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PL39/13 | A Chip Off the FCPA

bribery

No problem does more to alienate citizens from their political leaders and institutions,and to undermine political stability and economic development, than endemic corruption among the government, politica l party leaders, judges, and bureaucrats. — USAID Anti-Corruption Strategy

Source Valor Econômico | Portal ClippingMP.

Brazilian attorneys Leonardo Guimarães and Flávia Godinho compare recent anti-corruption legislation in Brazil with congeners in the U.S. and Britain.

Corruption indiscriminately affects citizens, public institutions and private organizations. Brazil as a whole is damaged when  corruption distorts the mechanism of the free markets — undermining fair competition, inspiring uncertainty among business owners, and driving away investors. For this reason,  combating corruption has been the subject of diverse international conventions, such as the Interamerican Anti-Corruption Convention organized by the OAS and signed in 1996; the OCDE Anti-Bribery Convention, from 1997; and the UN Anti-Corruption Convention, approved in 2005.

In response to the various international obligations it assumed, Brazil has passed laws designed to combat corruption, such as the Law of Administrative Impropriety and the “Clean Slate” Law.

Brazilian law still suffers from lacunae in its treatment of active corruption by a corporate entity, the only punishment for which is a restriction on the right to enter into contracts with the government.

Existing  mechanisms must be improved if the new law is not to be just another case of legislative inflation.

In the context of adapting our law according to international standards, we now have before us the PLA, the Anti-Corruption Bill (PL 39/13), which will regulate the civil and administrative responsibility of corporate entities for acts injurious to the public administration, both here and abroad. The law was approved in July 2007.

From the point of view of comparative jurisprudence,  PL 39/13 closely resembles the Foreign Corrupt Practices Act (FCPA), an innovative piece of legislation from the U.S.,in force since 1977, which prohibits the bribing of foreign public officials by U.S. corporations. It bears some  resemblance as well with the  Bribery Act, passed in 2011, a British anti-corruption law.

FCPA: Notable Cases

Although you read that the FCPA is too little used, there are at least two very interesting cases of its application: the Wal-Mart Mexico debacle and the record-setting settlement with SIemens.

An April 2012 article in The New York Times reported that a former executive of Walmart de Mexico alleged in September 2005 that Walmart de Mexico had paid bribes to officials throughout Mexico in order to obtain construction permits, that Walmart investigators found credible evidence that Mexican and American laws had been broken, and that Walmart executives in the United States “hushed up” the allegations. According to an article in Bloomberg, Wal-Mart’s “probe of possible bribery in Mexico may prompt executive departures and steep U.S. government fines if it reveals senior managers knew about the payments and didn’t take strong enough action, corporate governance experts said.”[6] Eduardo Bohorquez, the director of Transparencia Mexicana, a “watchdog” group in Mexico, urged the Mexican government to investigate the allegations.[7] Wal-Mart and the US Chamber of Commerce had participated in a campaign to amend FCPA; according to proponents, the changes would clarify the law, while according to opponents, the changes would weaken the law.

Siemens, in the Brazilian public eye at the moment, figures in this story, too.

In 2008, Siemens AG paid a $450 million fine for violating the FCPA. This is one of the largest penalties ever collected by the DOJ for an FCPA case

The lede:

In a December 15, 2008 press release, the U.S. Department of Justice (DOJ) revealed the details of a $450 million criminal fine payment made by Siemens AG, a German company, and three of its subsidiaries. The four pleaded guilty of violations related to the Foreign Corrupt Practices Act (FPCA). The three subsidiaries, Siemens S.A. – Argentina; Siemens Bangladesh Limited; and Siemens S.A. – Venezuela pleaded to one-count informations involving conspiracy to violate the anti-bribery and books and records provisions of the FCPA.

Taking One for the Team

Clarifying the line between “physical” and “legal” entities — my physical being and my purely notional translation business, say — is an important objective.

As in the examples just cited, the provisions of  PL 39/13 target the financier of the illegal act and not the receiver of the bribe. This is a completely novel approach with respect to the Brazilian legal system.

Within the spectrum of harmful acts that deserve to be repressed we find the defrauding of contract auctions and administrative contracts, as well as promising, offering or delivering, even if indirectly, an undue advantage to a public official or a third party related to that official.

In addition, it is forbidden to use an intermediary to hide or simulate the real interests or the identity of the beneficiaries of the act in question, or to hamper the work of agencies, institutions or public servants or intervene in their activity.

Administrative sanctions  — including the payment of a fine between 0.1% and 20% of gross income for the previous quarter — are applied independently of whether or not the guilt of a corporate entity is proven.

I read that paragraph carefully, and that is what it says. I suppose it means that if I cheat at poker in my official capacity as VP of Poker, my cheating reflects on my employer, since it was done in his name, even though without his knowledge.

There is a Brazilian legal concept called the domínio do fato that works in a similar manner. It came up frequently during the recent “payola” trial in the Supreme Court, where Zé Dirceu, for example, was not proven to have actively participated in the scheme but who was held responsible for reasons of domínio do fato.

Civil sanctions depend on proof of guilt or guilty intent, excepting the loss of assets and sums of money obtained by means of the infraction. It should be emphasized that the fate of the corporate entity does not let the physical person responsible off the hook — this person may be tried separately and/or simultaneously.

Also worth mentioning is the rule that provides benefits in the application of sentences for companies that adopt corruption prevention practices, such as “internal mechanisms and procedures to preserve integrity, audit carefully, and provide whistleblower incentives, as well as instilling effective ethical codes for the organization as a whole”.

This rule, one of the most beneficial provisions of the bill, stimulates the implementation or updating of “compliance” programs  — the Anglo-Saxon term means to act according to a rule. Compliance programs guarantee the adoption of conduct that conforms with the rules and polices, both internal and external, of the company, as well as fostering a transparent ethical atmosphere conductive to corporate best practices.

This is a major advance in our legislation, which will now take into account the procedures and internal policies of companies as a way of reducing punishments, as has become commonplace in countries like the U.S. and Great Britain.

Observe as well that where there is no regulatory framework to define the pillars of a compliance program, The American guide, A Resource Guide to the U.S. Foreign Corrupt Practices Act (PDF), can be useful. It identifies the “hallmarks” of what are considered to be essential factors in a successful compliance effort.

A integridade e os princípios éticos devem estar presentes em todas as ações realizadas pela empresa, incluindo seu relacionamento com o setor público. A possibilidade de uma mudança de cultura a respeito do relacionamento entre o poder público e o particular, com a incorporação de um compromisso das empresas contra a corrupção, é, certamente, uma boa inovação trazida pelo projeto.

Embora o projeto de lei, de forma geral, represente um avanço no combate à corrupção, principalmente no que se refere ao incentivo da criação de mecanismos internos de controle nas empresas, deve-se ter em mente as vulnerabilidades processuais e investigativas do nosso sistema, cujas leis anticorrupção anteriores não conduziram aos avanços esperados. A melhor resposta que se possa dar à corrupção, antes da criação de mais um aparato formal, é o aprimoramento e a efetivação dos mecanismos já existentes, para que as novas leis não se transformem em mera inflação legislativa, sem qualquer efetividade.

Latifúndio | Counting the Beans

Senator Kátia Abréu: "Miss Deforestation"

Senator Kátia Abréu: “Miss Deforestation”

Source:  Brasil de Fato

At least six of the major foreign and domestic groups in the agribusiness, mining and firearms industries invested  R$ 1.395 million in the 2010 election campaigns of nine of the 17 federal deputies who signed  PLP 227.

The bill weakens protections of indigenous rights to ownership of their traditional territories.

Data from the federal elections tribunal (TSE):  See the complete list of campaign donors to the 17 authors of PLP 227.

Dozens of other companies and multinationals involved in grain, pesticides, meatpacking, mining and construction are well represented among the principal donors of the lawmakers who signed PLP 227. As the Parliamentary Agriculture Front denounces the supposedly corrupt interests of native peoples and environmentalists, without ever naming names, the TSE donation figures indicate who should really be questioned about conflicts of interest. Continue reading

Celso Schröder on Veja: Bordering on the Criminal

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Source: Viomundo | Sul21

Date: May 28, 2012

Subject: Interview with PENAJ president — reelected in 2013 –Celso Schröder

Background: Evidence that Veja magazine allowed a criminal suspect to use its cover story to attack its accusers, in exchange for political favors

Head: FENAJ Will Not Protect Criminal Journalists

Translation: C. Brayton

A CPI conducted by the National Congress that seeks to investigate the influence of numbers racketeer Carlinhos Cachoeira among public officials has awakened a debate as unexpected as it is necessary: The relation of media with the halls of power,  political  as well as  economic.

The Polícia Federal has identified nearly 200 phone calls between the director of the Veja agency in Brasilia, Policarpo Júnior, and the scheme mounted by the racketeer [Charlie Waterfall]. The publication of these wiretap transcripts show that Cachoeira [Waterfall] often had a determinative say what was covered by the Abril weekly, which allowed itself to be caught up in Cachoeira’s political intrigues with Senator Demóstenes Torres (ex-DEM).

Given these facts, some lawmakers have demanded that Policarpo be summoned to testify in the CPI, even though commission member Odair Cunha (PT-MG) had already rejected a demand for information on the incident.

In the view of Celso Schröder, president of National Federation of Journalists (Fenaj),  the magazine ought to explain what guided its coverage in this episode. “Veja must explain itself to the Brazilian reader. It has to explain how it exercises the role of journalism, given the shallowness of this coverage, its lack of commitment to and irresponsibility regarding the long-standing ethical and technical principles of the profession,” Schroder said.

In this interview with Sul21, Schröder assesses the conduct of the magazine in this and other episodes and defends the development of a regulatory framework for communications.

Sul21 – What can the CPI of do Cachoeira tell us about the Brazilian media?

Celso Schröder – The CPI is showing us that the media is an institution just like any other and must submit itself to public principles to the extent that its raw material — information — is public in nature.  The less public this institution is, the more beholden it becomes to the private interests of its leadership, the  less committed it is to the nature of good journalilsm.  Like any institution, the media is not beyond good and evil, or the precepts of the democratic rule of law and the public interest.  From a politial perspective, a Veja has confused the public with the private. From the journalistic point of view, it has committed an unforgiveable sin: It has established a promiscuous relationship between reporter and source.

It is not just the reporter, but the organization as  a whole and its leadership, who have opted to behave in a technically dubious and ethical unacceptable way.  Every journalist learns during the first week of classes that the source is a part of the story only to the extent that it is treated as a source. The source has his or her own interests, and rather than let these contaminate the information being supplied, the journalist should act as a critical filter. The source, at the same time, provides the reporting with credibility and contributes to the plurality of the story. If it is not filtered, however, it may also contaminate the content.

Sul21 – At what point did Policarpo Júnior and Cachoeira violate the boundaries between reporter and source?

Schroder – Policarpo did not treat Cachoeira as a source. The problem is when a journalist or news organization assigns someone the role of a single, exclusive source, negotiating directly with that source the content and dimensions of the article and, in the case of Veja, committing the magazine to an act driven by partisan politics [and organized crime.]

This is a sin that Veja has been committing for a long time now. The Brazilian opposition  is very fragile. Lacking a strong opposition, the press assumes this role, but in the process completely distorts its mission.  The press is not obliged to assume this role. Society does not view [the world] through partisan lenses, as Veja seems to believe.

But Veja has recently produced some of the most shameful moments in Brazilian journalism.  When an attempt was  made to sneak into the hotel room of former minister José Dirceu (PT) by a Veja reporter, I wrote an article saying that if Watergate was the high point of world journalism, Veja”s behavior was the exact opposite — an anti-Watergate.

Little did I know that we would soon see something even worse. This was not the individual act of a reporter who lacked critical judgment. It was the premeditated and systematic act of a news organization whose chief dispatched his reporter to perform an immoral act that comes dangerously close to being criminal.

Sul21 – Can the same be said of the episode involving Policarpo Júnior and Cachoeira?

Schröder – At the  moment, that story is still coming together. This is a magazine that risks losing the raw material of its existence: its credibility.  It strikes me as suicidal,  especially from the point of a view of a company in the news business — unless Veja is counting on other means of financing, or has already received subsidies from a mechanism not involving credibility and public relations.  We lack concrete facts about its financial condition, but all signs are that at this moment Veja is financially changing  course.  The moral compromise and unscrupulous alignment of the magazine with a particular worldview makes one think of Veja as a publication with its hand out in exchange for services rendered to the political establishment that finances it.

Sul21 – But the magazine has had periods of greater commitment to proper journalism. What changed?

Schroder – Veja has long given signs that it does not care about its journalistic reputation. Veja was fundamental to the redemocratization of Brazil. It was an example to emulate for journalists of various generations and was led by men like Mino Carta. After a certain time, however, the magazine began aligning itself with a particular social group. Obviously, the editors of the magazine have their own opinions and play a conservative role in society.  There was nothing wrong with that so long as it expressed its editorial policy clearly.  Now, it limits its informative journalism to a space of discussion with counterpoints.

I am wracking my brains to translate this last sentence. Perhaps the yellow pages interview provides an example: the interviews often come off as scripted and softballed …

Elementary rules of journalism have been abandoned by this magazine, which was once so important to the transition to democracy and the development of journalism. It has degenerated into a negative example whose failings need to be confronted.

Sul21 – How do you view the possibility of summoning Policarpo Júnior to testify before the CPI?

Schroder – I have seen proposals in that vein from some politicians, such as Senator Ana Amélia Lemos (PP-RS), who says investigating the role played by Policarpo in this incident represents an attack on the press. But journalists are not above the law and cannot be held to be above and beyond republican values.  If he is summoned by the CPI, he has the right not to attend. If he attends, he has the right to claim reporter-source confidentiality.  But the summons in iitself represents no threat.

Veja owes Brazil an explanation. It must explain how it goes about doing journalistic work based on these mere ideological inclinations, this lack of commitment  and irresponsibility with regard to longstanding technical and ethical rules of journalism.   It is essential that we ask these questions. Journalists and academics have an obligation to question these practices.

Sul21 – In this light, would  it not seem valid to summon the president of Abril, Roberto Civita?

Schroder – That seems to me to be a loss of focus … In the CPI, Veja is [only] one of the topics to be covered. The main problem is the corruption that ties Cachoeira to the Brazilian parliament. A statement by Civita would generate a debate that would shift the focus of the CPI awat from its essential tasks.  There is no doubt that Veja praticed poor journalism and should be made to explain itself. The CPI has wiretaps of magazine employees talking with the numbers racketeer.  So let them be summoned. But bringing the chief of Veja’s Brasilia branch in to answer questions is no trivial matter.

Sul21 – Criticisms of Veja tend to be answered with arguments that praise its own, supposedly investigative, journalism while firing back with various charges of corruption [against critics]. The Policarpo-Cachoeira tapes, however, reveal the workings of the machinery behind some of these [character assassination ] attacks.

Schroder – There is a certain sensation in the air that we are living through the most corrupt period in our history.  This is far from being true. Consider our history and see whether or not we have functioning democratic institutions.  The press plays a democratic role by providing oversight of corruption scandals. The problem is that in certain sectors, where these charges are formulated, an absolute value is attributed to the concept of corruption.  In the Veja case, the worst of all was that magazine itself was directly involved.  This was not just bad journalism.  There were dangerous signs of self-enrichment – which need not necessarily be financial in nature. It may come in the form of an exchange of favors, in which Veja furnished Cachoeira, not with a journalistic report, but rather the script of a political campaign.

[It acts as  though] it were the political party that its opposition cannot be. If the press engages in such practices, it returns to standards not seen since the XVIII Century. If this is so, let the magazine change its name and openly assume its political alignment and partisan coverage. These days, as it presents itself as a space for the sharing information, Veja should reflect on the complexity and diversity of the Brazilian public sector and civil society. If it refuses, it is undermining journalism and bordering on a illegality which will have to be investigated.  Fenaj will not protect criminal journalists.

Sul21  – The revelation of this modus operandi practiced at Veja is generating an almost unprecedented debate: More and more, the  media is debating the media. Carta Capital magazine has dedicate several front pages on the topic and Record has broadcast a report. This is common in other countries, but to date has not caught on in Brazil.

Schroder – In the 1980s, when Fenaj proposed a programmatic support for the democratization of communication, we began with the awareness that the democratization of Brazil had yet to catch up with the media.  The Brazilian media system, unlike other institutions, had not undergone democratization.  We have five articles in the Constitution on this topic that have never been implemented. For 30 years we have mounted various initiatives to attempt to structure this debate. The basic logic of regulation exists in every nation in the world.

In Brazil, however, we face resistance from a powerful media that succeeded in electing the first two post-democratization presidents.  Sarney and Collor are among the politicians who owe the Globo network so very much.  Globo allies, advocates and concessionaires have been elected to our congress, such as Antonio Carlos Magalhães, who doubled as Minister of Communications. The media is not just concentrated, in the sense of suffering from monopolies. It is completely bereft of public control.  It is completely convinced that freedom of expression is a right exclusive to media owners. If the Constitution says that freedom of expression belongs to the people, the role of the media is to ensure this right.

Sul21 – How mch progress have you made in this direction since then?

Schroder – We had spent 30 years debating this theme by the time Confecom (National Conference on Communication, December 2009) took place.  Fenaj has successfully implanted the idea that the debate needs to be a public one. The media refuses to report on the debate, however, calling it an attempt to impose censorship.  At first, Confecom had the support of the media companies. I went with representatives of RBS and Globo to speak with federal ministers Helio Costa (Communications),  Tarso Genro (Justice) and Luiz Dulci (presidencial secretary-general) with our proposal for the event.

The companies believed at the time that telephony was threatening their business models.  During Confecom, however, Globo and its many allies attempted once again to sabotage the debate.  Conservatism is in the DNA of Globo. Globo is accustomed to believe that there should be no rules regulating its business. It is accustomed to autocratically  imposing its views and is therefore existentially opposed to any regulation.

At that moment, when Globo walked out on Confecom, it was clear that it is impossible to count on these media owners to support any attempt to construct a public, humanistic, national  communications policy, guided by cultural, democratic and educational principles. All that interests them is the rapid growth of revenues.

Sul21 – The editorial in O Globo defending Veja: is this a sign of collusion among traditional media owners?

Schroder – The principle uniting the two publications is the same adopted by SIP — the Interamerican Press Association: “The best media law is no media law at all.”

Media companies aligned with the idea that they cannot be held legally accountable  do so to protect themselves. Dressed up in the mantle of a freedom of expression convenient to their interests and businesses, they band together to shut the public out.

But journalism is the fruit of a professional activity, not of a business. Journalism is not ad sales. Essentially, journalism is the work of journalists. For this reason, it is the journalist’s obligation to speak out every time the profession is marred by misconduct, as occurred with Veja. It should also be the obligation of media companies, to the extent that they themselves are not involved in this type of conduct.  When the media owner or his agent becomes the accomplice of their source and covers up these practices, they align themselves with criminality.  These companies compete for market share, but mutually protect  “what is considered essential” in their attempt to refute the idea that their work is subject to the public interest, like any other.

Rio | Beginning of the End for Black Market Taxes?

Judicial Police in action against militia members

Judicial Police in action against militia members, November 2009

G1 reports on the sensational feat  of locking up dozens of military police for organizing themselves into what amount to militia groups — protection racketeering, mostly.

Agents from the Sub-Secretariat of Intelligence of the state security secretariat and the internal affairs agency of the military police, in coordination with GAECO, the state prosecutor’s special organized crime task force, last night began an operation designed to arrest a gang of criminals — most of the military police — who were extorting street merchants and informal van services in Bangu, in the Western Zone, and neighboring areas.

Of the 78 persons charged by the state prosecutor, 59 are policement: 53 from the military police and six from the state judicial police. The policemen involved worked out of different units: the 14 Miltary Police Battalion (BPM)(Bangu), the 9th BPM (Rocha Miranda), the 31st DP (Bangu) and officers assigned to the task force on crimes against intellectual property, designed to combat street vendors.

Continue reading

Rio | The PPP of Pistolagem

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Patricia Acioli, a Rio de Janeiro state lower court judge known for her uncompromising opposition to death squads, was gunned down in Niterói in 2011.

Patrícia was driving her Fiat Idea when she was surprised by men wearing ski masks, traveling in two cars and two motorcycles. At least 15 gunshots from .40 and .45 pistols struck the judge, who died on the scene.

The judge had handed down prison sentences to state military police troopers (PMs) from São Gonçalo, in the greater Rio metro area. The men were charged with kidnapping drug dealers, murdering them, and then demanding a ransom for their safe return.

Patrícia also remanded to custody PMs accused of staging crime scenes involving armed confrontations to conceal the summary execution of criminal suspects.

The judge’s name figured on the “blacklist” of Wanderson Silva Tavares, aka “Gordinho,” arrested in Espirito Santo in January 2012 and accused of heading up a death squad in São Gonçalo that had killed at least 15 persons in three years.

The troopers also face adminstrative punishment for privatizing the armory of the battalion — replacing rounds fired with fresh rounds in order to eradicate evidence in shooting cases. Continue reading

Post Mortem Ergo Propter Mortem | Citizen Journalist Down

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How much has changed since the Globo reporter’s 1992 exposé on São Paulo’s Maluf-era “police who kill”? Not much.

Ever since a group of military police riddled an entirely inoffensive neighbor of ours with bullets just a few yards from our front gate, I try to jot down other cases of this kind — the kind traditionally known as “resistance followed by death.”

To be fair, on January 9, the state trotted out a less Orwellian formulation: death as the consquence of an interaction with police, roughly. A note of mine from 2010 provides some of the context,.

True to form, the case of Mr. Aquino, our neighbor, has faded quickly from the headlines.

Another receent case in point — one with a citizen journalism angle to it — was the posting of an amateur video showing a São Paulo military police officer shooting a visibly unarmed and compliant suspect in the back, somewhere in the Southern Zone.

As soon as that footage came out on YouTube,  an amazing coincidence occurred: across the street from the previous crime scene, there was an extreme-overkill execution in which something like 50 rounds were expended on a man claiming authorship of the video, as he sat with friends in the local bodega, across from where the original crime occurred. The assailants reportedly entered the bar shouting, “Police!”

So what next?  Continue reading

Brasília | Oligopolies Under Observation in 2013

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Oligopolies in the Media Market

Source: Folha de S. Paulo | Brasilianas.Org.
By: Vladimir Safatle
Translation: C. Brayton

In recent weeks, Argentina made fresh headlines in Brazil with stories on clashes over the enforcement of Argentina’s so-called “Media Law,” which defines a new regulatory order for companies in the news and entertainment sectors.

Some of these new provisions, and especially those related to combating monopolies, have been viewed as signs of a vengeful State intent on limiting freedom of expression, as in the case of the archrivalry between President Kirchner and the Clarín group.

Leaving aside these heated public conflicts, however, the Argentines are engaged in an important debate that deserves to be treated more dispassionately. It seeks an answer to the question: “Do we or do we not need laws that restrict the concentration of ownership in the media sector?” That is to say, can we successfully argue that concentrated media ownership does not necessarily affect democratic practices?

At this juncture, it is worthwhile remembering that the global media market is currently among the most oligopolized in the world.

What is more, as we gather from  reading between the lines of the recent case involving Rupert Murdoch, this state of affairs really does affect our political life.

Murdoch built an empire of TV stations, newspapers, magazines, radio stations, book publishers, movie theater chains, and Internet portals that gave him the ability to mold debate, pressure governments and interfere in politics to the extent that it promised the American general  David Petraeus its unlimited support should he choose to run for U.S. president.

Situations like this are not exclusive to the Anglo-Saxon world, however. Recent decades have witnessed a brutal, highly negative trend toward consolidation of the sector that affects not only our politics but also our culture.

A single group like Time Warner, for example, exercises simultaneous control over production, distribution and development of new techniques. In this case, we are justified in saying that laws barring the formation of oligopolies is a way for society to defend itself against the coerced uniformity of opinion and the silencing of alternative voices.

Opponents of this viewpoint might reply that a more fragmented market would leave media companies more vulnerable to government pressure. This argument is not without merit.

The solution to this aspect of the problem, however, is not the perpetuation of the other aspect. Strategies are needed in order to prevent governments from framing the news according to their own interests.

In Brazil, this would imply limiting government influence by drastically cutting spending on government advertising — which should be confined to public service announcements — and enforcing laws such as the ban on politicians owning media outlets. Clear and absolutely fair criteria for the use of publicity budgets by state-owned firms should be developed.

São Paulo’s state-owned and publicly traded Sabesp might make an interesting case in point. It frequently walks the corda bamba between public service announcements and government propaganda, as is “this is your current government at work for you.”

But this could be an artifact of my own subjective impression as a couch potato. This might make a good little feature article to research.

sabesptutube

Where are all the Sabesp TV spots stored? What PR techniques do they apply? Do they amount to the use of public money to promote a specific administration?

Anyway, I have always thought that the «monthly payola» cases should be combined and subjected to a parliamentary commission of inquiry — CPI — of the PR industry at the heart of these and other scandals.

After all, the exact same mechanism was used in several of these cases: Publicity services were contracted by a state or municipal government for a given cultural or sporting event — Rock in Rio, an Enduro motorcycle event in Minas Gerais — and then publicity fees were accounted for as having been paid to fictional or purpose-built Potemkin village PR outsourcers.

In fact, however, most of these PR funds were skimmed off for use by political and private parties. Enter the hidden camera video of political operators stuffing their socks and jocks with bundles of cash and you have yourself a classic Brazilian “mountain of money” scandal.

In any event, big PR has a demonstrated capacity for financial legerdemain — think of Duda Mendonça as well as Marcos Valério. Perhaps the second most common source of laundered campaign money: state-owned companies like Furnas in Minas Gerais.

The Vanguard of the Obsolete

Gilberto Maringoni e Verena Glass of the IPEA provide a detailed historical narrative of media law development in Latin America, explaining why regulation produced in the 1930s-1960s no longer applies.

Another factor that could not have been anticipated was the invention of digital technology and the deterritorialization of media companies through the use of virtual networks.

Before the digital revolution (1980- 90) news organizations had to be located in the country where they operated. This was not merely an arbitrary legal requirement, based on nationalist developmentalism. At this time, the entire network of businesses, and especially in the advertising sector and media finance, was anchored in calmer waters.

Now, however, an ISP, Web portal or cable TV provider can transmit content from any part of the world, without having to use antennae or sophisticated broadcast equipment.

The main problem is that the ISPs and cable operators are not classifiable as content and information producers as defined by the current, outmoded legislation.

The privatization of Latin American telecoms in the 1980s-90s, opened up a veritable  Pandora’s box. State-owned telephone monopolies were auctioned off. It may be that the authorities who sponsored this policy were blind to the about-face that would make possible a state of borderless media convergence.

Telephone operators, for example, which during the 1990s were limited to long distance voice communication, underwent a consolidation that two decades later would turn them into the biggest Internet providers in Brazil and arm them with the same political firepower as any traditional TV network.

As things stand, TV, radio, telephone, film, literature, music, data transmission, navigation data and many other services can be tapped using nothing more than a single smartphone.  Each of these functions, however, must still comply with rules specific to its sector.

ISPs use technology to produce and distribute content. To the extent that they are not subject to the old legal norms, their content can be produced anywhere in the world and transmitted to any other, with adjustments made for local characteristics [such as  language].

At the same time, now that global media maintains offices in many different countries, a complex series of loopholes in current local laws has been used to legitimate the local operation.

From the same symposium,, Denis de Moraes:

Brazil is in the  vanguard of obsolescence [sic] in terms of its regulation of the media. Its radio and TV regulator remains one of the most outmoded in Latin America. To date, the congress has made no progress toward regulating Articles 220 and 221 of the 1988 Constitution, which respectively ban monopolies in the mass media and gives preferential treatment to TV and radio stations “serving education, artistic, cultural and informative ends,” as well as “the promotion of national and regional culture and a plan of stimuli to independent productions who qualify. .The lack of action by successive governments in this area is just plain alarming.

Media a Priority for 2013

The president of the ruling PT has said that political reform and media regulation are the top priorities of this year’s Congress. The quote is from November of last year.

Rui Falcão said his party has at least two goals for 2013: A new regulatory framework for the media and political reform.

The party will begin to execute its strategy — calling on the federal president to issue a bill that regulates the media —  the party will include the issue in its agenda for the meeting of the national leadership.

Last week, Falcão told the international press that he hopes the presidency will send down a bill regulating communications in Brazil. “It is not our party that wants to pass enabling legislation for these provisions of the Constitution, it is the congress as a whole. We hope that our government will send down a bill establishing a regulatory framework that will increase freedom of expression and eliminate any possibility of censorship of the established media, regulating provisions in the Constitution that have yet to get off the drawing board.”