On 13 March, the Financial Times reported that the Norwegian oil fund has dropped Brazilian firm BTG Pactual, the latest in a number of client fund withdrawals from the beleaguered firm. The Norwegian oil fund, valued at more than $890 million, is the world’s largest sovereign fund and its decision represents a big loss to BTG at a time when the company is believed to have “stabilized”.
BTG’s CEO, Andre Estevez, was arrested in November last year following involvement in the Petrobras corruption scandal. BTG, as a firm, has not even been implicated in the corruption probe, but because Estevez had long had controlling interest in the bank, his arrest triggered a rush of client withdrawals. In December 2015, Blackstone also dropped BTG as subadvisor of two funds.
Moody’s has downgraded the company’s long-term credit rating, raising BTG’s cost of capital. BTG is also losing a number of key staff, and is looking to sell major international assets. Speculation is rife that BTG is going private. Such is the impact of corruption and weak governance on a company’s franchise. Certainly a lesson for all to learn from.
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