December 5, 2013
Adam Green – Financial Times, 12/05/2013
The BNDES, Brazil’s government-owned development bank, will open its first Africa office on Friday in South Africa’s commercial capital of Johannesburg. Only the third overseas office for the Banco Nacional de Desenvolvimento Econômico e Social after Montevideo and London, it signals the ever-growing ties between Latin America’s largest economy and the world’s fastest growing continent. Its goal is simple – to push Brazilian companies deeper into Africa.
“We feel we are latecomers. We should have been in Africa for some time but now we are ready,” says Sergio Foldes, managing director of the bank’s international division. “By being close to institutions and decision makers, by being able to cover the region better, we can take better decisions.”
The move caps a decade-long strengthening of commercial and diplomatic relations. From 2000 to 2012, trade between Brazil and Africa grew from $4.9bn to $26.5bn. Africa’s share of Brazil’s international trade has doubled from 3 per cent in the 1990s to about 6 per cent today. In the diplomatic sphere, Brazil now has 37 embassies in Africa, up from 17 in 2002. And the love is reciprocated, it seems. Since 2003, 17 African embassies have opened in Brasília, adding to the 16 already there, making the Brazilian capital home to the largest concentration of African embassies in the southern hemisphere.
December 2, 2013
Vincent Bevins – The Los Angeles Times, 11/28/2013
In a country where less than 10% of prison inmates have finished high school, several major politicians and officials dealing with public funds are now behind bars in a corruption case.
After a long-running prosecution, the imprisonments have sent shock waves across the political and legal systems of a nation where widespread political corruption has long been a given but where dangerous prisons are usually reserved for the poor.
“The population has begun to believe that powerful people can be punished too,” Sao Paulo criminal attorney Rafael Tucherman said last week. “But the system continues to be the same.”
December 2, 2013
Anderson Antunes – Forbes, 11/28/2013
As many Brazilians are still watching incredulously the imprisonments of the principal figures in the Mensalão (“Big Monthly Payment”) scandal, the scheme in which public funds were used to buy political support for the then-Lula da Silva government and to pay off debts from election campaigns, one of the biggest questions surrounding the imbroglio is: how much money exactly was diverted into the pockets of corrupt officials and politicians?
According to the investigation initiated in 2005 and carried out by Brazil’s Public Ministry, the country’s Federal Police and the Brazilian Court of Audit, the huge cash-for-votes case involved some R$ 100 million ($43 million) siphoned from taxpayers’ money. No wonder why Brazil’s Attorney General Roberto Gurgel called it “the most daring and outrageous corruption scheme and embezzlement of public funds ever seen in Brazil.”
And that could just be the tip of the iceberg. A 2010 study by the FIESP (the Federation of Industries of Sao Paulo State, in its acronym in Portuguese), the average annual cost of corruption in Brazil is between 1.38% to 2.3% of the country’s total GDP. The World Bank lists Brazil in its database with a GDP of $2.253 trillion as of 2012, while the OECD expects Brazil to grow 2.5% this year.
November 22, 2013
The Economist, 11/23/2013
AS CHIEF of staff to President Luiz Inácio Lula da Silva in 2003-05, José Dirceu was the second most powerful man in Brazil. Then claims surfaced that he and other leaders of the ruling Workers’ Party (PT) were orchestrating a scheme to bribe allies in return for congressional support. Few Brazilians believed that Mr Dirceu, who resigned, would be charged, let alone convicted or jailed in a country where impunity for politicians has long been the norm. But on November 15th the supreme-court president, Joaquim Barbosa, issued warrants for the arrest of Mr Dirceu and 11 others among the 25 found guilty last year of, variously, bribery, money-laundering, misuse of public funds and conspiracy, in a case known to Brazilians as the mensalão (big monthly stipend).
Sharing Mr Dirceu’s Brasília prison cell are José Genoino and Delúbio Soares, formerly the PT’s president and treasurer respectively. Henrique Pizzolato, a former director of the state-controlled Banco do Brasil, guilty of laundering some of the money, quietly fled to Italy, where he also has citizenship, some weeks ago. Authorities there have hinted that his extradition would be more likely if Brazil rethought its 2010 decision to shelter Cesare Battisti, an Italian bomber facing a life sentence.
November 19, 2013
The Economist, 11/18/2013
NOVEMBER 15th is a big date in Brazilian history books: on that day in 1889 a military coup overthrew emperor Dom Pedro II and established Brazil as a republic. This year it was significant for another reason. Despite the national holiday the president of the supreme court, Joaquim Barbosa, stayed at his desk and wrote warrants for the arrest of 12 of those convicted last year in the so-called “mensalão” case, several of them high-profile politicians with close links to the government. Eleven spent the weekend in jail; a 12th turned out to have fled to Italy several weeks before. But just what was the mensalão?
The word, a Portuguese neologism roughly meaning “big monthly stipend” was coined to describe clandestine payments made by the Workers’ Party (PT), which won the presidency in 2003, to congressional allies in return for support for its legislative agenda. The scandal broke in 2005 when the president of an allied party claimed in a newspaper interview that the PT was paying several congressmen 30,000 reais a month (around $12,000 at the time). The money was said to have come from the public purse via fake advertising contracts signed by state-owned companies with corrupt advertising firms. The scandal was one of many that broke in quick succession, with others involving allegations that the state-run postal system had accepted bribes for contracts and that the PT had been extorting money from illegal-betting rings in Rio de Janeiro. Overlapping congressional inquiries ended up accusing 18 congressmen of involvement in the vote-buying scheme. The biggest name among them was José Dirceu (pictured right), who had been chief of staff to the president, Luiz Inácio Lula da Silva, until forced by the scandal to step down.
November 18, 2013
BBC News, 11/15/2013
Brazil has started to jail senior figures convicted in the country’s biggest corruption trial, the “Mensalao” (big monthly allowance).
The Supreme Court issued arrest orders for 12 of the 25 politicians, bankers and businessmen convicted last year.
Ex-President Luiz Inacio Lula da Silva’s former chief of staff was among the first to surrender to the police.
The “Mensalao” was a scheme that used public funds to pay coalition parties for political support.
November 18, 2013
BBC News, 11/14/2013
Brazil’s Supreme Court has upheld jail terms against most of the politicians, businessmen and bankers convicted in the country’s biggest corruption trial.
More than 20 people were convicted over a scheme to pay opposition politicians for supporting the former government of President Luiz Inacio Lula da Silva.
The court did not say exactly how many would be put behind bars.
November 6, 2013
Financial Times, 11/06/2013
After Eike Batista – once the richest man in Brazil – filed for bankruptcy, investors braced themselves for a tropical storm on the Bovespa stock market. Yet, so far, Latin America’s largest ever corporate default has gone down as smoothly as a caipirinha in Copacabana. Markets had begun to price in the $6bn insolvency ever since OGX, Mr Batista’s oil company, revealed in July that its only two producing wells had flopped.
It would nonetheless be wrong to conclude that Brazil has nothing to learn from Mr Batista’s spectacular collapse. The sinking of OGX has brought into focus the multitude of problems plaguing Brazil’s oil industry. In 2007, the discovery of an offshore reservoir containing as much oil as the North Sea was hailed as a “gift from God” by the then president Luiz Inacio Lula da Silva. Today, OGX is not the only oil company struggling with high debt and sliding revenues.
November 4, 2013
John Paul Rathbone – Financial Times, 11/01/2013
Black is a shade of brown. So is white, if you look,” John Updike once observed of the sun-burnished skin tones on Rio de Janeiro’s Copacabana beach. Sadly, however, not even in variegated Brazil is black a shade of red – and red is what investors saw this week after Eike Batista, Rio’s brashest businessman, declared bankruptcy by pulling the trigger on a $6bn default.
After Latin America’s biggest-ever corporate bust, some may wonder at Mr Batista’s exotic tale and conclude: so what? But his story is, in many ways, synonymous with Brazil’s rise and fall. Moreover, as Brazil is an emerging market archetype, it tells a global fable as well.
Only last year Mr Batista was the world’s seventh-richest man, boasting a self-made fortune that had grown to more than $30bn during the wonder years of Luiz Inácio Lula da Silva. Lula, as the charismatic former president is widely known, governed between 2002 and 2010 when Brazil, like Mr Batista, could seemingly do no wrong. Indeed, the two men were different sides of the same coin.
October 30, 2013
Stephen Foley & Vivianne Rodrigues – Financial Times, 10/30/2013
As the largest holder of bonds in Eike Batista’s oil company OGX, the US fund manager Pimco faces heartache in Brazil, after a love affair with the country stretching back more than a decade.
The California-based investment house piled into Brazilian debt when most major fund managers were running the other way during the country’s financial crisis of 2002, and it rode the economic expansion under President Luiz Inácio Lula da Silva. But amassing more than 17 per cent of the $3.6bn of bonds issued by Mr Batista since 2011 has proved a disaster.
While BlackRock and other major institutional money managers moved to cut their losses this year, Pimco increased its bet on OGX bonds due for repayment in 2018 and 2022, even as the company spiralled towards bankruptcy. The Pimco Income Fund, one of at least half a dozen of its funds to take on OGX debt, was still adding to its positions in the second quarter of this year, according to Bloomberg data and fund documents.