Brazil: Opportunity Costs for Dantas Fellow Travelers

MIT B-school alum Daniel Dantas: The embattled banker seems to bug some Brazilians.

CVM condena executivos do Opportunity (CartaCapital, Brazil): Journalist Paulo Henrique Amorim has been screaming for the Brazilian SEC-equivalent to do something about Daniel Dantas, Prof. Mangabeira Unger’s reputed pal — who is still mixed up in some hairy legal matters over industrial espionage in a battle with pension funds for control of Brasil Telecom.

And now it has.

Verônica, irmã de Daniel Dantas, e outros dois diretores são proibidos de administrar companhias abertas por dois anos

Veronica Dantas, sister of Daniel Dantas, and another two directors of Opportunity are banned from managing publicly-traded companies for two years.

A Comissão de Valores Mobiliários (CVM) condenou a dois anos de inabilitação como administradores de companhias de capital aberto Verônica Dantas, irmã do banqueiro Daniel Dantas, e outros dois altos executivos do Opportunity, Arthur de Carvalho e Maria Amália Coutrim. Os três, afirma a comissão, infrigiram regras de lealdade e diligência à Newtel, empresa que faz parte da cadeia de controle da Telemig Celular e da Amazônia Celular.

The Securities Commission (CVM) banned Verônica Dantas, sister of banker Daniel Dantas, and another two senior execs of Opportunity, Arthur de Carvalho and Maria Amália Coutrim, from managing any publicly traded company for two years. The three, the CVM found, violated laws of loyal competition and due diligence at Newtel, a company that was part of the bloc that controls Telemig Cellular and Amazônia Cellular.

Segundo apurou o inquérito da CVM, entre 2001 e 2002, a Newtel gastou mais de 10 milhões com advogados. A questão é que boa parte das ações judiciais patrocinadas pela empresa, também composta por outros sócios, entre eles fundos de pensão, defendiam exclusivamente os interesses particulares de Dantas, tanto na disputa societária com os demais acionistas das operadoras de telefonia quanto na briga com desafetos.

According to the CVM investigation, between 2001 and 2002, Newtel spent more than R$10 million on lawyers. The problem is that a good part of the legal actions filed by the firm, which has other partners as well, among them pension funds, were devoted to defending the personal interests of Dantas, including a dispute among the partners and the other shareholders and a dispute with dissident partners.

A comissão teve acesso, por exemplo, a uma nota fiscal emitido por um escritório norte-americano na qual o serviço discriminado era o acompanhamento do litígio nas Ilhas Cayman entre Dantas e o ex-sócio Luís Roberto Demarco.

The commission had access, for example, to a receipt issued by a U.S. law office describing the services rendered as following litigation in the Caymans between Dantas and former partner Luís Roberto Demarco.

Dantas was found to have lied his ass off in that case — a judgment upheld on appeal in a U.K. court.

A disputa interessava apenas ao Opportunity. “Tudo leva a crer que (a nota) era referente a gastos alheios aos interesses da Newtel. É uma falha gravíssima por parte dos administradores da companhia”, anotou a relatora do inquérito, Maria Helena de Santana. A CVM também percebeu a falta de comprovação de serviços de parte dos pagamentos a outros advogados.

The dispute was of interest only to Opportunity. “Everything leads us to believe that the receipt refers to expenses that do not apply to the corporate interests of Newtel. It is a serious fault on the part of the company’s managers,” the CVM investigator on the case, Maria Helena de Santana,  wrote. The CVM also found that the defendants failed to prove the services rendered with respect to payments to other lawyers.

Os executivos do Opportunity podem contestar a sentença no Conselho de Recursos do Sistema Financeiro.

The Opportunity executives can appeal the sentence to the Financial System Appeals Council.