Brazil’s Petrobras Reports Nearly $17 Billion in Asset and Corruption Charges

April 23, 2015

Paul Kiernan – The Wall Street Journal, 4/22/2015

Brazil’s state oil company Petróleo Brasileiro SA put a price tag on a corruption scandal that has thrown the country into political and economic turmoil, writing off $17 billion due to losses from graft and overvalued assets.

The disclosures were part of the first audited financial statements released by Petrobras in more than eight months.

Brazilian federal prosecutors since last year have been investigating allegations that the company’s suppliers conspired to overcharge Petrobras for major projects, funneling some of the illicit profit to former Petrobras executives and politicians in the form of bribes and illegal political donations.

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Amid Crisis, Rousseff Seeks Closer Ties with the U.S.

April 20, 2015

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Paulo Sotero – The Huffington Post, 4/17/2015

Confronted by calls for her impeachment in street protests fueled by a deteriorating economy and a deepening investigation on massive corruption at state oil giant Petrobras, a weakened President Dilma Rousseff sees improving relations with the United States as part of the solution to Brazil’s and her own mounting challenges.

Following a Saturday April 11 meeting with president Barack Obama at the Summit of the Americas, in Panama, Rousseff said concerns caused by the 2013 revelations of the National Security Agency surveillance activities in Brazil were resolved and confirmed she will visit Washington this year. The announcement of the June 30th gathering at the White House put the Brazil-U.S. dialogue back on track following a period of estrangement that cost the U.S. the loss of a major defense contract and frustrated plans to elevate Brazil-U.S. relations to a new level of engagement.

Praised by Rousseff for his decision to normalize U.S. relations with Cuba, the American leader has scored points by enhancing U.S. ties with its largest regional neighbor at a time when Brazil is experiencing its most severe political and economic crisis in two decades. Rousseff’s official visit to the U.S. will not have the frills of the state visit planned for October 2013, which was derailed by the NSA revelations, but was welcomed by the business communities and economic officials in both countries, who hope it will send a positive reassuring message to markets and help to restore investors’ confidence in Brazil.

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Paulo Sotero is the Director of the Brazil Institute at the Woodrow Wilson International Center for Scholars.


Brazil Scandal Sends Multinationals Running to Attorneys

April 17, 2015

Joel Schectman – The Wall Street Journal, 4/16

Multinationals with operations in Brazil are making frightened calls to their lawyers, as the country’s spreading corruption scandal reaches more companies.

The bribery investigation known as “Operation Carwash,” which has already sent Brazil’s state-run Petroleo Brasileiro SAPBR +1.15% into a tailspin, is spreading across the country’s largest construction companies and its third largest bank. Brazilian prosecutors say shipbuilding arm of South Korean conglomerate Samsung paid bribes to a former executive at Petrobras. Brazilian prosecutors have also accused Swedish builder Skanska ABSKA-B.SK -2.11% of taking part in the corruption at Petrobras. Skanska didn’t respond to requests for comment. Samsung couldn’t be immediately reached for comment.

Brazilian investigators have said they are investigating large international firms that they believe have paid bribes, Reuters reported.

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Investors tiptoe back into Brazil markets as inflation peaks

April 17, 2015

Walter Brandimarte – Reuters, 4/17/2015

Some investors are carefully betting that the recent selloff in Brazilian financial markets was overdone, pointing to signs that inflation is slowing and the government is getting its finances in order.

Many expect inflation will come down from its current 11-year high of 8.13 percent, thanks to the central bank’s interest rate hike cycle of 1.75 percentage points since October, as well as the economic slump’s effect on demand.

Meanwhile, state-run oil company Petrobras is expected to this month post financial statements that have been delayed by a huge corruption scandal, greatly reducing the risk of a major debt crisis that could have cost Brazil its investment grade credit rating.

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The Kickback That Killed Brazil

April 16, 2015

Bruce Douglas – Foreign Policy, 4/15/2015

Underneath the tiled awning of her whitewashed veranda, Cassia Gonçalves Moreira, 46, scoops clumps of damp pastry from a large plastic tub, rolls them between her hands, and methodically lines the bottom of a dozen or so small tins arranged on the table in front of her.

Next comes the filling: cheese, chicken, or hearts of palm. Then, she molds another dollop of pastry for the lid, before placing the completed empadas on a metal tray. A faint smell of rising dough drifts through the open door. Once she has cooked enough, she will put on her Brazil soccer shirt and start her daily trek around Itaboraí, a town a few miles east of Rio de Janeiro, across the Guanabara Bay, selling each empada for 3 real ($1).

“They don’t exactly pay for everything,” she said. “In fact, they don’t even cover the cost of the rent here. Still, they keep us from starving.”

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Brazil’s economic activity grows unexpectedly in February

April 15, 2015

Silvio Cascione – Reuters, 04/15/2015

Brazilian economic activity grew unexpectedly in February from the previous month, central bank data showed on Wednesday, but economists said the increase was too small to dispel forecasts for a recession this year in Latin America’s largest economy.

The Brazilian central bank’s IBC-Br economic activity index BRIBC=ECI, a gauge of farming, industry and services activity, rose a seasonally adjusted 0.36 percent from January, topping market expectations for a drop of 0.2 percent.

The index is seen as a leading indicator for gross domestic product data, which is released quarterly. Economists have forecast Brazil’s economy to shrink about 1 percent in 2015, which would be the country’s deepest recession in 25 years.

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Rio 2016: dead fish wash up in Olympic lagoon

April 14, 2015

Marilia Brocchetto – CNN, 04/14/2015

The bad news for Rio de Janeiro ahead of the 2016 Olympics keeps coming after scores of dead fish appeared in the Rodrigo de Freitas lagoon.

With just over a year to go before the city hosts the Games’ rowing and canoe competitions, officials with the legislative assembly of Rio de Janeiro Monday launched an investigation into the causes of death both in the lagoon and in other lakes and bays in the state in which this phenomenon has occurred.

The group will work in partnership with the State Environmental Institute (INEA) and the Secretariat of State for the Environment.

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