The (Big) State of Brazilian Journalism

Pitiful, how the Estado de S. Paulo metro daily has taken to the production of quasi-fake news of late, in the form of topical coverage of conference events produced by the newspaper itself for its various clients and then reported on as if objectively newsworthy. 

The Dreamliner and the Brazilian F/A-18

Source:  Radar On-line (Veja magazine)

The Planalto Palace has two serious concerns with news of U.S. spying. First and most obviously, the presidential palace wants to know how close the U.S. spy agency got to the offices of the President and her ministers.

Another priority is to learn the extent of industrial espionage. A major risk, according to palace sources, is the potential violation of confidential information shared during the negotiations over the purchase of fighter jets for the Brazilian air force.

Not coincidentally,  Brasil continues to evaluate three models of fighter: French, Swedish and American.

The American entry is the Boeing F/A-18.

In its most recent “yellow pages” interview, Veja features Boeing’s Jim McNerny evaluating the opportunities present in the Brazilian market, an interview conducted at the Boeing offices in D.C.

Boeing and Brazil’s Embraer signed a memorandum of understanding on June 26 to jointly market Embraer’s medium airlifter, the KC-390 — above.

Veja’s softball interview — a specialty of the house — touches only briefly on the fighter order, but does focus, sympathetically,  on the woes suffered by the Boeing 787 — a story covered on July 15 by Veja’s business-themed sister publication Exame.

The exec says that all the lithium ion battery problems have now been resolved.

A July 15 story in Exame, however, suggests that the headache persists:

Boeing faces a revealing public test of the carbon-fiber technology used in its 787 Dreamliner after a fire broke out on one of its aircraft at Heathrow Airport, in London.

British investigators say that the lithium ion batteries on the Ethiopian Airlines aircraft probably did not cause the fire, alleviating concerns about the return of the problem that led to the cancellation of Dreamliner flights for more than three months earlier this year, when a battery caught fire and another overheated.

Wall Street and passengers so far seem unconcerned: Boeing shares are expected to stabilize on Monday [July 15] after falling 4.7% on Friday. The airlines are keeping their aircraft flying and passengers in Japan, the jet’s primary market, are not cancelling flights.

Japan is said to be refusing to declare the aircraft flightworthy, regarding which McNerney says,

Safety is critically important to the Japanese, as it is to us. In Japan, there is zero tolerance for safety issues. They are asking for evidence that nothing else is wrong. We will provide the evidence. The situation is totally normal. We have sold 59 aircraft to ten airlines, none of them, so far, Brazilian. But an Ethiopian Airlines  787 is beginning to land in Brazil, in São Paulo and Rio. By year end we will have delivered 110 aircraft.

According to a July 2 story in the Telegraph,

JAL and its rival All Nippon Airways (ANA) both blamed the grounding of their Dreamliner fleets for hitting revenues to the tune of $200m, prompting Boeing to print full-page apologies in major Japanese newspapers. Japan is the single-biggest market for Boeing’s newest aircraft.

Veja closes its yellow pages interview by asking in general terms about what it was like to run a company in a country where corruption is rife — a question the executive deftly avoided, saying, “I would not say that Brazil is dramatically worse” than other countries in this area.

The exec also makes a point of promising that the fighter sale would include the technology transfer demanded by the Brazilians.

The interview bears all the earmarks of a charm offensive — as in the subtitle in which McNerney is quoted as saying, “My response [to news of aviation disasters] is the same as anyone’s. Human tragedy is human tragedy.”

The yellow pages are known for their publicity-driven, hagiographical profiles, and this seems like no exception to the rule. Consider the following ridiculous softball exchange:

Q: Is the 787 an enormous innovation?

A: Without a doubt. It is what the 707 was in its day [launched in 1958, it was the first Boeing commercial jet and the first in its class to achieve commercial success.] The 787 offers airlines improved performance and fuel efficiency, less environmental damage and lower costs. It is a productivity tool.

Q: What are the advantages for passengers?

This follow-on  question lacks a “disadvantages” follow-up.

Exame again, however:

The question is, can the aircraft that caught fire be repaired easily at a reasonable cost? These specific repairs have never been conducted on a operation commercial airliner. That makes the Ethiopian Airline incident the first opportunity for airlines, financiers, and competitors to study a real-life example of how to repair the plane and and how much it will cost.

Diagnosis: a mild case of «autohagiography by proxy» — self-praise and self-defense in a quasi-journalistic genre.

Coverage | Rating Port Reports

Via Observatório da Imprensa

By: Rolf Kuntz

Translate: C. Brayton

The Brazilian government is busy trying to stimulate the modernization of and competition among the ports, the stated goals of Provisional Measure 595, approved by a final vote in Congress on May 16.

Brazilian ports are among the best in the world at processing iron ore but occupy 35th place in the handling of containers, according to a study executed by FIRJAN and reproduced in the May 19 edition of O Globo.

To stimulate competition, however, it will be necesary to multiply access routes to various terminals, the Estado de S. Paulo warned in an article published the same day.

The contrast between coverage by the Folha and O Globo is striking: the Folha refers insistently to the current “chaos” as O Globo looks forward to an advance in the rankings, as follows.

Brazilian ports are experiencing a paradox. In port terminals for the export of iron, Brazil leads the world rankings in first, second and fifth place. Among ports that handle containers, it falls to 35th place, bringing up the rear in a study released by FIRJAN, the Rio de Janeiro industrial federation. Investments in increased capacity, modernization of equipment and improvements in electronic cargo handling could elevate Brazil to 17th place within three years. This leap, according to experts, could be favored by the MP dos Portos, approved last week in Congress.

Returning to the Estado analysis and its prognosis of “chaos”:

“The lack of alternative routes ends up overloading the southern and southeastern coastal ports, while other ports are practically idle.  In the area of grains, nearly two-thirds of production for export leaves the country through Santos (SP) and Paranaguá (PR). The rest is divided among 16 terminals scattered along the coast,” the article said.

With these articles, the two newspapers enriched the reader’s understanding one of the hottest and complex issues of the week, the vote on the Provisional Measure of the Ports. The major news organizations made a mighty effort over the course of that week to follow the voting in the two houses of Congress. Moreover, they took the trouble to explain the issue in detail and demonstrate to readers how important it was.

Hard Work

There were long, hard negotiations in the lower house. The government had failed to mobilize its congressional base of support. For this reason, a last-minute push was needed to obtain votes for the measure without agreeing to disastrous amendments.  MP 595 was to lose its validity at midnight on May 16.

An MP is a bill sent down by the executive to be voted by the Congress, with a time constraint. The mechanism is often criticized as an incursion of executive power into the powers of Congress.

With some of its main allies working against the bill, the government had to make concessions and promise resources for projects financed by budget amendments.

According to journalistic accounts, the Treasury is to release R$ 1 billion, and more political appointments are to be made. Debates in Câmara went on well into the night and the decisive session lasted 22 hours. Lawmakers were photographed sleeping on the floor of Congress, but sleep is a luxury reporters do not enjoy.

Observing this marathon was only part of the mission. Day by day it was necessary to explain the principal changes proposed, their consequences, and the probable reaction of the government.  It may be argued whether the effort was consistently successful, but the performance of the media was undeniable. It would be very difficult to obtain, in these conditions, a better result.  On May 17, the major dailies were still fixated on final approval of the bill, obtained quickly and with surprising facility by the Senate. The effort to translate the details of the text for the lay reader and to indicate the likely presidential vetos continued on Saturday.

Complex Agenda

On Sundary, the newspapers made space on the front page again for the topic.  “Brazil may advance in global ranking,” informed O Globo, with a jump head for an article on the classification and future of the ports. “New ports will require new roads and railroads,”, was the top headline of the Estadão. In a more discrete reference to the story, at the foot of the front page, the Folha de S. Paulo registered the statement: “‘I am not an evil genius’, said Eduardo Cunha, an opponent of the MP dos Portos”. Cunha leads the PMDB in the lower house of congress, the part of vice-president Michel Temer and the government’s most powerful ally. Its resistance was the principal obstacle to the approval of the measure.

Given the prospect that certain articles may be vetoed, there is much new material that will have to be explored and explained in subsequent editions. To date, the MP dos Portos is the most complete and best-organized governmental initiative to increase efficiency and competitiveness of the Brazilian economy.  But it is merely one part of a much broader agenda, as exemplified by the Estado’s story on the condition of access roads connecting to the terminals.

Decentering São Paulo: The Prefeitura’s Master Plan

São Paulo’s new mayor has a plan for the Augean Stables of one of the world’s most automobilistic sprawls.

Source: Brasilianas.Org.

By: Wanderley Preite Sobrinho
Translation: C. Brayton

SÃO PAULO — With its Arch of the Future and “urban corridor” plans, the city government intends to revise the Strategic Master Plan by increasing the supply of jobs on the periphery of the city without having to restrict the circulation of automobiles.

The administration of São Paulo mayor Haddad is betting all of its chips on revising the city’s Strategic Master Plan in order to reduce traffic congestion without the need to restrict traffic in the central districts, as it has since 1997 with the rodizio, the  once-a-week rotating restriction of automobiles based on license-plate numbers.

In this way, the city will also have no need to challenge the federal government’s industrial incentives program, responsible for an increase in the purchase of personal automobiles — the principal villain of traffic congestion in the city.

The city government’s strategy is to use the Master Plan to realize one of the principal promises of mayoral candidate Fernando Haddad (PT): the Arc of the Future, whose aim is to reduce the circulation of vehicles in the expanded urban center by urbanizing and attracting jobs to the periphery, where most of the city’s population lives.

Deals on Wheels | The Railway Pipeline

Source: Portal ClippingMP.
Authorship: Guilherme Soares Dias | Valor Economico

I have recently received an incentive to closely and constantly keep an on the Brazilian transportation sector as a whole — not just what the ALLs and LLXs are up to.

Intercity passenger trains are being readied to circulate again in at least nine Brazilian states with plans under active study. In most of these cases, the intention is to reuse existing freight lines for medium-velocity passenger service. The plans provide for management by private sector concessionaires and ticket prices competitive with intercity buses, in a attempt to take some of the strain off crowded highways.

Brazilian roadways — constantly subject to apocalyptic weather conditions, let it be said — are a nerve-wracking way to get around, although mirabile dictu the rodoviários — bus stations — hum industriously all year long, and especially around Christman, when Northeastern families make the trek to be temporarily reunited.

In all, 1,900 km of so-called “regional trains” will get off the drawing board sometime this year. The federal ministry of transport has detailed plans for six stretches of railway, while SUDECO — the Superintendency of  Center-West Development examines two rail lines in the Brasília region. The state of Minas Gerais is studying three new lines and São Paulo is planning another five.

After a study by BNDES, the national development bank, issued a list of  64 railway lines that could be used to move passengers, the transport ministry chose 14  priority project for evaluation in 2011. Two years later, six of these are underway under the auspices of BNDES and one another, under construction by the state of Minas Gerais, should be ready by the the end 2Q13.

After the studies are conducted, the proposals will be opened up to public discusion, after which the transport ministry intends to assess tender offers for projects starting in 2014. Bids closest to completion so far include the Londrina-Maringá connection, in  Paraná, and the Bento Gonçalves-Caxias do Sul connection, in Rio Grande do Sul, where feasibility studies have been conducted and public audiences will begin next month in which residents and local governments will have their say.

According to Euler Costa Sampaio, coordinator of studies on regional and passenger rail in the transportation ministry, the rail lines will likely operate on the basis of a Public-Private Partnership or a concession model. “We want to take advantage of the new rules for the railway sector, which instituted right of way [for passenger trains] on freight train lines,” he said..

Along certain stretches, such as the connection  Londrina-Maringá, the plan is to create a double-track road, given the heavy cargo loads resulting from the line’s proximity to the Porto of Paranaguá. Studies will show that demand will be sufficient for an all-passenger service, says Sampaio. Estimated demands runs around 36,000 passengers a day and 13 million passengers a year.

Another challenge for the regional lines will be entering urban zones, in places where they might cross paths with municipal transport. “We will have to provide quality and accessibility in order to compete with the interstate bus lines. Fairs will have to be in line with what it costs to travel by bus”, a Transportes official said.

In some cases, such as the Salvador-Alagoinhas connection in Bahia, whose study will be filed in June, indications are that the rail line can be extended another 40 km to Feira de Santana. With its  568,000 inhabitants, the city is the second most populous of Bahia state and is connected to Salvador by Highway BR-324, which sufferes from intense passenger and cargo traffic.

Another stretch of track featured in the  Sampaio reporte is the São Luís-Itapecuru-Mirim triangle, in the northern state of Maranhão, where the largest petrochemical center in the Northeast is under construction.

In addition to the six rail linkages already under study, the transport ministry expects to contract studies for another six: São Cristóvão—Laranjeiras (SE), Recife—Caruaru (PE), Campos—Macaé (RJ), Itajaí— Rio do Sul (SC), Campinas—Araraquara (SP), Santa Cruz—Mangaratiba (RJ), and Bocaiúva—Janaúva (MG).

Os projetos preveem que os trens atinjam de 80 a 140 quilômetros por hora para encurtar, em alguns casos, o tempo de percurso atual. É o caso do trecho entre Brasília e Goiânia que teria viagens de 50 minutos, enquanto as de carro e ônibus duram de duas a três horas. O trecho é estudado pela Sudeco. A linha seria de uso misto, sendo aproveitada para transporte de cargas, com ligação da Ferrovia Norte-Sul em Anápolis (GO), onde está prevista uma parada.

O diretor-superintendente da Sudeco, Marcelo Dourado, ressalta que 6 milhões de pessoas moram no entorno da futura linha e devem ser beneficiadas pelo novo modal de transporte. Ele destaca ainda que haverá melhora no escoamento de produção do agronegócio. A região concentra o segundo Produto Interno Bruto (PIB) meso-regional só perdendo para Rio-São Paulo.

“Essa ligação mais rápida vai incentivar a industrialização e a conurbação da região”, acredita Dourado. Os estudos estão sendo concluídos e a intenção do órgão é que a licitação ocorra até o fim do ano, as obras comecem em 2014 e sejam concluídas em até sete anos. O custo estimado é de R$ 1 bilhão. A Sudeco estuda ainda a ligação entre Brasília-Luiziânia (GO), onde já existe linha férrea e seria necessária adaptação para o trem de passageiros. “Essa seria uma intervenção mais rápida e barata. Seriam necessários dez meses e R$ 90 milhões de desembolsos para viabilizar a linha”, afirma Dourado. O trecho seria atendido por um Veículo Leve sobre Trilho (VLT). De acordo com o superintendente da Sudeco, os dois projetos têm chegada prevista na rodoferroviária da capital federal e devem desafogar as rodovias do Distrito Federal.

O governo federal prevê ainda estudos de um trem ligando as cidades do Triângulo Mineiro e outro mais ousado, da Superintendência do Desenvolvimento do Nordeste (Sudene), que planeja o “Trem da Costa Dourada”, linha de 2 mil quilômetros ligando Salvador ao Delta do Parnaíba (PI) pelo litoral, passando pela maioria das capitais do Nordeste. Apesar do apelo turístico do projeto até mesmo os estudos encontram dificuldade para sair do papel. “O Ministério do Turismo tinha se comprometido a bancar, mas ainda não conseguimos a liberação da verba. Agora estamos negociando com o governo espanhol para financiar os estudos”, diz o superintendente da Sudene, Luiz Gonzaga Paes Landim. Ele garante que o trem é viável e afirma que o projeto poderia ser “fatiado”, com início nos trechos de maior apelo turístico como Salvador -Praia do Forte (BA), Recife-Porto de Galinhas (PE), Natal-Praia da Pipa (RN) e Fortaleza-Canoa Quebrada (CE).

Para o coordenador de transporte de passageiros do Laboratório de Transportes e Logística (LabTrans/UFSC), Rodolfo Philippi, os projetos atuais estudados pelo Ministério dos Transportes terão viabilidade reforçada pelo transporte urbano, uma vez que o aproveitamento de linhas já existentes vai possibilitar estações no centro das cidades. “Em locais maiores como Londrina, Maringá e Caxias do Sul poderá haver mais de uma estação incentivando o locomoção das pessoas dentro das cidades”, diz.

Já o presidente da Associação Brasileira da Indústria Ferroviária (Abifer), Vicente Abate, recorda que nas décadas de 60 e 70 os trens de passageiros chegaram a transportar 100 milhões de passageiros por ano. “Com o desinvestimento do governo na rede, os trens de passageiros foram perdendo competitividade e começaram a ser desativados e foram substituídos pelo transporte de rodovias. Agora devemos ter novo momento de retomada do setor”, considera.

Hoje, apenas duas linhas férreas recebem transporte de passageiros no país: a Estrada de Ferro Carajás, entre São Luís-Carajás (PA), e a Estrada de Ferro Vitória-Minas entre Vitória e Belo Horizonte. Ambas são mantidas em projetos sociais da Vale e movimentam juntas 1,5 milhão de passageiros por ano.

Good fodder for a private Wiki on the subject.

Kassab and the Vehicular Inspection Racket

Everyman Kassab rides the Metrô

As limited as my understanding of local politics is, something told me this day would come: I predicted that ex-Mayor Gilberto Kassab would eventually come to grief over issues of public morality.

After all, among his first official acts was the nomination of his two brothers to head New Projects on the Metrô and to run SPTrans, the metro bus service.

The story received very little press coverage, but represents yet another opportunity for the incoming mayor, Haddad, to seek out bureaucratic dysfunctions and set them straight.  Will technocrats prevail over patronage? It will be interesting to see. People like result-oriented politics — leave bus fares alone, build more housing, install more sewers, and thank you very much for the break on our electricity bill.

But on to today’s clipping. Source: Estadão.

Former mayor Gilberto Kassab (PSD) is now a defendant in a criminal proceeding. He is accused of violating the law governing public tenders when he hired the firm Controlar to administer vehicle inspections in Brazil’s largest city. According to the state prosecutor, the contract cost taxpayers and motorists R$ 1.1 billion.

Softly, With a Big Stick | Rio’s Militias Today

Add to the necessary new readings list:

• No sapatinho: a evolução das milícias no Rio de Janeiro (2008-2011) | Heinrich Böll Foundation.

This book is the result of research performed by the State University of Rio de Janeiro’s Violence Laboratory, with support from the Heinrich Böll Foundation.

The objective of this study is to trace the evolution of the militia phenomenon in Rio de Janeiro, documenting changes to their structure and composition, tracing their territorial extent, and analyzing their profitability, their modus operandi, their perceived legitimacy and their community relations.

As the title suggests — no sapatinho means “wearing baby booties” or, if you will, walking softly with your big stick — these parapolitical groups have adjusted their management practices and continue to thrive.

The Electricity Bill | Shock Therapy

t

Addendum, December 6, 2012: a nice infographic listing the players in the electricity setor and their adherence to the federal rate-setting plan:

It is always gratifying when a genuine expert reaches much the same conclusion as your own murky thought processes. See, for example,

• Electricity in the Concessionaire | The New Price of Voltage

Regarding the confused and heated debate recently over the renegotiation of electrical concessions in Brazil, I had also guessed that the following might be true:

Many banks are issuing sell recommendations to investors and buying for their own account.

Press coverage of PL 579 — a executive order that calls for the state and energy providers to renegotiate concession contracts in the electrical sector after a number of years divided into “captive” and “free market” energy trading sectors — may well be a perfect case of «moral panic», as defined by students of rhetoric, public relations and propaganda.

In the world of fact, negotiations continue between governor and the electrical sector, with Dilma showing signs of reformulating how to calculate the sums needed to repay the electricity companies for changes they are being asked to make in the name of long-term sector strategy.

Assis Ribeiro files this analysis — by Najar Tubino — on the blog of Luis Nassif.

A massacre, an earthquake, devastation, a climate of fear and tension, an imminent explosion, a minedield, an orphaned capital market, a situation verging on mass bankrupcy. These are some of the expressions used during November to define PL 579, which deals with the renovation of concessions with electrical utilities and the lowering of energy bills for residential, commercial and industrial consumers.

The story is by Najar Tubino.

In the face of such descriptions, I decided to tone down the rhetoric, even though these were the labels being used by the daily Valor, a business-oriented joint-venture of the Organizações Globo and the Folha de São Paulo. One might correctly call Valor an arm of the two publishing giants, given that it sells hundreds of pages of ads at a minimum price of  R$130,000  – just as it publishes the quarterly reports of Brazil’s major corporations and prints the opinions and analysis of leading figures in the economy, and especially the capital markets.

The soap opera always works out the same. An “anti-market” government policy is targeted, such as the recent reduction in interest rates, which took analysts by surprise. Next comes an avalanche of articles, analysis and expert prognostication —  usually from economists employed by brokers or consultancies.

Valor is a newspaper I read regularly,, with close attention, and I have read its attempt to undermine MP 579 with the same attention.

Me, too.

But to the facts. For two years the national electricity regulator ANEEL has been discussing with industry “players” as they call themselves, certain changes in the definition of energy costs. Each year, ANEEL publishes the figures on depreciation of assets, as it is known in the industry, which are assigned to the concessionaires under the terms of contracts signed decades ago — 30 years on average. Some of these will expire in 2015 and 2017. This includes generators of all types: hydro, thermal or wind power. It also includes transmitters who maintain the lines — all 98,000 km of them — substations and regional distributors that bring light and power to many different customers: residential, industrial and commercial.

Scheduled for renewal are 58 generators, with combined capacity of 21,500 MW – 20% of the market — as well as 73,000  km of transmission lines, some 83% of the basic network of the National Integrated Sysytem and 30% of the distributors market, comprising contracts with 41 companies. The renewal deadline for those accepting the government’s  terms is December 4.

Of this total , 67% of generation is managed by Eletrobras — 62% of transmission and 25% of distribution. Electrobras is a public-private partnership, a «mixed economy» company, with shares traded in São Paulo, N. York and Madrid. It accounts for 60% of the generation market and 40% of transmission. In other words. it dominates the market., The federal government holds 58% of the shares, including a portion owned by BNDES, but JP Morgan has some 8% of the voting shares.

Panic Attack

The Norwegian fund  Skagen is also a participant, with 1% of the ON and 17.5% of the PN of Eletrobras, and says it has as R$3 bi invested in Brazil.

The PR department of this firm has produced a most hystericial demonstration of European power over us poor Tupi indians, mired as we are in the emerging world.

“We have the financial means to take this case to court. Brazil is turning into another Argentina, and the market has taken note. The government is looking to nationalize the sector.”

Aside

If I remember correctly, many of these PPPs are structured so that private investors maintain the right to name a board and vote their 49% of the shares. Chesf is one such company, I think.

State-run board members can take back the power with a plain old share repurchase, if the government wants it, too..

Since 2003, the sector has been overseen by the ONS — National System Operator — which

 is responsible for the long-term planning of the electrical sector and adminsters the EPE — Energy Research Corporation — to that end. It also organizes the  CMSE,  which monitors security of the energy supply, and MAE — the wholesale energy market —  which deals with transactions realized in the MAE and involving electricity sold through the Sistema Interligado and registered by the CEEE, the electrical energy clearinghouse.

I had a cheat sheeet here somewhere on this topic, let me look.

At he beginning of the year, the Skagen fund was worth R$1.3 billion and in November stood at R$730 million.

Also under the heading “hysteria” we might include a known Brazilian columnist who wrote:

— Eletrobras has lost 70% of its market value and runs a serious  risk of default.

The columnist ignores the fact that Eletrobras assets include 30 hyrdoelectric plants, 15 thermal, two nuclear plants, 190 substations and nearly 60,000 km of transmission lines.

It also owns half of Itaipu – a hydro operation of some 7,000 MW – as well as an equal share in others: Chesf, Eletronorte, Eletrosul, Companhia de Geração Térmica de Energia (CGTEE) and seven other distributors. The latter are considered “subprime” because they operate at a loss — they include companies in  Alagoas, Piauí, Amazonas, Acre, Rondônia and Roraima. Eletrobras is preparing to acquire 50% of the distributor in Goiás.

A portfolio of assets such as these can only disappear from market calculations because investment banking analysts calculate that share prices no longer correspond to market value.

It is here that the topic “the massacre of the electric companies” emerges, one of dozens that Valor has written on the subject. First of all, the shares of these companies are considered “defensive” — they are not expensive, and show no price volatiity, but continue to yield generous dividends at year’s end.

By law, companies listed on the Bovespa must distribute 25% of prophets to shareholders. The electrics, however, distribute more than 90% — as is the case with Eletropaulo.

So who are the experts selected to be interviewed? Representatives of U.S. or U.K. banks, known for their role in the 2008 crisis… repackaging fixed income assets and selling them to funds all over the world, at a handsome profit.

Such is the case with Goldman Sachs, JP Morgan, and Barclays. At the latter, the standard spokesperson has set the target price for Eletrobras at R$1 per share. Itaú was more generous: R$8 per share. In late April, common shares were at  R$9.69. The company had “lost” more than half its market value: from R$26 bi to R$11,6 bi.

But let us also listen to investor Luiz Barsi Filho, 73, a highly sought after commentator who lives off his dividends.

“A country cannot fail to invest in energy if it sincerely intends to encourage development;. The controversies have not been resolved, but the utilities will be the ones to suffer from the impasse. This might, however, represent a golden investment opportunity. Personally, I am long on electrical energy.”

Barsi is not alone. Many banks are issuing sell recommendations to investors and buying for their own account. But his approach is outmoded as well. I decided to check some of the analyses by these same analysts in 2010 and 2011. I found the same information in the business weeklies. One of them, Exame (Grupo Abril), listed 12 companies that paid the best dividends according to a survey by Economática — a research company headed by a former Banco Central president.

M&A, Gringo to Gringo?

Meanwhile, Relatório Reservado — a daily market rumor  newsletter — narrates the troubles reportedly encountered by two foreign players in the changing domestic landscape. I translate a selection:

There is a frenzied climate inside the Brazilian offices of  GDF Suez and Duke Energy. The government’s proposal to reduce energy prices has scribbled a question mark over what should have been one of the biggest M&A deals in the sector in years.

Some four months ago, GDF Suez was negotiating the acquisition of Duke Energy’s Geração Paranapanema. According to a source close to the U.S. group, the money on the table is around R$6 billion.  Duke controls practically  all the stock in Paranapanema — only 5.72% are publicly traded.

This newsletter discovered that the two parties intended to seal the deal sometime in 2012 — due diligence is said to have been complete last month. Now, however, with the government’s decision, the deal looks hazy. The facts have changed and so has the timing of GDF Suez …

Scandal 47 | Dilma Delegates

I read it in the Estadão, and translate.

BRASÍLIA – President Dilma Rousseff has decided to fire the head of the Federal Presidency’s office in São Paulo, Rosemary Nóvoa de Noronha, who has been indicted by federal police for corruption and influence peddling. The second highest ranking official in the federal Attorney General’s office will also be let go.

The case apparently involves a Paraguayan over-the-counter market in favorable regulatory findings, such as those required to get cargo into the country via Santos, one of its principal ports.

Remind me to tell that well-worn story of mine about getting my books into the country using a Santos despachante.

In the meantime, this item from the white-collar police blotter sounds a lot like a familiar broken record — petty-ante crimes by permanent civil servants of the State used to leverage accusations of endemic corruption inside the Government.

Taking Out A Contract | Waterfall’s São Paulo Dealings

The oppositionist Diário de Manhã  warns Brazilian federal deputies in the government alliance that an investigation of crooked contracting practices in the «Waterfall» case might also hurt the ruling PT and the allied PMDB.

Recently read:

Leandro Fortes, “Cachoeira leaves fingerprints on São Paulo,” Carta Capital(Brazil), 19 September 2012.

I translate a passage or two.

 Technical experts working for the federal parliamentary inquiry into mob boss and lobbyist Carlinhos Cachoeira have just finished a complete survey of all contracts signed by the São Paulo state and municipal governments and Delta, a private contractor linked to the criminal organization headed by the numbers racketeer.

Linked how? That’s the interesting question. Leandro Fortes calls him a “silent partner” of and lobbyist for the engineering firm, one of the largest in Brazil.

In an intriguing sidelight, the scheme apparently used journalists, both witting and unwitting, to smear, with screaming headlines, rivals and government officials standing in the way of its interests . Fortes cites past negotiations over a report that ran in Globo’s Época magazine, for example:

The revelation of a relationship between Globo and its magazine and the group headed by the numbers boss comes just as Leonardo Gagno, the attorney for Cachoeira right-hand man and black bag operator Dadá, told the congressional commission that Dadá and his colleague were tasked with “feeding stories to the news media,” and that “Cachoeira’s interest in using [information warfare] as a part of doing business was well-known by everyone.”

«informações» = information, intelligence, counterintelligence

But back to CartaCapital and Leandro.

The alleged scheme involves sums in excess of R$ 1.2 billion. The results of the study reveal the relationship of PSDB governments with the parent organization of the Cachoeira conspiracy and cast suspicion on seven-figure contracts negotiated by the Kassab municipal government in São Paulo, supposedly influenced by the former DEM senator for Goias, Demóstenes Torres.

Kassab was a member of the DEM until a year or so ago when he jumped ship to the newly founded PSD.

Delta received the contract for the urban renewal of the Paraisópolis shantytown under the Kassab government.

The project is being used as a model urban renewal project in TV inserts for mayoral candidate José Serra.

The indefatigable Paulo Preto puts in an appearance as well. A federal police telephone wiretap conducted during Operation Monte Carlo captured a conversation between Cachoeira and Cláudio Abreu, Delta’s regional director for the Brazilian Center-West, in which th two men discuss Delta’s contracts with the São Paulo city government.

Dated January 31, 2012, the wiretap captures the numbers and bingo boss asking Abreu about a conversation between Delta’s former CEO, Fernando Cavendish and Mayor Kassab about an as yet unidentified contract.

The Delta director makes a revelation: As a favor to Senator Torres, São Paulo’s mayor supposedly tripled the value of the unidentified contract. The converation runs as follows, transcribed from an audio file to which CartaCapital had access:

— Carlinhos Cachoeira: One other thing, Cláudio, Did you speak to Fernando (Cavendish) about that thing with Kassab?

— Cláudio Abreu: … I am going to meet with him later, I am going over there to give him an answer. But tell me, what’s the deal over there? The contract, right? He did the thing, didn’t he? He did it for the Professor (Demóstenes Torres), right?

— Cachoeira: He (Kassab) said he tripled the contract for him (Demóstenes).

An analysis conducted by the CPI indicates that São Paulo city hall signed three contracts with Delta between 2004 and 2012, worth a total of 307.6 million.

A contract with the Companhia de Limpeza Urbana (Comlurb) – street sweeping and garbage collection — was worth R$ 93.7 million. A contract for the urban renewal of the Paraisópolis shantytown, signed with the city housing authority, was worth R$ 15.4 million. A contract with São Paulo Transporte S.A. (SPTrans) — public transportation — was worth R$ 12.2 million.

Given the timeframe of the police surveillance, it is not yet possible to detect exactly which of the contracts was allegedly tripled, since all three were continued into 2012.

City hall spokesman Emerson Figueiredo said that Mayor Kassab “is unaware of this dialogue and its supposed protagonists and considers its content groundless.”

Relations between Delta and the São Paulo state government involve larger sums, totaling R$ 943 million in today’s reais. The contracts were signed under state governors José Serra (R$ 765 million) and Geraldo Alckmin (R$ 178 million) between 2002 and 2012. The deals were signed at the instance of five state-owned firms: Dersa and DER (highways), Daee (hydroelectric power), Sabesp (water and sewage treatment), and Unicamp (state university).

The most significant project for which the state contracted Delta was as part of the New Tiete Consortium, which undertook to broaden the Tiete beltway for R$ 150 million. The contract ran from June 22, 2009 to April 10, 2012. Based on an analysis of the transfer of consortium funds to Delta’s accounts, the CPI’s technicians concluded that the companies involved have no controls over the allocation of credits and debits to consortium members. In this way, one firm may subcontract another and pay it the entire amount due for the service. Using this subterfuge, and based on the padding of invoices or  falsification of receipts for services rendered, the difference can be returned to the subcontractor with absolutely no oversight or disclosure.

Delta may have mounted a money laundering scheme using such bureaucratic subterfuges. The experts also noted that Delta’s subcontractors enter into contracts with one another … and transfer funds to one another without accounting for the sums transferred.

The congressional inquiry into São Paulo public works contracts coincides with the results of an earlier survey by Conceição Lemes, of the Web log Viomundo, based on data from the Transparência São Paulo Web log, which specializes in the analyis of public spending.

Based on this information, it was possible to detect that the contract with Dersa with respect to the Tiete project (R$ 415 million) was signed by Paulo Vieira de Souza, aka «Paulo Preto», Dersa’s director of engineering until April 2010, and by Dersa CEO and superintendent Delson Amador.

With intimate ties to the PSDB — social democrats — «Black Paulo» was reputedly a fundraiser for party election campaigns and at one point was accused of making off with R$ 4 million supposedly earmarked for the Serra for President campaign.

Black Paulo and Amador also figure in the federal police Operation Sandcastle in which executives of public works contractor Camargo Corrêa were accused of mounting a bribery scheme in public works projects.

In 1997, when Andrea Matarazzo of the PSDB presided over the company, Delson Amador was named CEO of the state-owned electric company (Cesp),which was later privatized.

He was responsible for auditing public works projects involving Camargo Corrêa, such as the Porto Primavera generation plant and the Ponte Pauliceia, a bridge over the Paraná River linking Pauliceia, São Paulo and Brasilândia, Mato Grosso do Sul. Amador was Matarazzo’s chief of staff when Matarazzo headed the Sé subprefecture in metro São Paulo.

A certificate issued by the São Paulo Junta Comercial – the corporations registry – indicates that Heraldo Puccini Neto, Delta’s regional director for São Paulo and the Brazilian South, is also the legal representative of the Nova Tietê consortium.

Federal police wiretaps show that Puccini is one of the closest confidants of Carlinhos Cachoeira. Documents from federal police Operation Monte Carlo point to to Puccini as one of the persons used by the scheme to prepare bids for public works projects.