Brazil banker denies insider trading charges
ReutersPlus, Thursday, May 13, 1999 at 17:05
BRASILIA, May 13 (Reuters) - The former head of a Brazilian
investment bank Thursday denied accusations that he paid a
Central Bank informant for confidential information just before
January's currency devaluation.
Salvatore Cacciola, former president of Banco Marka, told a
Senate panel investigating the charges that he did not know any
senior Central Bank officials before the currency crisis.
Opposition lawmakers question why the Central Bank sold
dollars below market rates to Banco Marka and another local
investment bank, FonteCindam, the day before it allowed the
local currency, the real, to float against the dollar.
Central Bank officials say the operations were legal and
designed to prevent a currency collapse.
Cacciola emphatically denied any accusations of insider
trading and blamed the government for forcing the closure of
Banco Marka in January.
At the time of the devaluation, Banco Marka held dollar
futures positions on the BM&F commodities and futures exchange
that were 20 times the size of its assets. The Rio de
Janeiro-based bank was betting that the government would keep
its foreign exchange policy unchanged.
The Central Bank said a controlled devaluation of the
Brazilian real on Jan. 13, but massive outflows forced it to
allow the currency to trade freely against the dollar two days
later.
"With the change in foreign exchange policy, we lost the
bank," Cacciola said in a heated exchange with senators. "On
the 13th, Marka woke up with negative assets. It was the
saddest day of my life."
Cacciola said he flew to Brasilia on the same day to inform
the Central Bank of the situation, but he denied having pleaded
for help, as reported in local newspapers.
In exchange for the official bail-out, Cacciola said he
pledged to turn Banco Marka into a non-financial organization
and to liquidate all its outstanding debts and financial
operations.
The Italian-born banker complained he was being hounded by
the Brazilian press, which has widely published allegations
that he paid a Central Bank informant $125,000 per month for
confidential information.
The local press also alleged Cacciola had stashed money
abroad shortly before his bank went under. News reports focused
on his extravagant lifestyle, which includes traveling to work
by helicopter.
"I lost 100 million reais -- 70 in Brazil and 30 abroad --
with Banco Marka. I lost what I loved most, the bank," he said.
Cacciola complained about a police freeze on his assets
while the Senate investigation continued and vowed he would
bounce back from his current professional crisis.
"I am healthy, I am intelligent, I will make money again,"
he said.
Copyright 1999, Reuters News Service
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