Corruption scam involving bank executives. Payment of kickbacks. Graft. Diversion of funds. Money Laundering. Crisis Management

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

Problem. Workout team from MBB’s head office discovered that the entire capital of the Brazilian bank (US$500 million) had disappeared in in bad loans. In addition to the potential reputational damage, MBB was responsible to the other shareholders.
Prior to the arrival of the workout team, an expatriate adjunct-director had denounced the kickback scam. His warnings were ignored.

Solution. Investigation revealed an organized scam involving loans to non-creditworthy borrowers 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 divert attention from the fact that corporate management had consistently ignored warnings, to the extent of dismissing the previous expatriate director who had attempted to bring the matter to their attention. A credit recovery strategy was implemented and reputation damage control exercise was carried out.
The names of those involved have been withheld for reasons of confidentiality.

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