We hope to add a couple of articles about scandals in the next week or so.
Scandal 1.
Brazil is in big trouble.
Not only do they have the dreadful mosquito born zika virus that is causing babies to be born deformed with microcephaly (small deformed heads) that is spreading rapidly into other South American countries and causing major consternation globally because there is no antidote currently but they have to prepare for the summer Olympic Games in September. The government has no money but plenty of debt and here is one reason why.
Nomi Prins writing for Jim Rickards Strategic Intelligence February report discusses the fall of Brazil’s Petrobras ‘mega oil company’ that has she says been riddled with corruption that was ignored by international banks greedy to lend during oil boom years. In 2010 Petrobras raised 120.36 billion reais ($70million) in the biggest share issue ever. The notion of oil autonomy even played a roll in the outcome of Brazils 2010 election.
In an Enron style haze of fraud investigators have found books have been cooked by inflating contract payments and asset prices as well as old fashioned bribes and payment kickbacks to officials and employees. Brazillian Police arrested senior managers for money laundering for right wing political parties. She says ‘Move on a few months and things were unravelling‘. Not only was Petrobras mired in scandal but lawsuits worth billions were piling up.
She continues: ‘Petrobras owes about $135 billion in loans and bonds (some estimates are lower) to its international investors. China, Brazil’s largest trade partner came to its rescue last spring. On April 1, 2015, Petrobras signed a $3.5 billion financing agreement from the China Development Bank as part of a broader oil cooperation agreement with China. Mid-scandal Petrobras still projected based on crude oil prices of $60 and $70 per barrel for 2015 and 2016 when in fact oil prices closed 2015 nearer $35 per barrel.‘
On June 3, 2015, two years after Bank of America called Petrobras the “most indebted company in the world,” Petrobras invited it to run a $5 billion asset sale. More, Petrobras’ problems will hamper Brazil on multiple levels beyond scandal and an estimated $30 billion in GDP losses. Due to ongoing investigations, Petrobras stopped payments to other firms, including rigging companies. That sent some into bankruptcy and others to the brink, a factor that will depress their share prices in 2016. Associated sectors remain imperilled, including Brazil’s steel, construction and banking sectors.
In summary Prins says “It is impossible to see a silver lining in Brazil’s economy or the havoc that the ongoing Petrobras’ corruption and growing investigations will cause for now. You should avoid the company and Brazil as whole. It will get much uglier there before the sun peaks out”
Not far away lies Venezuela where a striking similarity exists with State oil company PDVSA the Venezuelan oil giant also riddled with corruption and debt. The Venezuelan economy is in tatters with rampant inflation now out of control (prices for some food items are rising by 100’s% and is expected to challenge Zimbabwe with overall inflation expected to hit over 700%) with default on national debt if not a near immediate certainty then widely expected by international lenders soon. The benchmark bond yield is already trading at 27%! Food stocks in supermarkets are hard to find with shelves stripped bare but this hardship story is hard to find in Western press.
With the Olympics and Carnival season soon to begin maybe Copacabana beach won’t be as amazing as before. But the real story is what about the health of athletes? We have heard that they are a ‘horny’ lot but maybe the first question you have to ask now (especially the girls) is not ‘do you have a condom?’ but have ‘you been bitten by a mosquito yet?’
Back to the Zika Virus…
Just posted elsewhere on Kiwiwatch is an article by Claire Bernish https://www.kiwiwatch.org.nz/zika-outbreak-epicenter-in-same-area-where-gm-mosquitoes-were-released-in-2015/
If true and a definite link is made perhaps someone could is culpable?
Malcolm Eves
01/02/16