Bingo! | Delta Goes Down

Source: Delta defines bankruptcy recovery plan — Portal ClippingMP.

In the annals of contemporary Brazilian bribery scandals, probably none are more painful than the saga of the public works contractor Delta and its ties to organized crime boss Carlinhos Cachoeira — Charlie Waterfall, whose principal business is the murky world of smuggling, numbers racketeering, and “nickel-hunter” gambling machines.

One of Brazil’s largest contractors, Delta had been a star player in the PAC — the federal growth acceleration program — and was afforded the honor of joining the consortium to rebuild the Maracanã Stadium in Rio de Janeiro.

Now, it would be difficult for it to obtain a bicycle-powered newspaper route.

Delta has since voluntarily withdrawn from Maracanã and most other projects.

A congressional investigation is underway — wrapping up early, actually, after company officials and other parties took the local equivalent of the Fifth — but federal police say they have ample evidence of wrongdoing — including the involvement of journalists in character assassinations of Mr. Waterfall’s enemies..

Delta executives appeared on court-ordered wiretaps discussing how to cheat federal contract bidding procedures and infiltrate regulatory agencies, among other things.

And so the rise and fall of Delta turns out to be a textbook case of moral hazard.

Delta intends to pay its non-financial creditors with equipment. Its plan is to reduce its inventory of idle equipment by reducing the number of projects contracted for since January 2012 by  50%. Banks and financial institutions will receive payment starting in June 2014,  payable in 72 monthly installments and corrected by CDI+1%, according to a recovery plan filed yesterday in a Rio de Janeiro court. The creditors assembly is scheduled for December 7. Bradesco is the company’s largest creditor.

Brazil | Federal Home and SME Loans Survive Budget Cuts

Underlying the battle in the Congress this week over the increase in the minimum wage — the opposition leader in the Senate, Aécio Neves, has just announced he supports the lower rise, silencing loud noises from the former presidential candidate of his party as well as disappointing the major trade union conferderations —  is a project to cut the federal budget this year while maintaining development subsidies.

The local press, except for the leftist Carta Maior — the editoriographic above is from the cheerfully pelego DComércio — makes no mention of this linkage, but the factoid of the hour is that each additional real committed to the wage adjustment is R$15 billion unavailable for social and economic development programs.

As at home, the tactic of the opposition is Starve the Beast, as we saw in the purely symbolic defeat of a meaningless tax o financial transactions, the CPMF, that was simply made up for with the increase of the IOF.

With the deal now closed at the lower wage increase, the Estadao is able to report that

… the Caixa Econômica Federal and the National Social and Economic Development Bank (BNDES) will have an additional R$ 130 billion in capital for loans this year . The  Caixa will receive R$ 2.2 in  Petrobrás and Eletrobras, raise to some R$ 30 billion its loan reserve;  BNDES will get an additional R$ 6.4 billion, raising its loan capacity to R$ 100 billion.

With the increase in assets, the Caixa’s Basel Index will rise from 15.4% to 16.0% or so, but should settle at about 15% by year’s end due to a 30% increase in loan volume planned for this year.

A VP of the CEF says …