Citigroup’s Shareholder Tango in Brazil (A)

Case Solution

Susan Perkins, Sachin Waikar
Kellogg School of Management ()

Citigroup discovered that Daniel Dantas, who five years earlier was hired to manage Citigroup’s $ 750 million private equity investment in a joint venture in the Brazilian telecommunications industry, allegedly mismanaged more than $ 300 million in assets and contracts. Dantas’ crime is related to his administration of Citigroup’s CVC Fund and IIFIA, a legal entity that represents a group of large Brazilian pension funds. Together with the Opportunity Group of Dantas, CVC and IIFIA own Brasil Telecom, the third largest telecommunications company in the country. The pyramidal structure of ownership of the company makes it difficult to monitor its actions. Citigroup needs to quickly figure out how to disrupt Dantas’ intricately woven control network without allowing it to get more value from the partnership. This case provides specific examples of the expropriation risks that joint venture partners face when they are unfamiliar with the pyramid-shaped structures of group ownership.

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