Brazil’s presidential election: The battle for Brazil

September 26, 2014

The Economist (print edition), 9/27/2014

To describe the final weeks of Brazil’s presidential campaign as dramatic would be putting it mildly. There was tragedy, when Eduardo Campos, leader and candidate of the centrist Brazilian Socialist Party (PSB), perished in an aeroplane crash in mid-August. There were tears: Marina Silva, Mr Campos’s running-mate-turned-candidate, broke down after being criticised by Luiz Inácio Lula da Silva, in whose cabinet she had once served as environment minister but whose protégée and successor, Dilma Rousseff, is seeking a second term. This being Brazil, there was also scandal, as a former executive at Petrobras, the statecontrolled oil firm, alleged that politicians from Ms Rousseff’s left-wing Workers’ Party (PT) and some coalition allies were involved in a kickback scheme there.

The twists and turns have led to lots of head-scratching among pollsters and pundits. With days to go before the first round of voting on October 5th, firm predictions are scarce. Mauro Paulino, boss of Datafolha, a big polling company, says the way the campaign as a whole has unfurled is “incomparable”. And not just with any prior Brazilian election, but with anything that has happened anywhere in the world, at least in living memory, according to José Toledo of Estadão Dados, a data website.

The prediction that commands most confidence is that Ms Rousseff will not secure an outright majority in the first round and that the election will go to a run-off on October 26th. There she will almost certainly face Ms Silva, who in the weeks following Mr Campos’s death has surged past Aécio Neves, the candidate of the centre-right Party of Brazilian Social Democracy (PSDB). The latest second-round simulations show Ms Rousseff and Ms Silva running neck and neck.

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Is Petrobras Becoming Too Tied to Brazil Elections and Sentiment?

September 23, 2014

Jon C. Ogg – 24/7 Wall St., 09/22/2014

Petróleo Brasileiro S.A. (NYSE: PBR), or Petrobras, is showing how dangerous it can be for one company to be considered such a key market barometer for upcoming elections. With Brazil having tipped from a great emerging market back into a red-tape economy, and now into an economy that keeps weighing social issues over that of domestic and international finance, the question to ask is whether Petrobras is simply becoming too much of a daily barometer for Brazil’s upcoming presidential elections.

As the October 5, 2014, presidential election comes closer and closer, Petrobras shares seem to rise and fall drastically around predictive polling and news flows each day. From an outsider’s view, it is easy to see how and why a socialist-leaning president would be more liked by the bulk of the population — after all, Brazil’s general population is far from wealthy.

The flip side is also easy to see, and that is that international money is not going to flow into a nation that treats capital so poorly. To say that common stock investors of Petrobras are treated poorly in the capital structure would be the understatement of the year. If Petrobras was an international oil giant that acted like most of its large peers in the Americas and Europe, investors would likely flock back into Petrobras (and likely elsewhere in Brazil).

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Campaign donations highlight winners, losers in Brazil election

September 22, 2014

Silvio Cascione and Brad Haynes – Reuters, 9/19/2014

Brazil’s financial markets have rallied on the prospect of environmentalist Marina Silva unseating President Dilma Rousseff in next month’s election, but political donations show plenty of companies may be wary of a new administration.

Silva’s market-friendly proposals promise relief for oil giant Petrobras, ethanol mills and private banks. But they could also cause headaches for a range of firms facing tougher competition, higher borrowing costs and maybe even more taxes, especially in the energy and auto industries.

Political fundraising reflects the split among potential winners and losers, with the vast majority of donations going to the incumbent – a reflection of powerful business interests comfortable with the status quo that Rousseff represents.

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Brazil’s largest company, Petrobras, accused of political kickbacks

September 18, 2014

Jonathan Watts – The Guardian, 09/17/2014

The brutalist headquarters of South America’s biggest company, Petrobras, offers a harsh riposte to those who try to romanticise Brazil as a land of golden beaches and endless forest. This week, the concrete edifice in central Rio de Janeiro was the focus of a pro-oil rally by thousands of petrochemical workers amid a presidential election debate dominated by how to manage the nation’s vast fossil fuel reserves.

It is a question that has opened up the biggest gap between President Dilma Rousseff, an old industry champion of the Workers Party, and her main challenger Marina Silva, a former environment minister who has pledged to shift priorities towards alternatives energies like wind, solar and ethanol.

This is more than just a Brazilian rerun of George Bush and Big Oil versus Al Gore and climate concern, because state-run Petrobras is no ordinary company and – with the company also mired in a massive corruption scandal – this is no ordinary time.

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Scandal hits Brazil on eve of election

September 8, 2014

Longview News-Journal, 9/7/2014

As Brazilians prepare to vote in a national election next month, a scandal involving the state-controlled oil giant Petrobras flared up again during the weekend over testimony that implicated dozens of top figures in President Dilma Rousseff’s governing coalition in a vast kickback scheme.

Details of the scheme were revealed in confidential testimony by Paulo Roberto Costa, a jailed former executive who oversaw refining operations at Petrobras until 2012. The testimony was obtained by Veja, a Brazilian magazine. The accusations target Rousseff’s energy minister, Edison Lobão, and the leaders of both houses of Congress, Henrique Eduardo Alves and Renan Calheiros.

The revelations complicate a tough re-election bid by Rousseff, who has seen her lead in the polls vanish amid the surging candidacy of Marina Silva, an environmental leader whose campaign has blasted Rousseff over corruption at Petrobras and called on Brazil to shift toward a greater reliance on renewable energy sources. The election is scheduled for Oct. 5.

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Brazil: No Government Member Accused in Corruption Case

September 8, 2014

TeleSUR, 9/7/2014

The Brazilian president Dilma Rousseff (Workers’ Party – PT, center-left) denied on Sunday that there was any concrete evidence that could involve any members of her government in the corruption case freshly uncovered by the national press.

“I think that [the denunciation] does not involve the government, as no one in the government has been accused of anything,” said Rousseff in a press conference held in the presidential palace of the Alvorada, after a meeting with Brazilian youth.

The national press relayed on Friday and Saturday the alleged declarations of a former director of the national oil company Petrobras, Paulo Roberto Costa, to the police. In the declarations he would have accused dozens of politicians of corruption.

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The Petrobras affair

September 8, 2014

J.P. – The Economist, 9/8/2014

“If I talk, there won’t be an election,” Paulo Roberto Costa, a former executive at Petrobras, was supposed to have warned. Now Mr Costa, arrested in March in a money-laundering probe involving Brazil’s state-controlled oil giant, has started talking. Polling day in Brazil, now less than a month away, will not be cancelled. But if what he says is true, it could affect the outcome.

According to revelations published in Veja, a leading weekly, and Estado de São Paulo, a newspaper, Mr Costa, who ran Petrobras’s refining division from 2004 to 2012, has accused more than 40 politicians of involvement in a vast kickback scheme. The list reportedly includes a minister, three state governors, six senators and dozens of congressmen from President Dilma Rousseff’s Workers’ Party (PT) and several coalition allies. The beneficiaries are alleged to have pocketed 3% of the value of contracts signed with Petrobras in return for supporting the government in congressional votes.

The federal police, who have been taking Mr Costa’s testimony since August 29th, have yet to confirm or deny the press reports. All those who could be contacted have fiercely denied the allegations; at the time of writing The Economist is awaiting a statement from Petrobras, as well as from the police and the government.

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