Client.Major British Bank (MBB) owned 50% of Brazilian Investment Bank (BIB). MBB hadmanagement responsibility for BIB and was responsible to other shareholders.

Problem. Workoutteam from MBB’s head office discovered that the entire capital of the Brazilianbank (US$500 million) had disappeared in in bad loans. In addition to thepotential reputational damage, MBB was responsible to the other shareholders.

Prior to the arrival of the workoutteam, an expatriate adjunct-director had denounced the kickback scam. Hiswarnings were ignored.

Solution.Investigation revealed an organized scam involving loans to non-creditworthyborrowers with kickbacks to bank management. BIB was also laundering drug money and money for corrupt politicians. The adjunct-irector who denounced kickback scam was being set up as a scapegoat to divertattention from the fact that corporate management had consistently ignoredwarnings, to the extent of dismissing the previous expatriate director who hadattempted to bring the matter to their attention. A credit recovery strategywas implemented and reputation damage control exercise was carried out.

The names of those involved havebeen withheld for reasons of confidentiality.

Is your company or bank investing inBrazil? You need to know who is managing your investment. Wolfe Associates canperform due diligence on and profile senior executives.

Tags: Diversion of funds. Bankcorruption scam. Graft. Bribery and kickbacks. Money laundering. Crisismanagement.

‍