The Betrayal of Brazil

Michael Smith, Sabrina Valle, Blake Schmidt – BloombergBusiness, 05/08/2015

In mid-2013, Brazilian federal police investigator Erika Mialik Marena noticed something strange.

Alberto Youssef, suspected of running an illicit black-market bank for the rich, had paid 250,000 reais (about $125,000 at the time) for a Land Rover. The black Evoque SUV ended up as a gift for Paulo Roberto Costa, formerly a division manager at Brazil’s national oil company, Petrobras. “We were investigating a money-laundering case, and Petrobras wasn’t our target at all,” says Marena. “Paulo was just another client of his. So we started to ask, ‘Why is he getting an expensive car from a money launderer? Who is that guy?’”

Marena had spent the previous decade building cases against money launderers, and Youssef had been a perennial target. He’d been arrested at least nine times for using private jets, armored cars, clandestine pickups by bagmen, and a web of front companies to move illicit cash. But Youssef had been spared serious jail time by testifying repeatedly against other doleiros, Brazilian slang for specialists in laundering unreported cash.

Read more…

The Betrayal of Brazil

World Cup stadiums leave a troubled legacy in Brazil

Associated Press, 5/2/2015

Brazil spent billions of dollars renovating and building World Cup stadiums that were supposed to help modernize and improve local soccer. Almost a year after the tournament ended, the nation is still trying to figure out what to do with them.

Some of the 12 new state-of-the-art stadiums are just now being completed as originally planned. Others are already up for sale.

The Itaquerao Stadium in São Paulo hosted the World Cup’s opening match last June, a 3-1 win over Croatia for the host nation. But the stadium has only now been completed, nearly 11 months after the tournament. Some of the glass that is part of the stadium’s roofing was installed several weeks ago, along with other items that were still missing at the arena, which cost $450 million.

Read more…

World Cup stadiums leave a troubled legacy in Brazil

Experts give their prescriptions for Brazil as the commodity boom ends

Joe Leahy – Financial Times, 3/25/2015

Brazil’s economy has slowed sharply. The brakes were applied by the end of the commodity supercycle that occurred in the first decade of the 21st century combined with rapid credit growth.

The debate in Brazil has returned to the vexed question of how to make one of the world’s most inward-looking economies more competitive.

The answer lies in improving education, streamlining taxation, simplifying bureaucracy in general, and fixing infrastructure. But beneath these concepts are complex questions that run as deep as Brazilian politics and culture itself.

Read more…

Experts give their prescriptions for Brazil as the commodity boom ends

Schumpeter: Brazil’s business Belindia

The Economist (print edition), 2/28/2015

BRAZILIANS make up almost 3% of the planet’s population and produce about 3% of its output. Yet of the firms in Fortune magazine’s 2014 “Global 500” ranking of the biggest companies by revenue only seven, or 1.4%, were from Brazil, down from eight in 2013. And on Forbes’s list of the 2,000 most highly valued firms worldwide just 25, or 1.3%, were Brazilian. The country’s biggest corporate “star”, Petrobras, is mired in scandals, its debt downgraded to junk status. In 1974 Edmar Bacha, an economist, described its economy as “Belindia”, a Belgium-sized island of prosperity in a sea of India-like poverty. Since then Brazil has done far better than India in alleviating poverty, but in business terms it still has a Belindia problem: a handful of world-class enterprises in a sea of poorly run ones.

Brazilian businesses face a litany of obstacles: bureaucracy, complex tax rules, shoddy infrastructure and a shortage of skilled workers—to say nothing of a stagnant economy (see article). But a big reason for Brazilian firms’ underperformance is less well rehearsed: poor management. Since 2004 John van Reenen of the London School of Economics and his colleagues have surveyed 11,300 midsized firms in 34 countries, grading them on a five-point scale based on how well they monitor their operations, set targets and reward performance. Brazilian firms’ average score, at 2.7, is similar to that of China’s and a bit above that of India’s. But Brazil ranks below Chile (2.8) and Mexico (2.9); America leads the pack with 3.3. The best Brazilian firms score as well as the best American ones, but its long tail of badly run ones is fatter.

Read more…

Schumpeter: Brazil’s business Belindia

Private equity circles Brazilian projects amid Petrobras fallout

Joe Leahy – Financial Times, 01/21/2015

Brazilian construction groups’ inability to raise finance for large-scale projects, after being caught up in the Petrobras corruption scandal, is creating unprecedented opportunities for private equity investment in oil, gas and infrastructure deals.

Many of the country’s leading construction companies have struggled to access capital markets since state prosecutors alleged that they paid bribes to the state oil company and certain politicians in return for contracts.

But private equity groups are claiming that the companies’ resulting capital shortages could force them to retreat from projects to build oil and gas facilities, airports and hydropower dams.

Read more…

 

Private equity circles Brazilian projects amid Petrobras fallout

FIFA is giving Brazil $100 million after the country spent $15 billion on the World Cup

Stephen Wade – AP/Business Insider, 01/20/2015

Football’s world governing body FIFA said Tuesday it had set up a $100 million World Cup Legacy Fund for Brazil, aimed at sports facilities, youth and women’s football, and medical and health projects.

FIFA President Sepp Blatter pledged two years ago to give some of the revenue from the 2014 World Cup back to grassroots programs in the South American country, which spent about $15 billion organizing last year’s World Cup.

Spending on the Rio de Janeiro 2016 Olympics is expected to top $15 billion.

Read more…

FIFA is giving Brazil $100 million after the country spent $15 billion on the World Cup

Brazil crowds up but stadium usage still problematic

Andrew Downie – Reuters, 12/23/2014

The average attendance at Brazil’s new arenas in the five months since the World Cup was higher than the league mean but stadiums in cities without major clubs are in danger of becoming white elephants, studies and experts said.

The average attendance at all games in the 12 stadiums was 18,300, just above the 16,562 recorded over the season in Brazil’s Serie A, statistics compiled by the Folha de S.Paulo and Lance! newspapers showed.

Although the attendance at first division games in new arenas is twice that in older stadiums, only three of the new venues, in Sao Paulo, Belo Horizonte and Manaus, were consistently more than half full.

Read more…

Brazil crowds up but stadium usage still problematic