Archive for the ‘Brazil’ Category

Brazil Charges 35 in Petrobras Scandal

| December 12th, 2014 | No Comments »
ABC News


Prosecutors investigating a sprawling kickback scheme at Brazil’s state-run oil company Petrobras filed charges Thursday against 35 people, including executives from some of the nation’s biggest construction firms.

The formal charges cap a months-long investigation dubbed “Operation Car Wash,” which is proving to be one of Brazil’s biggest corruption schemes yet uncovered with authorizes saying they’ll seek the return of nearly $400 million from the accused.

Authorities allege top officials from Petrobras operated the kickback scheme on contracts worth upward of $4 billion, with money from the inflated contracts eventually being fed back to the governing Workers’ Party and other top parties for political campaigns.

“These people stole the pride of Brazilians,” Prosecutor-General Rodrigo Janot said at a news conference in the southern city of Curitiba, where a top informant in the case is being held. “We’re far from being at the end” of the investigation.

Prosecutor Deltan Dallagnol added that “we’ve begun to destroy the ... Read More

Brazil’s economy in a funk marked by low productivity and ‘creative accounting’

| December 9th, 2014 | No Comments »
From the Washington Post

By Dom Phillips

SÃO PAULO — Valter Barros, co-owner of a small electronics components factory in the São Paulo suburbs, was unimpressed with the Brazilian government’s battle last week to pass a controversial fiscal measure economists dubbed “creative accounting.”

He was not alone. As lawmakers arrived in Brasília this week for a vote on a measure that would effectively permit the government to ignore all of a legally mandated $45 billion budget surplus for this year, protesters jeered and held up 100 Real notes.

This was not the first time the administration of newly reelected President Dilma Rousseff had moved the goalposts to meet its targets.

The government’s budgetary woes are a consequence of Brazil’s underperforming economy. Critics trace the economy’s troubles back to the government’s policies. Brazil, they say, needs to overcome the barriers that hold it back: crippling tax burdens, torturous bureaucracy, expensive labor legislation, rising inflation, poor education and a lack of infrastructure, all of which result ... Read More

Brazil Prepares Indictments in Oil Company Graft Case

| December 8th, 2014 | No Comments »
The New York Times


  Brazil’s prosecutor general said over the weekend that he was preparing to indict at least 11 executives from the country’s largest construction companies on charges including bribery and money laundering, in connection with a graft scandal shaking Brazil’s oil industry and the government of President Dilma Rousseff.

In pressing ahead with the case, Rodrigo Janot, the prosecutor general, is opening the way for a trial that would focus scrutiny on growing testimony about a web of illicit dealings between former executives at Petrobras, the state-controlled oil company, powerful contractors and political figures in Ms. Rousseff’s government.

“We are following the money and we will reach all of these perpetrators,” Mr. Janot said Saturday night in an interview with the Globo television network.

The scandal, which involves claims of bribes to obtain contracts with Petrobras, stunned Brazil’s business establishment in November, when ... Read More

Brazil Recovery May Hinge on Choices Rousseff Makes in New Term

| December 8th, 2014 | No Comments »

By Jessica Brice and Filipe Pacheco

In early October, a few weeks before Brazil’s closest presidential election since the country’s return to democracy in the 1980s, 100 executives gathered at an American Chamber of Commerce event in Sao Paulo for another sort of vote. When polled about the country’s economy, more than half of the attendees said their outlook would improve — as long as President Dilma Rousseff lost her re-election bid. Two-thirds expected economic performance to worsen if she earned a second term.

It’s the lack of confidence in Rousseff’s leadership — amid high inflation, currency interventions and deteriorating fiscal accounts — that investors say will be her biggest challenge, Bloomberg Markets magazine will report in its January 2015 issue. Rousseff, who prevailed by a margin of 4 percentage points on Oct. 26, must now try to stave off a credit-rating downgrade and revive growth in Latin America’s biggest economy, which slipped ... Read More

Corruption Curses Mexico and Brazil

| December 4th, 2014 | No Comments »
Article appeared in The Weekly Standard


Call it a tale of two countries. Two would-be Latin American powerhouses, both with populations surpassing 100 million people – and both with weak presidents who are beset by corruption problems. Both, in other words, are severely underperforming countries, whose chronic inability to live up to their potential continues to undermine growth, stability, and hope for the future. 

Begin just south of the United States border in Mexico, a one-time success story, which has been reeling for months. The trouble began in late September, when 43 students were kidnapped and murdered in Iguala. An appalling and grizzly atrocity to be sure, made worse by the alleged involvement of local law enforcement and even the mayor of Iguala. Local authorities in the southern state of Guerrero (home of Iguala) are evidently horrifically corrupt – they have been bought off by the local drug cartels. Unsurprisingly, Mexico has been rocked by weeks of protests as ... Read More

Japan’s profile rises in the Americas

| December 4th, 2014 | No Comments »
The Miami Herald


As Asian rival China invests billions in Latin America and snaps up strategic commodities, Japan also is looking at the region with new interest.

Shortly after Chinese President Xi Jinping’s Latin American tour in July, Prime Minister Shinzo Abe made a 10-day, five-nation swing through Latin America and the Caribbean.

His trips to Mexico and Brazil were the first bilateral visits by a Japanese prime minister in a decade, and his trip to Chile was the first such visit by a Japanese prime minister since 1996. Abe’s stop-over in Port of Spain marked the first time that a Japanese prime minister had ever visited the twin-island nation of Trinidad and Tobago, and his trip to Colombia also was the first official visit for a Japanese prime minister.

In September, Abe also held a summit with Panamanian President Juan Carlos Varela while both were attending the U.N. General Assembly and they discussed ... Read More

Petrobras’s $100 Million Man Tops Graft Haul in Scandal

| December 3rd, 2014 | No Comments »

By Sabrina Valle

Brazil’s biggest money laundering and corruption scandal just got bigger with a high-level executive’s pledge to return $100 million and testify against colleagues including his former boss at state-run Petroleo Brasileiro SA. (PETR4)

Pedro Barusco, a third-tier executive who reported to the head of the engineering division until 2010, contacted prosecutors and confessed he took bribes from construction companies, according to the text of a Nov. 18 decision by a judge to put Barusco’s former boss under preventative arrest. Barusco also took cash from SBM Offshore NV (SBMO), the Dutch oil platform supplier, said a person with direct knowledge of the probe, who asked not to be named because the information is confidential.

The testimony from Barusco threatens to implicate more people in the scandal as prosecutors probe the origins of his allegedly ill-gotten fortune. Petrobras management has been dealing with the crisis as it struggles ... Read More

Latin America, Caribbean 2014 Growth Likely Reached Only 1.1%

| December 2nd, 2014 | No Comments »
Wall Street Journal WSJ-01 By ROBERT KOZAK Growth in Latin America and the Caribbean likely reached only 1.1% this year, the slowest rate of expansion since 2009, but will jump back up to twice as high next year, the United Nations Economic Commission for Latin America and the Caribbean said.

The organization, known as Eclac, said Tuesday that Central America, including the Spanish-speaking Caribbean and Haiti, will post the best expansion in gross domestic product in the region next year, rising by 4.1%. The English-speaking Caribbean will lag with an expansion of 2.2%. South America will expand 1.8% next year, it added. Overall the area will expand 2.2% in 2015, it said.

A slump in demand in developed economies and the slowing of growth in emerging economies, especially China, hit Latin America and the Caribbean nations hard this year. China has become an important trading partner, especially for raw materials, for many countries in the region.

The agency said an economic deceleration became ... Read More

Ibovespa Falls as Industrial Output Declines More Than Forecast

| December 2nd, 2014 | No Comments »

By Denyse Godoy 

The Ibovespa (IBOV) extended the biggest two-day drop since October as Brazil’s industrial production fell more than forecast, dimming the outlook for economic growth as Joaquim Levy take over as finance minister.

Lender Itau Unibanco Holding SA contributed the most to the gauge’s decline. Pulp producer Fibria Celulose SA was the best performer on the equity gauge after saying it will increase prices starting Jan. 1.

The Ibovespa retreated 0.5 percent to 52,031.08 at 11:21 a.m. in Sao Paulo as 50 of its 70 stocks fell. The real declined 0.4 percent to 2.5698 per dollar. Brazil’s industrial production decreased 3.6 percent in October from a year earlier, the national statistics agency reported today. The median forecast from economists surveyed by Bloomberg was for a drop of 3 percent.

“The industrial production was very weak,” Alvaro Bandeira, a partner at Orama Asset Management, said in a phone ... Read More

Desarticulan en Brasil una banda de narcotráfico internacional y lavado de activos

| December 2nd, 2014 | No Comments »

La Policía Federal (PF) brasileña desarticuló este martes en Brasil una red internacional de narcotráfico y de lavado de dinero que importaba droga procedente de Perú y Bolivia al gigante latinoamericano y posteriormente la enviaba a Europa, informaron fuentes oficiales.

Más de 180 agentes participaron en la operación “Denarius” (dinero en latín), en la que fueron cumplidos 13 mandatos de prisión y 39 órdenes de búsqueda y aprehensión en dieciséis ciudades de los estados brasileños de Paraná, Sao Paulo, Mato Grosso, Minas Gerais, Rondonia y Mato Grosso do Sul.

Según un comunicado de la PF, también fueron bloqueados bienes por valor de 60 millones de reales (unos 23 millones de dólares), entre haciendas, casas y locales comerciales.

De acuerdo con medios locales, entre los bienes aprehendidos se encuentran un avión de pequeño porte y un helicóptero.

Las investigaciones comenzaron en febrero, cuando los agentes localizaron ... Read More

New Brazilian finance minister pledges to restore fiscal balance

| December 1st, 2014 | No Comments »
Financial Times

Joe Leahy and Samantha Pearson

Joaquim Levy, Brazil’s new finance minister, immediately committed to restoring balance to the country’s struggling public finances in comments that will please investors and rating agencies.

The Chicago-trained former Treasury secretary said the primary fiscal surplus, the budget surplus before interest payments, would be gradually returned to the equivalent of at least 2 per cent of gross domestic product per year.

“The immediate objective . . . is to establish a target for the primary fiscal surplus for the next three years that is compatible with the stabilisation and decline of gross public debt in relation to GDP,” he said.

Mr Levy, who is seen as a fiscal hawk in contrast to predecessor Guido Mantega, who oversaw a generous and prolonged fiscal stimulus, said there would be no immediate “package” of measures.

But he said the government would aim for a primary surplus next year of 1.2 per cent followed by at ... Read More

Analysis – Brazil’s new economy chief will need space from Rousseff

| November 26th, 2014 | No Comments »
Article originally appeared in Reuters


(Reuters) – When Brazilian President Dilma Rousseff first considered replacing Finance Minister Guido Mantega two years ago, a top aide confided that any good candidate for the job would have to meet two requirements.

First, a good personal relationship with Rousseff, a notoriously gruff and demanding manager known for making subordinates break down in tears.

And second, accept that “Dilma likes to be the minister” – that as a trained economist with a fervent belief in a strong state, she would insist on making many policy decisions, even minor ones, herself.

Rousseff is expected to finally replace Mantega this week with respected banker Joaquim Levy. But it’s unclear whether the job description has really changed since then and whether Levy will have the power and independence to execute the pro-business shift that investors are hoping for.

A government official told Reuters that Rousseff, who won re-election last ... Read More

Rousseff Veto Signals More Brazil Fiscal Control Next Term

| November 26th, 2014 | No Comments »

By Raymond Colitt and Arnaldo Galvao

Brazil’s President Dilma Rousseff vetoed a budget law, signaling increased fiscal discipline as she prepares to nominate Banco Bradesco SA asset management chief Joaquim Levy as her finance minister.

The bill that was approved by congress on Nov. 5 would have allowed tax cuts without identifying revenue sources to offset them. Justifying the veto that was published today in the Official Gazette, Rousseff said the bill had been proposed at a time when revenue was rising.

“Therefore, the veto is justified because of a change in the economic cycle,” Rousseff wrote in the gazette.

Brazil’s budget deficit in September was the widest in more than a decade as the government increased spending and extended subsidized credit to fuel growth that is forecast to slow to 0.3 percent this year. The veto is the first sign that Rousseff is moving toward increased fiscal discipline in ... Read More

Brazil’s Rousseff Seen Naming Joaquim Levy as Finance Minister

| November 25th, 2014 | No Comments »
Wall Street Journal WSJ-01


SÃO PAULO—Brazilian President Dilma Rousseff is set to name Joaquim Levy, a former treasury secretary and prominent banker, as the country’s next finance minister, a move aimed at bolstering Brazil’s credibility amid slowing growth, rising inflation and falling markets, an official said.

Ms. Rousseff will name Mr. Levy as Thursday, possibly with other appointments for her second term that starts in January, the official said. Mr. Levy couldn’t be reached for comment.

The 53-year-old economist will succeed Finance Minister Guido Mantega to assume the top economic post at a crucial time for a resource-rich country hitting a downturn amid declining commodity prices. Brazil is mired in a toxic mix of near-zero growth and rising inflation, and its currency has lost more than a third of its value during Ms. Rousseff’s first term.

Job one for the next finance minister will be preserving Brazil’s coveted investment grade credit ratings. Economists say the ... Read More

Petrobras scam allegations weigh on Brazil as blacklist fears rise

| November 25th, 2014 | No Comments »
Financial Times

By Joe Leahy in São Paulo

When black money market dealer Alberto Youssef was arrested by police in March, he was carrying seven mobile phones with another 30 in a desk in his office, an officer involved in the case said.

The reason the jailed conspirator in what is emerging as Brazil’s biggest corruption scandal might have needed so many phones is becoming clearer after police this month raided the offices of Brazil’s major construction companies, arresting scores of officials and executives in the process.

The builders being investigated in the scam, in which Mr Youssef allegedly co-operated with former Petrobras director Paulo Roberto Costa to skim billions of dollars off the state-owned oil company to pay kickbacks to politicians, are responsible for much of Brazil’s infrastructure projects, from airports and nuclear submarine bases to stadiums for the 2016 Olympics.

The arrests have caused concern not only at home but among international investors. If ... Read More

Brazil’s Rousseff struggling to limit Petrobras scandal’s damage

| November 24th, 2014 | No Comments »
Article originally appeared in Reuters

By Brian Winter and Anthony Boadle

SAO PAULO/BRASILIA (Reuters) – President Dilma Rousseff expects a bribery scandal at state-run oil company Petrobras to deteriorate in coming months, aides say, with arrests possible for some political allies and potentially serious damage to an economy that is already struggling.

Prosecutors say corrupt officials siphoned billions of dollars from Petroleo Brasileiro SA, as the company is formally known, into the coffers of several parties including Rousseff’s Workers’ Party.

The probe has already resulted in the arrest of two former Petrobras officials as well as executives from eight of Brazil’s 10 biggest construction companies, which prosecutors say were part of the scheme. More arrests are expected.

“The only thing we know is that things will get worse,” a senior official close to Rousseff told Reuters.

Rousseff was chairwoman of Petrobras’ board from 2003 to 2010, but she ... Read More

The $31 Billion Bet Against Brazil’s New Finance Minister

| November 24th, 2014 | No Comments »

By Ye Xie and Filipe Pacheco

Whoever is tapped by Brazilian President Dilma Rousseff to oversee the government’s finances in her second term, one thing is clear: There’s plenty of work to be done to win over currency investors.

While the real gained the most in three weeks on Nov. 21 amid optimism the looming cabinet shuffle will help shore up Brazil’s economy, foreigners are betting on more declines after the currency weakened to a nine-year low this month. Overseas holdings of futures contracts wagering against the real have soared 30 percent since Sept. 29 to $31.3 billion as of last week, according to data compiled by the Sao Paulo bourse. That’s just 8.6 percent shy of August’s record high.

A surge in government spending, coupled with Rousseff’s intervention in Latin America’s biggest economy, has left Brazil with its widest budget deficit in a decade and near-zero growth. ... Read More

3 Reasons Why Brazil’s State-Controlled Oil Giant Petrobras Should Be Privatized

| November 21st, 2014 | No Comments »


One of the most famous songs by the late Brazilian rock star and songwriter Raul Seixas is entitled ‘Rent,’ in reference to what he considered to be the best solution for Brazil: literally, to rent the country for foreigners. The song was composed in 1980, at a time when Brazil was going through a difficult economic period marked by hyperinflation.

Fast-forward to 2014.

Today the ghost of price increases gone out of control has come back to haunt Brazilians, partly due to a government-sponsored rise in fuel prices that resulted in consumer prices advancing 6.54% in the 12 months through mid-November, down from a rise of 6.62% through the previous month but still above the 6.5% ceiling of Brazil’s Central Bank target, according to the median of 22 market forecasts for the IPCA-15 inflation index.

Add to that a total lack of confidence from investors, ... Read More

Petrobras scandal: Brazil’s energy giant under pressure

| November 21st, 2014 | No Comments »

By Ruth Costas

Brazil’s state-run oil giant Petrobras has always been a company of superlatives.

In recent years, it has become not only the largest but also one of the most internationally recognised firms in Latin America.

It has discovered huge deep-water oil reserves, which experts predict could turn Brazil into a top energy player.

And in one of the biggest share sales in history it raised $70bn in 2010.

But recent investigations by the Brazilian Federal Police and public prosecutors have added an unfortunate addition to this record.

They have put Petrobras at the centre of what is thought to be one of the biggest corruption scandals in Brazil’s history.

“This [scandal] may change the country forever,” President Dilma Rousseff acknowledged during the recent G20 summit in Australia.

A number of Petrobras directors are accused of taking bribes from construction companies and funnelling funds to parties of the ruling coalition.

The investigation – ... Read More

Brazil Official Sees Alleged Petrobras Corruption Scheme Reaching $1.6 Billion

| November 20th, 2014 | No Comments »
Wall Street Journal WSJ-01


SÃO PAULO—The alleged corruption scheme said to involve kickbacks from contracts at Brazil’s state-controlled energy giant Petroleo Brasileiro SA, or Petrobras , may have totaled as much as 4 billion Brazilian reais ($1.6 billion), according to the head of the country’s budget watchdog.

Brazil’s Court of Accounts, which is known by its Portugese initials TCU, is helping the country’s federal police investigate allegations of payments to politicians with money skimmed from Petrobras contracts, according to TCU President Joao Augusto Nardes.

The value calculated by Mr. Nardes includes money allegedly overcharged on contracts involving the purchase of a refinery in Texas and the construction of a petrochemical complex in Rio de Janeiro state and three refineries in other locations in Brazil.

“This case is the biggest corruption scheme evaluated in the history of the TCU, in terms of the financial amount involved and also regarding the huge number of people involved,” Mr. Nardes told The ... Read More

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