Maluf | Corruption Comes Home to Roost

The Maluf-inspired Roberto Marinho Avenue — a Sambodian Big Dig

G1 reports

A court in the Isle of Jersey, a European fiscal paradise, has ordered the transfer of one million pounds sterling — some R$ 4.5 million — with ties to the family of federal deputy Paulo Maluf (PP-SP) to the municipal coffers of São Paulo.

The funds were released on Friday (May 24) and deposited in the account of a law firm representing the city in London.  The money will be returned to the public coffers on May 28, since May 27 is a holiday in Great Britain.

Jersey court denies Maluf appeals Jersey, orders Maluf-owned companies to return US$ 28 million to SP

Jersey condemns Maluf to repay embezzled funds

Abril Wises Up | Educational Content Consolidates

Source: Fusões & Aquisições. Thanks for your careful and consistent coverage.

Abril Educação buys Wise Up for R$ 877 million

The value of the deal, which will be paid off in parcels, may be modified according to revenues reflected in the language school’s next earnings report.

Abril Educação today announced the acquisition of the English language school Wise Up in a deal valued at R$ 877 million. The deal will be paid off in three installments and could be subject to renegotiation depending on the 2012 EBITDA of Wise Up. Cash flow and net debt might also affect the value of the deal between now and the signing date.

Founded in 1995, Wise Up has  76,000 students at 338 franchise schools in 89 Brazilian cities.

I make that out to be R$ 11,540 to acquire a student.

Wise Up is an official English-language education supplier for the upcoming World Cup.

Above, Abril’s timeline for its accelerating acquisitive phase, starting in 2010.

Abril Educação comprises the Ática and Scipione textbook publishing houses, the SER curriculum factory, and others.

According to its Formulário de Referência 2012, the company,

in 2009 reached the broadest audience in the Brazilian education market in terms of students served, according to the Ministry of Education. We estimate that 71% of Brazilian students and more than 63% of elementary schools make use of our services or teaching materials. Our brands are recognized in all the markets we occupy. Our businesses have diverse sources of revenue which complement one another, creating synergies and capable of attending to all the needs of the elementary school and pre-university education cycle. We currently operate in five markets and are preparing an entry into two others …

The new businesses are prep courses for civil servant exams and the application of distance-education to language learning, a commitment born out by this recent bit of news. .

That 71% cannot be healthy for the Brazilian culture industry and educational policy.  71% plus vertical integration is why I tend to think of Abril as a tropical zaibatsu wannabe.

Abril has been in acquisitive mode for some time now. I have not run the numbers yet, partly because there are no precise numbers to be had. Even so, the financial grandiloquence of this deal ought to give us some inkling of the financial health and creditworthiness of the Grupo Abril in general.

The British network also has 36 units on deep sea oil rigs and another 21 schools located in four inland cities.

The deal is April’s third advance on the language-learning market. Last July, it purchased 51% of Red Balloon, geared toward children, at R$ 29.8 million. Abril also owns  6% of Livemocha, a U.S. distance-learning language franchise.

In a Material Event announcement to the market, Abril Educação says, “We have many other businesses in various educational markets, covering 4,500 Brazilian cities. There exist a number of synergies between these companies and Wise Up, whose shareholders will profit from the deal.  Abril also said that the deal signed with Wise Up calls for the medium and long-term retention of Wise Up senior management.

I wonder: Would this deal make rumors of an Abril IPO more or less likely? Relatório Reservado reports:

Abril Educação is preparing a follow-on offering on the Bovespa. It is said to be awaiting an improvement, however modest, in the international markets. But we have heard this song before. Contacted, the company had no comment.

Abril is extremely, aggressively competitive in this area of its business. A memorable example was the smear campaign conducted against a competing publishing house — up for the same public tender as Abril — for the provision of text books.

The group’s flagship weekly, Veja, screamed bloody murder, calling the rival publisher a purveyor of communist indoctrination and accusing the education ministry of practicing North Korean brainwashing techniques. I shit you not. Never underestimate the power of «moral panic» marketing.

In general, I wonder whether mass-market publishing or education figures larger in the group’s bottom line. AE and a couple of other subsidiaries are listed, but the Group is not.

According to the Web site of the Editora Brazil, the magazine publishing arm of the business produces 192 million copies of 52 titles a year, with 28 million readers and 5 million subscribers.  If you are not planning to read it, please deposit in the proper recycling bin …

The two flagship educational houses, Àtica e Scipione, sold 53.2 million books to the public sector and 6.5 million to the private sector in 2011, according to company financials.

Water Over the Dam | Will Investors Take the Plunge?

Source: Brasil Econômico | 24 January 2013
Tenor: Market is moderately cautious over energy-sector pricing reform
Excerpt | Translation: C. Brayton

Negative pressure on shares is transitory and reflects the continued uncertainty of investors. The BM&F Bovespa’s electricity and energy sector index (IEE) is down 1%.

The reduction in energy bills announced by the president on January 23 has had a limited negative impact on the shares of electricity generators, transmitters and distributors.

Pedro Galdi,chief analyst at the SLW Corretora brokerage house, explains that the government has already absorbed part of the losses suffered by some companies. 

Listings to the Left | Carta Capital Under Fire

Source: Comunique-se

Carta Capital magazine stands accused by the state’s attorney of Minas Gerais of forging a document used to illustrate articles on the so-called «monthly payola of the PSDB» … The infraction alleged by the magazine was supposedly committed during the reelection campaign of Minas governor Eduardo Azeredo (PSDB) in 1998.

Isto É magazine — above — also reported on documentary evidence in the case, in a September cover story The document in question is sometimes called the «Lista de Mourão» after its mentor, Cláudio Roberto Mourão da Silveira.

In a press release, the state prosecutor states that “on December 3 of 2012, the editors of Carta Capital were served with Notice No. 108/2012-SCI-PGJ, informing the magazine’s senior editors of the falsehood of information published in the article in question, “Return to the origins,” in the November 14 edition.

The article, written by Leandro Fortes, states that the former governor and current federal deputy withdrew more than R$100 million from state-owned firms and passed the funds to politicians and judges, most of them linked to the PSDB,  as well as to media companies.

The list included the name of Supreme Court justice Gilmar Mendes, former presidente Fernando Henrique Cardoso and Goiás governor Marconi Perillo (PSDB).

According to Fortes, this scheme to skim money from the public coffers was much worse than the «monthly payola» of the PSDB’s rival, the PT.

“For those who have watched the trial in the Supreme Court, with its innovative doctrine of «de facto dominion» and its guilty verdicts based on subjective intuitions, the «Toucan payola» will prove even more shocking thanks to the presence of something sorely lacking in the current case: inequivocal and decisive proof.

Dominio do fato is a controversial legal doctrine under which hierarchical superiors can be held responsible for bad acts by subordinates, even when demonstrably unaware of such acts For instance, the central player in the «PT payola» scheme was found guilty without any evidence of bad acts on his part. The judges reasoned that given his position, he must have or should have known of the scheme. The German legal scholar who authored the concept has appeared in a handful of interviews questioning its use in this case.

Coordinator of CAORIM, the Center for the Operational Support of Criminal Prosecutors, Joaquim José Miranda Júnior filed a police report with the Belo Horizonte Forgery and Fraud division, charging CC with journalistic fraud, The state’s attorney of Minas Gerais claims the document bears a forged signature of prosecutor Adriano Estrela, suggesting that the underlying sources of the story were “forged” and “inauthentic.”

On holiday, Leandro Fortes told Comunique-se he knows nothing about the accusation by the MP-MG.

Jornal da Mídia adds:

The lista … was produced by a known forger, who did jail time long before creating the list in question. The document is registered in the notary office and its signatures notarized. It contains gross errors, such as describing the alleged beneficiaries as holding offices they would not hold until several years after the registered date of the “document.”

Carta Capital replies immediately with the following op-ed.

I have been reading here and there that the Minas Gerais prosecutor is accusing this magazine of forging documents in the case of the «Toucan payola. I repeat: we have been accused by the MP of creating and publishing false documents from a law suit, according to reports on the Internet. The author of this serious accusation will have to back his words with evidence in a court of law.

As to the Web sites that hastened to spread this “information,” without contacting us for comment, I would like to repeat that CC does not publish police records or forged documents, does not accuse without evidence to back it, does not transform corrupt politicians into paragons of public morality  does not transform a wadded up piece of paper into a brick, does not associate with racketeers like Carlinhos Cachoeira and does not use the services of black bag, private-sector intelligence operators — who have become the true “investigative reporters” of Brasília.

The pejorative description reflects Mino Carta’s contempt for the contemporary Veja magazine, a magazine he founded in mid-1968.

The reference to a wadded-up piece of paper refers to a political propaganda set piece used during the last presidential election. Passing through a poorer  neighborhood in Rio, the candidate was struck on the head by a wadded-up flier thrown by a union member.

The mainstream press turned the incident into an exemplar of how vicious and violent government supports are. It really was absurd, and yielded quickly to online mockery.

We do not belong to this club, and this attempt to lump us with in the others is pathetic  We do not practice the journalism of the sewers.

As to the  «Toucan payola» document, like the Furnas list before it, it is once again self-evident how much political power is being brought to bear on the effort to undermine its credibility.

This time around, however, the participation of the MP of Minas is impressive. The  Furnas List was also described as a phony. Former governor Azeredo continues to use this argument — that the list is a forgery — in response to documents that describe how the «pipeline» operated in his back yard.

One faction of the “fair and independent media” simply parrots Azeredo to see if it can make the forgery theory stick. But a report by the federal police criminalistic lab has proven that the list was not tampered with and that the signatures are authentic.

The report by Leandro Fortes, as usual, was based on documents received from trusted sources, including participants in the lab experiments that ripened into the slush fund laundering scheme developed for the PSDB by  Marcos Valério de Souza, later used by the PT. We are absolutely confident in our reporting..

The original report ran in Issue No. 723,, November 11, 2012.

Furnas List

Mourão List

Broker and Broker | A Lean Year for Intermediaries

Member brokerages of ANBIMA — Brazilian Association of Capital and Financial Market Institutions

Source: Valor Econômico— Portal ClippingMP.
Translation: C. Brayton

Frustrated by growing costs, most Brazilian independent brokerage houses will close out 2012 in the red. In a survey of the 27 largest Bovespa traders not tied to the major banks, 16 lost money in the first three quarters of 2012.  Among the  houses operating in the black, only one reported profits higher than R$1 million — US$500,000.

The year was notable for internal restructuring and new product distribution strategies. With a view to the future, brokers in this sector are searching for partners in order to survive.  The goal is to rationalize and reduce costs to compensate for lesser margins.

Edemir Pinto, of the BM&F: “Brokerage houses need to think about consolidation.”

Redefining the Brazilian ONG-NGO?

A communiqué from ABONG, the Association of Brazilian NGOs — a much weaker counterpart to the GIFE, the Group of Foundations and Institutes, which represents corporate and family philanthropic trusts, for the most part. ABONG hopes to see some of its proposed reform measures for the sector implemented. Brazilian philanthropic foundations are not notable for the transparency of their governance, I think it is fair to say. Where is last year’s Form 990? There is no such thing — not even for the local self-appointed transparency watchdogs. I translate an excerpt.

During a national open forum on effective development of Civil Society Organizations — OSCs — held by ABONG in São Paulo on 21 and 22 March, the chief of staff of the secretary general of the federal presidenc, Maria Victoria Hernandez, stated that the federal government would created a mixed commission, together with various civil society groups, to discuss and draft a new regulatory regime for OSCs, something ABONG and its associates have long advocated.

If memory serves, Brazilian law defines ONGs — NGOs — OSCIPs, or “civil society groups of public utility,” and foundations with the same description, which, under a 2007 law, requires that these entities “not exercise, in their activity, the exclusive pursuit of the private interests of associates or founders, as the case may be. There is another acronym in this field that for the life of me I cannot recall at the moment. The Instituto Millenium — a local clone of the Cato Institute — gained this status recently, and has so expanded its activities that it now employs an investor relations firm.

In 2010, a series of mobilizations, networks, movements and organizations, ABONG among them, presented the presidential candidates with a Platfor for a new Regulatory Regime for  OSCs. The document demanded a state policy with instruments and mechanisms to assure the political and financial independence of OSCs in order to benefit citizen participation, with a view to radicalizing democracy and redesigning the deliberative process for the awarding of “public utility” status.

Softex | Hard Sell from Intel

Softex, the software development arm of BNDES, announces:, and I translate an excerpt or two:

Intel Brasil and Softex announce the signing of a Tecnical and Scientific Cooperation agreement that establishes a mutual commitment to the Brazilian software and IT services industry, inceasing Brazil’s share of a sector that already brings inUS$ 18.5 billion and is expected to grow 25% in 2011.

In recent weeks, Intel had announced it would bypass India and China and invest half a billion dollars in an R&D center in Brazil.

The MOU establishes work standards for the training of Brazilian IT personnel in bleeding-edge technology in order to make them more competitive in the world market and making it possible to offer services and products of the highest quality to the Brazilian consumer. at the same time, innovative solutions developed in Brazil will be immediaely made available all over the world through Intel’s online store. The initiative will benefit, not just Softex members, but all organizations represented on its board, such as Assespro, Abes and Fenainfo.

That is to say, industry syndicates generally aligned with the Business Sotware Association of America and the Entertainment Software Association.

The technology press here is dominated by “coverage” of the latest U.S. releases, with little if any attention paid to the Brazilian industry.

One of the first initiatives under study is a survey of IT firms which state of the art technologies,such as parallel programming, cloud computing, mobile solutions, security and graphics computing, should be focused on first in the context of the agreement. 

Massacre at the Estadão | Shanghai-Sambodian Data Pipeline

Comunique-se reports: local metro daily O Estado de S. Paulo lays off 22 journalists.

Already, most of Brazil’s estimated 12,000 “journalists”– the term also applies to publicists — are working in corporate communications. My wife just landed such a job. Pbulic service journalism is palpably shrinking.

I once calculated on the bakof a bar napkin that Brazil has something like 8 to 10 times fewer journalists per capital than the U.S., even before separting out the flacks.

The Estadão surprised its journalists on Wednesday by laying off  22 professiona from both the print and online sides. One journalist laid off was Marcelo Auler, police reporter from the Rio de Janeiro bureau. Some administrative personnel also lost their jobs, but most employees affected were journalist, .The Estado group cited cost savings as the reason for the move;.

“What I find weird is that in December we were all told that the Estadão was the fastest-growing paper in Brazil for the year. We even joked about how this revenue growth would be punished by reducing the staff . One manager said no, our jobs were safe”, said Auler, who felt secure in her job given the stability of the company..

Ricardo Gandour, content manager of the  Grupo Estado, , said the layoffs were aimed at cost reduction. “It is a matter of budgetary goals..It was an adjustment already underway in other parts of the group. We had them in IT, and now we have them here in the newsroom,” he said..

BATS Brasil | “Catalyst of Consolidation”?

You stop paying attention to a subject for a couple of years and suddenly you have know idea what is happening any longer.

To the announcement that the BATS exchange — third-largest in the U.S. — would enter Brazil, and will seek to kick off a process of consolidation of exchanges through M&A, for example, my response was, “What in the hell is BATS?”

I have not been keeping up with Mondo Visione as I should.

In one of those one-analyst interview types of stories today, Brasil Econômico. – semi-heir to the old Gazeta Mercantil, thought still awfully thin in terms of in-depth reporting — plays up the international consolidation angle.

I always thought, with the participation of the Chicago Merc, that the model of expansion centered in São Paulo would be the establishment of  network of regional excchanges. Brazil is a practically a continent, after all, and the BM&F Bovespa is just a tiny little chamber of open outcry  in a bad neighborhood, trading maybe ten big Brazilian companies for the most part.

The DB-NYSE-Euronext deal was a confluence of very deep waters. Here, the well is still being dug, it seems to me.

I have a photo of myself, for example — during a fattish period, so no way I am posting it — in front of the Stock Exchange of Pernambuco and Ceará. It was essentially some lady writing on a whiteboard every half hour or so after getting off the phone with someone — just like the Iraqi Stock Exchange when I interviewed the consultant helping them put that together.

Imagine a stock exchange whose very location cannot be disclosed without extreme information security.

Anyway, that old bourse in the Old Town of Recife could actually become a real exchange, serving a real need in the real world.

But we will just have to see. As to BATS Brasil, I translate hastily.

The U.S. consultring firm Solaris sees the arrival of Bats Global Markets on the capital markets scene in Brazil as the first step in a process of merger and consolidation of stock markets in Latin America..

Described as a New York firm, Solaris lives in Bedford Hills — hedge fund country — and not the Apple.

Overseas,  Deutsche Börse of Frankfurt has just tied the not with  NYSE Euronext of Paris, New York Brussels and Amsterdam,. forming the largest exchange in the world.

The announcement last week that Bats Global Markets might move to Brazil through a partnership with the local securities firm Claritas, diluting the concentration of capital markets here, is not universally dismissed as absurd, given the international scenario.

Another historical example to consider is the consolidation of the Nordic exchanges by, the group behind the  Oslo exchange, I think it was. I interviewed the damn CEO, now I cannot remember the name of the company.

One of those sharing this view is Timothy Ghriskey, investment director at  Solaris Asset Management, an independent New York consultancy. He sees no dissimilarities between the international scene and the situation in Brazil.

“I see little difference between the markets. The big companies today are all global, and the exchanges are starting to reflect this internationalization,” he points out.

Silvio Santos PROER is Answered

My subscription to Relatório Reservado has finally lapsed, but with the merger between TAM of Brazil and LAN of Chilw, orher moves are afoot in the regional airline industry, the Rio rumor sheet says.

The Constantino clan is looking hard at a privatization of TAP. And  Gol is looking to get into the game. It cannot be seen as a response, albeit a modest one, against the porposed merger of TAM e Lan. The plans are heavily guarded and only disucssed at 20,0000, or so says a ranking source with ties to the Gol board ….

After stoutly supported the  Dilma candidacy among the empresariate, Néné has held high level meetings on the aviation sector … aftere getting out of jail again on weapons charges.

But wait, I take that back. My modest little broadsheet is still faithfully arriving, bringing news this noon hour that the the obscenely overprice luxury retailer Daslu is ready to declare bankruptcy and negotiate its debts;

The future of Daslu is reaching a turning point.. In late February, the company will hand its plan to creditors and its plan for judicial reorganization. In play are debts on the high side of R$100 million. A decision to forgive the debt is a sine qua non for for Daslu.

The question now seems to be whether Eliane “I am a victim of political persecution” Tranchiae will stay on board.

 

Strong contenders for the firm are Marcus Eliat of Parmalat — look how that turned out — and Grupo JHSF — what we would call a REIT. .

OI, a major player in digital convergence, will indemnify Bahian consumers with R$ 100 million for shitty service, notes the AE..

SALVADOR – The outage that hit fixed line and mobile telephones and internet connectivity of Oi after a file at the firm’s central operation center in Salvador,on December, will cost the company R$ 100 million paid to consumers in the state..

My NET-Virtua internet went down 9 times yesterday after Electropaulo transformers, as usual, EXPLODED APOCALYPTICALLY.

A settlement signed by Oi and the Secretary of Justice and Human Rights of  Bahia, provided a set of benefits to users, ranging from exemption from usage fees during outages to, 30 bonus minutes for  3,196,590 prepaid plan uses in the state,, as well as a month of discount for 194,990 post-paid customers. The parties also agreed to prorate and discount up to three months of the fees paid by 25,962 fixed-line internet and 11,974 Velox broadband users affected by the outage..

Silvio Santos, the legendary TV network owner and personality, has found his white knight, the Estado de S. Paulo says — a PROER, or Programa de Estímulo à Reestruturação, bank by BTG Pactual.

The private PROER will keep Banco Panamaricano out of bankruptc and allow Silvio Santos to told onto his assets. Last night, BTG Pactual bought Santos’ share in Panamericano for R$ 450 billion.  Silvio used the money to service R$ 4 billion in debt with the Fundo Garantidor de Crédito (FGC) and cover shortfalls at the bank. The FGC will hold onto the remainder in the name of national financial stability..

Silvio was smiling last evening, not least because he had held onto his najor asseta  including  SBT and the Jequiti cosmetics company. On the other hand, he loses the only back he still controls

The mechanics of the deal were as follows: Silvio received, not cash, but notes receivables from  BTG and its chairman André Esteves, worth R$ 450 million. It transfered these securities to the FGC and liquidated its debt from ownership of Panamericano.  BTG must now define when it will repay the FGC.BTG has until 2928 to do so, at 13% per yer. If it takes all the time afforded it, it will have pid the FGCC R$ 3.8 billion.

But  BTG can pay the principal whenever it likes. paid tomorrow, it would be liable for R$ 450 million. In that case,  FGC would lose some $ 3,5 billion.

My wife’s response is “What are people going to do without the Baú de Felicidade?” — an enormously popular game show.