Two heads are worse than one

April 4, 2014

The Economist, 4/5/2014

“UNIQUE.” That is how Credit Suisse, a bank, sums up Petrobras. It has a point. Most companies’ stocks would sag on the sort of news Brazil’s oil giant has faced in the past three weeks. A federal investigation was opened, into alleged backhanders paid to its employees by a Dutch company in exchange for oil-platform and drilling contracts. (Both companies deny the allegations.) A parliamentary inquiry is imminent, into the purchase in 2006 of a refinery in Texas which cost $1.2 billion but is now worth no more than $180m. A former director has been arrested in a money-laundering probe. If that were not enough, on March 24th Standard & Poor’s, a ratings agency, downgraded its corporate debt. Yet Petrobras’s shares have risen by 30%.

The reason for this seemingly irrational exuberance is that investors consider Petrobras’s prospects to be inversely linked to those of Brazil’s government, led by the president, Dilma Rousseff. The rally began with rumours (later proved premature) that Ms Rousseff’s poll lead over her likeliest challengers in a presidential election this October was dwindling. The government owns a majority stake in the company and makes most of the strategic decisions over the head of Maria das Graças Foster, the chief executive.

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Brazil’s president faces revolt by coalition allies

March 13, 2014

Anthony Boadle – Reuters, 3/12/2014

The rift between President Dilma Rousseff and her main political allies widened on Wednesday one day after they voted in Congress to look into bribery allegations leveled at Brazil’s state-run oil company Petrobras.

Disgruntled congressmen from coalition parties summoned an array of Rousseff’s cabinet members to appear before various congressional committees in a new display of discontent.

They also invited Maria das Graças Foster, the chief executive officer of state-controlled oil producer Petróleo Brasileiro SA, to answer questions about the allegations that a Dutch company paid bribes to company officials to win contracts for floating oil platforms.

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Brazil police to probe Petrobras bribery allegations

March 13, 2014

Reuters, 3/13/2014

Brazil‘s federal police will investigate allegations that officials from state-run oil company Petroleo Brasiliero SA accepted bribes from Dutch ship leaser SBM Offshore NV, newspaper Folha de S.Paulo reported on Thursday.

Petrobras, as the company is known, last month began an internal investigation of the matter after an unidentified former employee at SBM Offshore alleged that Petrobras officials were paid $139 million in bribes through an intermediary over contracts for floating oil platforms.

A press officer at the federal police in Brasilia declined to comment on the Folha report, which comes two days after Brazil’s lower house of Congress voted to set up a special committee to monitor the Petrobras investigation.

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Rousseff remains favorite to win Brazil re-election

February 24, 2014

Rogerio Jelmayer – The Wall Street Journal, 2/23/2014

Brazil’s President Dilma Rousseff remains the favorite to win re-election in October with a comfortable lead over possible contenders, according to a poll published Sunday.

The Datafolha polling institute said Ms. Rousseff has recovered much of the support she had lost in the wake of mass street protests in the middle of last year.

Millions of Brazilians demonstrated in cities across the country of 200 million people. They had many complaints, but most were focused on perceived corruption and on the poor quality of public services, such as health care and education.

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Brazilian companies face heavy fines with new corruption law

February 18, 2014

Joe Leahy – The Financial Times, 2/18/2014

The period before Brazil’s annual carnival in late February is normally short of news. But this month, the nation’s media has been buzzing with the case of a man who fled the country after being convicted in Brazil’s biggest corruption case.

Henrique Pizzolato, the former marketing director of Banco do Brasil, the state-controlled bank, was allegedly found living in his nephew’s apartment in Maranello, Italy, by Italian police and is facing possible extradition.

He disappeared from Brazil last year after being sentenced to more than 12 years jail for his role in the Mensalão case, in which some of the nation’s most senior politicians were found guilty of vote-buying in Congress using public money.

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Fury and frustration in Brazil as fares rise and transport projects flounder

February 6, 2014

Jonathan Watts – The Guardian, 2/6/2014

At 5am every day, Paula Elaine Cardoso begins her long commute from the poor periphery of Rio de Janeiro to her care worker’s job in the upmarket resort of Copacabana.

After a walk to the bus stop, she has to wait about 40 minutes to get a seat, then – provided there is no breakdown or accident – she has a nearly two-hour ride in the traffic, usually without air conditioning and often in temperatures over 30C. Hot and tired by the time she reaches the subway station, she must then line up again for another jam-packed journey to her destination.

Most days, she gets in shortly before 9am, the 22 miles having taken close to three hours. It is the same story in the evening. By the time she gets home, usually long after dark, Cardoso has spent almost a quarter of her day, and a sizeable share of her income, on public transport.

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The richest politicians in Brazil

February 4, 2014

Anderson Antunes – Forbes, 2/3/2014

As in the rest of the world, Brazilians who become politicians are invariably wealthy, or become wealthy, before they serve in public office. But many build their fortunes through questionable means, and, not surprisingly, as a result Brazilians have developed a sentiment of distrust towards politicians.

Half a year after demonstrators climbed onto the roof of Brazil’s Congress in Brasilia, the country’s capital, demanding a clean-up of political deadwood and an end to corruption, the relationship between the Brazilian people and its leaders remains strained. The protests initially began as a public uproar against a hike in bus fares in several major Brazilian cities, and were briefly called a “revolution” by more enthusiastic observers.  Ultimately they were demonstrations against politicians.

Brazilian politicians are among the highest paid and least productive in the world, not to mention some of the most corrupt as well. Political scandals have become so usual in Brazil that many people are satisfied to vote for politicians who notoriously and unashamedly steal from public funds. “Steals but does [something],” goes the saying here in Brazil.

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Brazil’s new anti-corruption law: hard to read

January 31, 2014

The Economist, 01/29/2014

At firstblush, it is just what the doctor ordered. Brazil’s new “Law to Combat Corruption”, which went into effect on January 29th, honours the country’s commitment to curb palm-greasing under the OECD’s anti-bribery convention. By focusing on the corruptors—which could be any firm operating in Brazil, including foreign ones without a permanent presence—it complements the “Administrative Improbity Law” of 1992 that targeted crooked public officials. And it comes at an auspicious time, as the government prepares to dole out more contracts linked to the football World Cup in June and the 2016 Olympic Games in Rio de Janeiro—and against the backdrop of scandals involving alleged backhanders paid by Alstom and Siemens, two European engineering giants, to Brazilian officials.

In many ways the Brazilian statute is harsher than similar remedies elsewhere. Fines slapped on firms can reach 20% of their gross annual revenue or, if turnover is hard to determine, 60m reais ($25m). Unlike America’s Foreign Corrupt Practices Act (FCPA), it requires no proof of bosses’ intent or knowledge: so long as the charged firm benefits from corrupt acts committed by an employee (even one acting through a subsidiary or a subcontractor) it is on the hook. Unlike Britain’s Bribery Act, it does not regard robust internal safeguards as a statutory defence (only as a potential mitigating factor). Unlike either, it allows courts to dissolve a company in particularly egregious cases.

But then graft is a bigger ill in Brazil, which ranks 77th out of 177 countries in the corruption-perceptions index compiled by Transparency International, a Berlin-based lobby. Bribes discourage domestic as well as foreign investment, according to José Ricardo Coelho or FIESP, São Paulo state’s main business lobby, which has embraced the new law with gusto. If accompanying regulations are implementation are clear and consistent, Mr Coelho argues, the law will be a boon for business.

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Brazil’s new anti-corruption law: hard to read

January 30, 2014

The Economist, 1/29/2014

AT FIRST blush, it is just what the doctor ordered. Brazil’s new “Law to Combat Corruption”, which went into effect on January 29th, honours the country’s commitment to curb palm-greasing under the OECD’s anti-bribery convention. By focusing on the corruptors—which could be any firm operating in Brazil, including foreign ones without a permanent presence—it complements the “Administrative Improbity Law” of 1992 that targeted crooked public officials. And it comes at an auspicious time, as the government prepares to dole out more contracts linked to the football World Cup in June and the 2016 Olympic Games in Rio de Janeiro—and against the backdrop of scandals involving alleged backhanders paid byAlstom and Siemens, two European engineering giants, to Brazilian officials.

In many ways the Brazilian statute is harsher than similar remedies elsewhere. Fines slapped on firms can reach 20% of their gross annual revenue or, if turnover is hard to determine, 60m reais ($25m). Unlike America’s Foreign Corrupt Practices Act (FCPA), it requires no proof of bosses’ intent or knowledge: so long as the charged firm benefits from corrupt acts committed by an employee (even one acting through a subsidiary or a subcontractor) it is on the hook. Unlike Britain’s Bribery Act, it does not regard robust internal safeguards as a statutory defence (only as a potential mitigating factor). Unlike either, it allows courts to dissolve a company in particularly egregious cases.

Read more…


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