F&A | Ruy Moura’s Breakfast Reading

It has always surprised me that Brazil’s gargantuan and complex business ecosystem   seems unable to produce something along the lines of Dealb%k — an exemplary use of that in-the-moment blog format that keeps readers checking in periodically throughout the day, rather than simply reading it once through and lining the parakeet page with the leftovers.

The business pages of the major Brazilian dailies are heavy on macroeconmic trends, market movements, and the like — stuff you can cover sitting on your ass in front of a Bloomberg Box —  but very light on hard business stories with real protagonists and consequences: Company X overcomes Problem A to accomplish Objective 1.1, or Bank C offers Subsidiary Z to Company Y for X gazillions.

Only the largest economic groups and deals get such coverage, which is not much use to the venture cap, hedge fund or M&A guys who fish a smaller pond — and whose activities are newsworthy themselves, to boot.

So, then, a Brazilian Dealb%k?

The plain old Blogspot Fusões & Aquisições is a step in the right direction, although I  wish it would publish a masthead and take itself seriously as a journalistic source.

Its principal analyst — its only analyst, it seems — appears to be Ruy Moura, founder of Acquisitions Consultora Empresarial Ltda.

Moura’s daily clipping file has climbed to the top of my breakfast reading list, along with the planning ministry’s clipping of various media sources, broken down by topic and searchable.

I think there is a substantial editorial market for the Dealb%k style of coverage.

The only potential competitor I can think of in the Brazilian editorial market is Relatório Reservado, a one-page tip sheet circulating daily to a private circle of subscribers and relying heavily on market rumors.

Exame magazine has a deal flow blog that is useful to check in on as well.

This is the sort of story I find myself missing: 

M&A & The New CADE

I read it in O Globo, which cites the findings of PwC: Brazilian M&A deals in 2012 — 770 — up 2.5% from 2011.

I read recently — without recollecting where — that Brazil’s antitrust regulator is undergoing some structural changes in order to streamline bureaucracy and catch up to its Dickensian backlog of cases.

An interesting question to consider: how will streamlined due process affect rule-enforcement at a regulator recently redesigned and given new powers.

The government visibly wants deals cleared efficiently — part of its industrial strategy is creating international JVs and Brazilian multinationals.

Confession: This is one of those topics I need to read up on before venturing an opinion. Mondaq has a thorough article on the topic, and the blog Fusões e Acquisições is a useful and up to date lusophone source .

In the meantime, I will jot down some notes — my rough & ready translation — and then present selections from catalog of significant deals prepared by the ever-reliable Valor Econômico.

Greasing the Wheels

Source: Administradores.com. Begin translated excerpt.

M&A deals should be dealt with more rapidly by a less bureaucratic procedure in the coming months. The federal Chamber of Deputies is considering a bill — PL 3937/04 — that proposes further structural changes in the antitrust regulator CADE.

By the number assigned, it seems that this bill was introduced in 2004 and is only now making its way to the floor for a vote. As a matter of fact, a look at the legislatve record seems to indicate it is still occupying real estate on the  mesa, though it is classified as urgent.. 

7D | A Mexican Standoff?

On 7D, nothing will happen

Argentine media group Clarín announces a stay of execution.

It says it will not be required to comply with the 2009 Ley dos Medios until all appeals have been exhausted.

As soon as [the court] extended the stay in the case challenging the constitutionality of certain provisions of the media law, Clarín issued the following statement:

The Grupo Clarín has just been informed that the injunction has been extended until a definitive ruling on the constitutionality of provisions of the Media Law  has been arrived at.

As it has throughout the process,  Grupo Clarín will follow the law, respecting the Constitution, the law, and the findings of the courts.

Eric Nepomuceno of Brazil’s Observatório da Imprensa summarizes the case, below.

As it happens, and contrary to the image of a deeply polarized debate, there is internal disagreement among shareholders in the Clarín group over compliance — I will translate that, too. But first,

Policarpo, On His Oath? | Journo Wanted in RICO Probe

The phony bribe-stuffed Swiss bank accounts cooked up and served by Veja magazine

I read it in Carta Maior: A congressional panel wants the federal attorney to probe relations among prominent members of the press, on one hand, and movers and shakers of the diversified, post-modern numbers racketeering sector, on the other.

Brasília – The rapporteur of the «CPMI of Charlie Waterfall», deputy Odair Cunha (PT-MG), will request that a subpoena be issued to journalist Policarpo Junior, chief of the Brasilia office of Veja magazine em Brasília, as part of the final report to be submitted today, 21 November 2012, in the Brazilian Senate.

The CPMI is a mixed parliamentary commission of inquiry. Charlie Waterfall is a numbers and gambling racketeer the depths and scope of whose influence are proving difficult to spelunk, although Goiás and Brasília should play a major role.

The Veja journalist is the subject of, or a participant in, a good deal of conversation recorded by the federal police in the case.

In an initial reading of the evidence currently available, it appears that Policarpo was often fed with microwave-ready scandal stories by and at the behest of Charlie Waterfall’s Vladimiro Montesinos, an ex-ABIN agent named Jairo Martins.

PT members on the panel argue that the documents analyzed during the 180-day term of the commission leave no doubts about the journalist’s involvement with the «Waterfall» criminal organization. “This is a  position we have taken from the very beginning,” says Dr. Rosinha (PT-PR), who presides the commission.

The question of issuing a subpoena to Policarpo has created constant friction among CPMI members. Submitted a number of times by PT lawmakers and Senator Fernando Collor de Mello (PTB-AL), the motion failed to receive a majority of the 32 votes on the panel.  The PT, PCdoB, PSB and PTB officially supported this position, but these parties only make up 11 of the votes on the commission.

Opposed to the subpoena, opposition members — PSDB, DEM and  PPS — obtained the support of the PDT and PMDB, which turned the tide in favor of the journalist.

In August, a study carried out by the Waterfall commission at the behest of  Dr. Rosinha found that the Veja editor not only used the Waterfall organization as a journalistic source but also requested favors from Waterfall’s RICO.

Pardon the Newspeak, but RICO = «racketeering-influenced corrupt organization» seems to define the issue ratherly neatly, and even makes for a bilingual pun.

Often, he would receive ready-made “journalism” serving Waterfall’s interests and feature it in the magazine a short time later.

“This study establishes that Policarpo maintained a personal relationship with the Waterfall RICO that went well beyond the source-reporter relationship. He owes Brazilians an explanation, yes he does, ” Dr. Rozinha said at the time.

The study did not confirm any direct participation by other Veja management or employees, including the Civita family, owner of the Abril Group. It did say, however, that stories published by the magazine directly served the interests of the criminal conspiracy.

The report was based on court-ordered wiretaps realized by the federal police in Operation Vegas and Operation Monte Carlo. In Monte Carlo alone, police recorded 42 calls between  Policarpo and members of the Waterfall RICO..

The journalist also faces accusations by Goiânia judge Alderico Rocha Santos, who said that Waterfall’s wife, Andressa Mendonça, tried to blackmail her in exchange for advantageous treatment for Waterfall, threatening her with a dossier that would allegedly compromise her.

Veja defended itself saying, among other things, that it does not compile, nor does it publish, dossiers.

Veja, Veja, as unbelievable as ever.

One example that comes to mind, for example, is the “bribe-stuffed Swiss bank account of Lula” gambit. Luis Nassif narrates the gambit with his usual candor and caution.

Veja’s partnership with investment banker  Daniel Dantas grew closer as 2006 drew to a close. The assortment of articles and dossiers, and especially the most outlandish. seem to have been furnished directly by the banker.

In its May 17, 2006 edition, Veja laid down a bolder bet.

Editor in chief Eurípedes Alcântara received a dossier from Dantas regarding supposed offshore bank accounts of senior government officials The same dossier was supplied to another member of the three musketeers + Dartagnan: Diogo Mainardi.

Assigned to track down the details was Márcio Aith, the same journalist who had covered the Kroll case for the Folha de S. Paulo.

At that point, Aith enjoyed a solid reputation among fellow investigative reporters, having worked at the Gazeta Mercantil and Folha de S. Paulo. He had an excellent knowledge of the capital markets, corporate earnings, macroeconomics and the like, and looked to be heading for a stellar career.

So Aith goes looking for evidence to support the dossier, and quickly finds out that it is a forgery. This in itself would make a good story.

The original dossier was prepared by Frank Holder, ex-CIA and a Latin America specialist who left government service to set up his own shop — Holder Associates – a business later acquired by Kroll.

Aith went looking for Holder in Switzerland. Holder told him that the list was the fruit of an Italian investigation into the Brazilian part of the Parmalat scandal. Aith tracked down Italian police officials in Milan, but they said they knew nothing of the matter.

Holder then changed his tune, saying that the dossier was prepared by the Argentine José Luiz Manzano, a former minister and, according to Aith, a living symbol of the corruption of the  Menen regime.

Aith tracked down Manzano, who confirmed the authenticity of the dossier and ordered aides to collect more data. The resulting article material was full of inconsistencies. The article was a new Caymans Dossier.

The reference is to  elaborate, but on closer inspection clumsy attack on the PSDB and its leadership during the elections of 1998

Aith had enough info now to guarantee him an Esso

But there is a rule of journalism: When the sources is trying to fool the reporter, the reporter has the obligation to out him by name.  But Eurípedes resisted released the name of Dantes. There was internal debate. There was no way to get around Aith’s finding, but on the other hand, Eurípedes wanted to defend his ally.

Aith wound up giving in. On one hand, he admitted that Dantas was his source. But the efforts to spare Dantes and his reputation turned the article into a «pterodactyl» — an ugly creature, designed by committee.

Aith had committed the error of a lifetime in letting his byline go on the Swiss dossier story. …

The story began with the cover. The headline made no mention of the dossier or its lack of authenticity. On the contrary, the forgery was presented as though it were real:

“Daniel Dantas: banker and suicide-bomber. In his arsenal, the number of Lula’s supposed offshore bank account.

The headline made no sense at all. Aith’s investigations had turned up no such thing — in fact, he had found it to be a fraudulent document cooked up by Dantas.

But the “lead” was even more incredible:

“Daniel Dantas is preparing to open a new chapter in the investigations into the “criminal organization” that has taken over the government and caused so many problems for Brazil …

The lead paragraph, rather than featuring Aith’s scoop –the discovery of a phony dossier – said:

“On the floor of the Senate, Arthur Virgílio (PSDB-AM) revealed the contents of a document in which Banco Opportunity, controlled by Dantas, said it was being persecuted by the Lula government because he refused to pay bribes of tens of millions of dollars to the PT in 2002 and 2003.

Veja editorialized on several occasions in favor of this “political persecution” theory, which formed a cornerstone of the banker’s defense in Manhattan Federal Court against the Citigroup suit.

The letter, written by Dantas attorneys and filed with the New York court where the banker was being sued by Citigroup for fraud and negligence, is merely the beginning of a soap opera that, judging by the story of Dantas’ life, will be much more than a simple shakedown.”

And on and on it goes. Charlie Waterfall wants to promote a model of new school construction, so Veja cooks up a massive special issue on the subject, pure puff. Abril further consolidates the textbook business with Ática-Scipione and suddenly competitors are the target of campaigns accusing them of “communist indoctrination.”

I s**t you not. Unbelievable.

IstoÉ also finds itself criticized as a rent-a-byline disinformation pipeline

Brazilian Auto Industry | Beemers Built in Blumenau?

It is not by accident that the Brazilian automobile sector has been the showcase of industrial policy under a president whose political career emerged from the auto workers unions of the São Paulo metropolitan area.

It is no surprise, either, that FIESP president Paulo Skaf — the Industrial Federation of São Paulo State — is endorsing the PT’s candidate for mayor, Fernando Haddad.  This here is not Venezuela. Corporate interests have enjoyed a seat at the table from the get go.

In contrast with other sectors — telecommunications, media, agribusiness, logistics —  the auto market already seems more modern, diverse and competitive and has attracted foreign investment to manufacturing for Brazil’s promising internal market.

Stuck in the city’s legendary traffic jams, you can bide the time birdwatching the economy models of U.S. and European brands — Citroen, Renault, Mercedes, Fiat, VW —  as well as Asian vehicles — the recently launched Chery of China, Honda, Toyota, Kia, Nissan.

Source: Estadão Conteudo, via Yahoo! Notícias.

On Friday, October 20,  BMW announced through its press office that its Brazilian president, Henning Dornbusch, will meet with President Dilma on Monday to formalize the company’s plan to build a factory in Brazil and to announce its location.

BMW has intended to build vehicles in Brazil for some time now — an intention bolstered by the new regulatory scheme for the industry, known as Inovar Auto, which will take effect in 2013.

Green Machines | Braskem’s Sugar Cane Gains

The Estadão reports:

Tigre will introduce a new line of drainage grills using polyethylene produced by Braskem from sugarcane. Known as the Tigre Eco-Grill, the product line marks the entry of «green» plastic into the construction market, the company says, without revealing further details of the deal.

“Our investment in this new line shows that we are increasingly open to differentiated strategies based on our sustainability policy, which we restructured late last year,” writes Paulo Nascentes, Tigre VP for tubes and connectors. Tigre is already negotiating with homebuilder Tecnisa over the use of green products at a building site in São Paulo. The product line officially rolls out this month.

The announcement represents a widening and diversification of Braskem’s applications for  polyethylene plastics. The company has already closed deals to supply the likes of Procter & Gamble, Johnson & Johnson, Nestlé e Tetra Pak, among others.

«I have one word for you, my boy: Plastics», as someone once told Dustin Hoffman.

Other news from the alt.energy file, via Relatório Reservado — taken with a grain of salt, like tequila, a stimulating source of conjecture …

The owners of Dobrevê Energia, namely the controlling shareholders of Malwee and Natura, are searching for a new partner. EDF and AES are the main candidates to enter the wind-power company.  Energisa, which has already visited the deal’s data room, has begun due diligence, but has lost ground over its financial capacity. Contacted by RR,
Dobrevê confirmed that it is selling part of its equity.

The Brazilian business press tends to be short on deal- and breaking stock-oriented news and big on macroeconomics, which makes Jack a dull boy.

Marina and the Greens | Plus, Big Sousaphone Solo

Newsvine | A Fair and Balanced Interview with Marina Silva by Globo. Mirabile Dictu.. That is me doing a quick bit of translation about the collision between politics and environmental policy in Brazil.

Brazil has only had a forest service for 10 years, to our 110. The obscenely well-organized agribusiness lobby is more interested in billions of hectares of monoculture sugarcane than in actual environmental preservation, despite the fact that this huge country can feed and fuel itself eleven times over:

I only contribute to these stupid churnalism sites like Newsvine — now in the hands of MSNBC, where the MS stands for Melissa Gates, board member of the Washington Post — to keep myself from succumbing to boredom. The most I ever saw in my account at the end of the month was $5, which I kept for myself and bought a good cigar with.  Back when the dollar was worth something, this was — a puro habano, even. 

Thoughtoid

An open letter to various persons around the world.

I have been scheduled for an extensive biographical interview tomorrow afternoon — doctor’s orders, knowing my wife’s talent as a journalist and searching for insight into my human condition as an incomprehensible gringo with an improbable life story.

There is some possibility I will be receiving a disability pension or insurance benefits in the near future — hopefully not as in “in the near future” in the sense Bush meant it when he said he was going to bring us the head of Osama bin Laden.

That took too long, and cost too much, especially for a Republican administration touting their man as the “MBA President” vehemently opposed to nation-building.

A decent Harvard MBA would have assembled a virtual team from preexisting resources, working off laptops in Starbucks in Karachi, and adapted it to the business case, not created a gazillion-dollar Homeland Security bureaucracy that seems sort of redundant when we already have a Defense Department. They should at least rename it the Offense Department in the interests of Plain English nomenclature.

Bush turned out to be more of a “the crippling ills of legacy admission policies” president, really.

But that is all over now. I am listening to Radio Eldorado on the Net — radio is still the king of Brazil — and here comes “Times keeps on slippin’, slippin’, slippin’, into the fyoo-chaaaaa.”  I would rather be hearing Jorge Ben Jor, but an Eletrobras fubar fried a lot of our electronics, including my musical playback box.

When Brazilians start accusing us of cultural imperialism, they are not being paranoid. Eldorado’s rotation sticks precisely to the 30% of national cultural production required, bitches about it, and can be counted on to play Led Zeppelin at least once an hour.

Fortunately, it’s rock ‘n’ roll and can be relied upon to trash the hotel room. One of my favorite discoveries here is the band the Raimundos, modeled after the Ramones, of course, but also taking their name from “a girl who has a nice ass but is otherwise horribly ugly.” This is an excellent term that was lacking in my vocabulary until now. I have been enriched, culturally.

I am proud of having introduced to the Portuguese language the term gironalismo as a translation of churnalism, itself a very useful neologism for journalism that merely rewrites part of the press release, signs its byline, and then fucks off to the pub to forget its self-respect.

I am ginning up a case study today. When IstoÉ magazine ran a cover story on “Why Apple is the most valuable brand in the world,” I pointed out that the magazine not only has a long partnership with an agency hired to promote the brand’s value, but that the apparently independent sources who opined on the matter all belong to the same PR group, WPP, in partnership with its local fan-wallah — remember Passage to India? — IBOPE.

Now that is sleazy. 

Brazilian Capital Market Machine | Writing the Meltdown Manual

The great Sambodian smoking hole, above: Collapse of excavations at the future Pinheiros Station of the São Paulo Metrõ system.

After all these years, and thank you for your concern, Brazil seems to have adequate control over its nuclear reactors — even if the location Angra dos Reis along the south-cenral coast, teeming with life, is a constant cause for nervousness and target for activism.

The government has plans to build three more in the coming years.

Nevertheless, it is natural enough for the local press here to imagine what a Brazilian Fukushima might be like at a moment like this, when Japan is constantly in the news. Experts are trotted out to offer explanations:

José Manuel Diaz Francisco, a spokesman on security for the state-owned Eletronuclear, the technology used at Brazilian plants is safer than that used at the Japanese complex damaged by the March 11 earthquake.

“Here in Brazil we use PWR (pressurized water reactors). In Japan, the boiling water reactor ( BWR) is used. And we have isolated the two circuits in a way the Japanese have not,” Francisco said.

Following the same logic, I often find myself wondering what a Brazilian market crash might be like, especially if it came as the result of massive fraud by inadequately supervised market operators.

If it can happen to the NYSE, with its PWR model of self-regulation, what might happen to a pot with the lid left off, boiling over with first-time individual investors — grist to a rumor mill that operates at full steam day and night?

As Brasil Econômico reports, the Brazilian securities regulator — the CVM — has finally established credentialing and oversight system for independent securities brokers — selecting a rickety organization that looks to have been knocked together for the occasion as the autoregulator of these “liberal professionals.”

The official ceremony too place yesterday.

With the new rule, No. 434, the National Association of Brokerage and Securities Distribution FIrms (Ancord) will become the licensing body for these professionals in Brazil.

The prior that makes registration with the  Comissão de Valores Mobiliários (CVM) obligatory will make this registration automatic as soon as a private accreditation is obtained, much like the current system for accrediting stock analysts run by the professional association Apimec.

Apimec is on the campaign trail at the moment against a recently-instituted commission based on the British Takeover Panel.

Ancord already administers the qualifying exam for investment professionals and has lobbied the CVM for the job.

ANCORD just recently merged with ADEVAL, the Association of Securities Syndicators — the later part of the FENADISTRI syndicate.

The organization produced through this union, however, seems to have little in common with SIFMA, its U.S. counterpart — formed by the merge of the Bond Association and the Securities Industry Association mid-decade.

New From the Nose for Newsaphone

Learn how to fool search engines and optimize your sites and blogs

• Gilpérez set to lead Telefónica Latam: buzz

Just horsing around with the headlines this morning, as usual.

The Latin American digital convergence market is just about the most interesting game on the planet, if you squint at it correctly — a version of basequetball developed by soccer players, say.

Semealogy, meanwhile, where I registered that little note — it was the top non-BS headline in Valor Econômico today –  is nothing more than an instance of Semantic Wikimedia that lives on my rented server space. If I wanted it to, however, it could easily behave like an automatic news robot.

I saw one of these gizmos in action the other day: A company announcement broken down into its component factoids being pumped out at one twit per second (tps) into twitterspace, taking about five minutes to run through the cycle.

Twitter provided the widget and customized it with the branding of the client, then stuck it in a footnote to the page so that it would rack up impressions without anyone having to actually notice it or actively select it.

They call it churnalism. Bill Gates and George Soros each fork out $50 million a year to make it happen.

Among the worst examples I have seen was the Twitter user who became the talk of the twitterverse overnight by obtaining 185,000 followers in a span of about four hours.

No one was actually talking about the user — a poster child for some iSomething or other — but the decibelmeter was registering Beyond the Voice of God.

I was tracking the guerrilla marketers behind the campaign at the time — working out of a P.O. Box in downtown Goiânia and incapable of keeping straight their various noms de guerre.

That sort of blackhat SEO is kid stuff, though, in comparison with the sort of thing Valor Econômico did to readers during its ongoing promotion — we are getting it home-delivered for free at the moment, and have been for more than a month — just last week.

In a “special section” dished up with the exact same look and feel as the real newspaper, it ran sponsored content not identified as such, mixed in with bylined pieces from persons with ambiguous relationships to the reportorial staff and the subject of coverage.

In the middle of this hodgepodge, a stirring full-page message from your friends at British American Tobacco, swearing their allegiance to the theology of free will, free markets and an end to the traffic in Parguayan Marlboros.

Here in Brazil, this campaign comes joined at the hip with a push for self-regulation of the capital markets and a last-ditch effort to bring the mass media sector within the jurisidiction of the Brazilian FCC, CADE, the antitrust regulator.

It always makes me feel … greasy … when fellow foreigners go all Col. Kurtz on us like this, out here in the heart of darkness like this.

Sure, you CAN reduce your risk of negative news coverage to almost zero, but SHOULD you?  Do you really think people don’t notice?

The local villain to watch is Souza Cruz, the Brazilian Philip Morris behind several Cato Institute clients that one might mention.

When a film was made of the life story of President Lula a year or so back, for example, the fiery labor leader pointedly chain smokes from start to finish — as he used to in real life — and trade unionists only drink Brahma beer.

The film was financed in large part by Brahma and Souza Cruz.

During the military dictatorship, a man named Jean Manzon, editor of Paris-Match, pulled an almost identical stunt with a special propaganda section on the Brazilian miracle.

Manzon had helped found modern Brazilian photojournalism at Globo and produced a remarkable series of propaganda short subjects on behalf of the coup plotters, conditioning audiences for the state of exception to come.

Manzon is still celebrated as an example of Globo’s storied Standard of Quality.  I have some clipped material on the guy somewhere here on one of these 250 GB bricks ….