March 27, 2015
Kenneth Rapoza – Forbes, 3/27/2015
Michael Reynal, portfolio manager at the $287 million RS Emerging Markets Fund (GBEMX) puts it this way: “Politics are ruining a good investment story in Brazil.”
It has oil. It’s the No. 1 orange juice exporter, coffee exporter, sugar exporter, iron ore exporter, beef exporter and the No. 2 soybean exporter. It has a diverse economy and strong banks. It has a growing consumer class and they’re constantly aching to spend like crazy North Americans. Nobody cares.
A colossal corruption scandal involving Petrobras and the ruling Workers’ Party has hundreds of thousands protesting in the streets. Two weeks ago, some of them even called for impeachment. And this week, a polling firm called MDA showed that more than 59% of respondents think president Dilma Rousseff should be impeached.
March 27, 2015
Anthony Boadle – Reuters, 3/26/2015
Brazilian authorities on Thursday said they uncovered a tax fraud scheme at the Finance Ministry’s tax appeals board that may have cost taxpayers up to 19 billion reais ($5.96 billion).
The news came in the midst of a multibillion-dollar corruption scandal at state oil company Petroleo Brasileiro SA , known as Petrobras, that has rattled Brazil’s political establishment and weighed on the fragile economy.
In the latest case, federal police inspector Marlon Cajado said companies bribed members of the CARF, a body within the Finance Ministry that hears appeals on tax disputes, to get favorable rulings that reduced or waived the amounts owed.
March 26, 2015
Gianpaolo Baiocchi and Marcelo K. Silva – Al Jazeera, 3/22/2015
On March 15, hundreds of thousands of demonstrators across Brazil flooded the streets. It was the biggest mobilization since June 2013, when millions took to the streets in protest that began over increased public transit fares and grew to encompass a range of other causes, including World Cup megaprojects, the poor state of public education, the need for political reform and many others.
A different cause united this month’s mobilizations. Protesters could be heard chanting Cold War–era anti-communist slogans, demanding the impeachment of President Dilma Rousseff and even calling for army intervention in domestic politics. Thirty years after the end of Brazil’s military dictatorship, Rousseff and her center-left Workers’ Party (PT) face a growing challenge from the right.
The PT has held national power in Brazil for the last 13 years. But Rousseff is increasingly politically isolated. Re-elected last fall by a slim margin, she now has to contend with the most conservative National Congress since 1964 as well as a decelerating economy, hostile media and a corruption scandal that implicates her party. She has very low approval ratings and has increasingly alienated her party’s traditional base of trade unionists and social movement activists, many of whom are disappointed with her pro-market political appointments. Although opposition parties are not yet calling for Rousseff’s impeachment, there is no question that difficult times lie ahead.
March 26, 2015
The Economist (print edition), 3/28/2015
SHE is less than three months into her second term, but already most Brazilians want to see the back of Dilma Rousseff. Grappling with a sickly economy and a hydra-headed corruption scandal at Petrobras, the state-controlled oil giant, she finds herself almost friendless in Brasília. She has already lost control of a Congress where, in theory, her coalition has a comfortable majority. More than 1m Brazilians took to the streets on March 15th to repudiate their president. Her approval rating has fallen by 30 points in six months to 13%, the lowest for a Brazilian president since Fernando Collor in 1992, on the eve of his impeachment for corruption.
Nearly 60% of respondents in one poll believe that Ms Rousseff merits the same fate. It is not hard to see why voters are angry. She chaired Petrobras’s board in 2003-10, when prosecutors believe more than $800m was stolen in kickbacks and funnelled to politicians in the ruling Workers’ Party (PT) and its allies, 47 of whom face criminal investigation. She won last year’s presidential election—albeit by just 3% of the vote—by assuring Brazilians that their living standards, jobs and social benefits were threatened only by her opponents.
In fact, as many voters now realise, Ms Rousseff was peddling a lie. It was the mistakes committed in her first term that have led to the spending cuts and tax and interest-rate rises she is now inflicting (and which have earned her the enmity of her own party). Add the perception that her re-election campaign may have been partly financed by money stolen from Petrobras, and Brazilians have every reason to feel they are the victims of the political equivalent of a confidence trick.
March 24, 2015
Samantha Pearson – Financial Times, 3/20/2015
Emilio Pastore normally spends the weekend visiting his elderly parents or taking a quiet bike ride in the countryside around São Paulo. But last Sunday the 50-year-old systems analyst printed out a banner with the slogan “no more lies” and took to the streets for the first protest of his life.
The multibillion-dollar corruption scandal engulfing state-controlled oil company Petrobras and President Dilma Rousseff’s ruling coalition was too much to bear, he says.
“Corruption has escalated from random cases to a state strategy — it now seems to be the official source of party funds, from the small-town mayor all the way up to the nation’s president,” he says. “We’ve had enough.
March 23, 2015
Brian Winter – Reuters, 03/23/2015
Brazil’s biggest opposition party has no interest in impeaching President Dilma Rousseff despite recent street demonstrations calling for her ouster, former President Fernando Henrique Cardoso told Reuters.
Cardoso, who at 83 remains an influential leader in the centrist Brazilian Social Democracy Party (PSDB), said removing Rousseff so soon after she was re-elected would be destructive to Brazil’s 30-year-old democracy, especially since prosecutors have found no evidence she participated in a corruption scheme at state-run oil company Petroleo Brasileiro SA.
“Nobody should want impeachment, it’s a very complex thing,” said Cardoso, who led Brazil from 1995 to 2002.
March 23, 2015
Simon Romero – The New York Times, 03/20/2015
President Dilma Rousseff ran for office declaring that she would harness an oil bonanza in Brazil to supercharge the economy while avoiding the corruption and mismanagement that have plagued other oil-rich countries in the developing world.
But less than three months into her second term as president, Ms. Rousseff is fighting for her political survival as Petrobras, the national oil company she oversaw and has championed, reels from a colossal bribery scandal.
Compounding her problems is the prospect that the economy could shrink in 2015 for the second consecutive year, the first such contraction here since the onset of the Great Depression in 1929 and 1930.