the federal bank Caixa for causing potential harm to account holders and clients. As a precautionary measure, investigators blocked $483 million in bank assets.

All the players

The police are also investigating public agents who approved the acquisition, consultants hired to make the purchase seem legitimate, and businessmen who contributed to this false appearance.

The Silvio Santos Group closed the faulty contract in December 2009 between PanAmericano Bank and the federal bank subsidiary CaixaPar. The sale included the transaction of 21.9 percent of PanAmericano’s preferential shares and 49 percent of voting capital to CaixaPar. In total, CaixaPar paid about $238 million to complete the transaction. However, strong market evidence existed of the bank’s fragility in its inter-bank transactions.

These crimes of fraud and reckless administration could lead to 12 years in prison.