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Strategies & Market Trends : Telebras (TBH) & Brazil -- Ignore unavailable to you. Want to Upgrade?

To: wl9839 who wrote (21202)	8/1/2000 11:43:32 PM
From: Steve Fancy	Read Replies (1) \| Respond to of 22640

Brazil Cenbank director ousted in corruption probe Reuters, 08/1/2000 14:51 BRASILIA, Aug 1 (Reuters) - Brazil's Central Bank bowed to a court order Tuesday and removed banking supervision director Tereza Grossi from her post amid an investigation into a 1999 corruption scandal involving two struggling banks. Grossi, the first female director at Brazil's Central Bank, is suspected of having intentionally overlooked a possibly illegal bail-out of two struggling banks -- Banco Marka and FonteCindam -- following the country's shock currency devaluation in January last year. The Central Bank is accused of selling dollars to the two banks well below market levels. A justification for the 1.6 billion real bail-out, normally a prerequisite for such a transaction, was reportedly only issued by Grossi after the transaction was completed. Public prosecutors said Grossi could be reinstated if cleared of accusations against her. They justified her removal by saying Grossi could influence the course of the investigation if she remained at the head of the banking supervision department. Central Bank officials have justified the bail-out on the grounds it was necessary to prevent a possible run on banks during the chaotic days around the devaluation. Former Banco Marka owner Salvatore Cacciola is also accused of stealing the federal funds sent to bail-out his bank and for possibly buying information from Central Bank officials. Cacciola fled authorities two weeks ago after a Supreme Court ruling temporarily released him from custody after 37 days under arrest. His lawyer said the fugitive ex-banker was recovering from his time in jail at a spa, while authorities suspect he may have fled to Italy. Cacciola's escape and Grossi's ousting come at a difficult time for President Fernando Henrique Cardoso's administration, which is defending itself against accusations of involvement in a $100 million embezzlement scheme between 1992 and 1998. That scandal has already led to the impeachment of a senator and Cardoso ally, Luiz Estevao, whose construction company was accused of receiving the bulk of funding slated for the construction of a Sao Paulo courthouse. Cardoso's former chief of staff and friend of Estevao, Eduardo Jorge, is expected to give testimony, possibly as early as this week. He previously denied any involvement in the scandal. Copyright 2000, Reuters News Service