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Elton John World News: Scandal in The Wind

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A Fall From Grace For a High-Profile Financier

Thursday 25 October 2012 @ 16:18 - GMT

The New York Times reports that Brazilian authorities have detained the chief executive of a bank engulfed in an accounting scandal, a rare step which has focused attention on the weaknesses emerging among an increasing number of small banks there.
 

While Brazil has a long history of banking scandals, few bankers have been arrested or forced to spend time in prison. The arrest on Monday of Luis Octavio Índio da Costa, previously  known for hosting lavish parties at which the likes of Elton and Tony Bennett have performed, could signal a new emphasis on holding bankers accountable for financial debacles.


Citing the need to guarantee economic order, a federal judge ordered Mr. Índio da Costas arrest in São Paulo after auditors said they had detected wide-reaching fraud in his bank, Cruzeiro do Sul, contributing to losses of as much as $1.2 billion. He was taken to the Casa de Detenção Provisória de Pinheiros, a sprawling São Paulo prison.

The 48-year-old faces up to 12 years behind bars if convicted of fraud charges. Supporting the arrest order for him and pointing to a shift in the way financial crimes are being viewed in Brazil, prosecutors compared the fraud Mr. Índio da Costa is accused of orchestrating to bank robbery, saying both actions threaten social well-being.

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