Brazil’s Rousseff Admits There Was Wrongdoing at Petrobras

October 20, 2014

Paulo Trevisani – The Wall Street Journal, 10/19/2014

Brazil’s President Dilma Rousseff said Saturday that there was embezzlement at government-controlled oil producer Petróleo Brasileiro SA .

The company, known as Petrobras, has been at the center of a corruption scandal allegedly involving people connected to Mr. Rousseff’s Workers Party, or PT.

“I will do all I can to reimburse the country,” Ms. Rousseff said during a news conference at the presidential residence late in the afternoon. “There was” deviation of public money, she said according to a transcript of the interview published on her official campaign website.

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Scandal Over Brazilian Oil Company Adds Turmoil to the Presidential Race

October 20, 2014

Simon Romero – The New York Times, 10/19/2014

Paulo Roberto Costa was living an oilman’s dream.

He had a house in a luxurious gated community here. He bought a yacht and drove an armored Range Rover. He had more than $25 million stashed in bank accounts in Switzerland and the Cayman Islands.

But that dream evaporated recently when the police arrested Mr. Costa and charged him with orchestrating a bribery scheme on an epic scale at Petrobras, Brazil’s national oil company, and funneling the proceeds to the governing Workers Party and its allies while enriching himself.

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Perennial Nightmare Petrobras Pushes Brazil Stocks Lower

October 17, 2014

Kenneth Rapoza – Forbes, 10/15/2014

Presidential polls are not to blame for this one.  Brazil’s stock market decline is a mix of oil giant Petrobras, and lackluster consumer sales. Though for true followers of the Brazilian stock market, Petrobras is public enemy No. 1.

Brazilian equities were the worst performing of the BRIC markets on Wednesday due to Brazil’s perennial stock market disaster — Petrobras — which fell by 9.06%. The iShares MSCI Brazil (EWZ) exchange traded fund settled 5.11% lower today while the MSCI Emerging Markets settled 1.26% lower.

Petrobras remains a government story, mired in electoral politics and fiscal policies.

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Petrobras scandal adds fuel to Brazil’s fiery election campaign

October 16, 2014

Joe Leahy – Financial Times, 10/15/2014

Common wisdom has it that Brazilians have become so desensitised to political scandals – so frequent are they on all sides of the political spectrum – that they make little difference in elections.

But there are signs that what could end up being Brazil’s biggest corruption case – the alleged kickbacks from state-owned oil company Petrobras – could be different. Politicians from the Workers’ party-led ruling coalition are accused of skimming 3 per cent off billions of dollars of contracts signed by Petrobras ahead of the election of incumbent president Dilma Rousseff in 2010.

Not only are Brazilians taking more notice of this scandal – one Facebook user complained last week it meant he was paying 3 cents of every dollar to the Workers’ party, or PT, whenever he fills his car with petrol. “Better to ride a bicycle,” he said.

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Brazil election candidates spar over corruption, nepotism

October 15, 2014

Anthony Boadle – Reuters, 10/15/2014

Brazil’s two presidential candidates traded accusations of lies, corruption and nepotism on Tuesday night in a bruising television debate that had no clear winner ahead of the hotly contested Oct. 26 election runoff. Leftist incumbent President Dilma Rousseff warned Brazilians that the election of her pro-business challenger Aecio Neves would lead to unemployment and put at risk social benefits gained under 12 years of rule by her Workers’ Party.

Neves charged that the Rousseff campaign propaganda was a pack of lies that had misinformed voters that he was planning to end cash transfer programs and privatize state banks. The senator and former state governor hammered Rousseff for allowing state-run oil company Petroleo Brasileiro SA to be allegedly used to channel money from bribes to the Workers’ Party and its allies in the governing coalition.

Rousseff retorted by pointing to an airport Neves built adjacent to an uncle’s farm when he was governor of Minas Gerais state, and she accused him of nepotism by giving government jobs to a sister, uncles and cousins. At the end of each round of the debate, aides rushed to help the candidates like seconds tending fighters in a boxing ring.

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Petrobras blamed for stalling Brazilian airline growth

October 15, 2014

Samantha Pearson – The Financial Times, 10/13/2014

Petrobras’s fuel pricing policy threatens to put the brakes on Brazil’s airline industry, the world’s third-biggest domestic market and a key propeller of the country’s growth, industry associations have warned. Brazil now has the second most expensive airline fuel in the world after Malawi in Africa, making it impossible for airlines to reduce ticket prices further as the economy slows, said Eduardo Sanovicz, head of the Brazilian Airlines Association ABEAR.

“This is a fundamental barrier if Brazilian aviation is to increase its number of passengers from the current 111m,” said Mr Sanovicz, adding that fuel represents 40 per cent of Brazilian airlines’ operating costs compared with a global average of just over 30 per cent.

While taxes and currency fluctuations are partly to blame, jet fuel is so expensive in Brazil largely because the state-controlled oil company Petrobras still charged a heavy “import fee” even though more than 75 per cent of the fuel nowadays was refined in Brazil, Mr Sanovicz added.

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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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