Everybody who’s anybody in Brazil is getting hacked

. Jul 26, 2019
Everybody who's anybody is getting hacked

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Good morning! News of yet another authority hacked emerges nearly every hour. Economy Minister Paulo Guedes has a plan for the economy. The fight for oil money. And more.

Everybody who’s anybody is getting hacked

Law enforcement agents say that the list of authorities who had their cell phones hacked could reach 1,000 individuals.

The biggest names in the republic were affected, including President Jair Bolsonaro, Supreme Court justices, the heads of both congressional houses, the prosecutor general, and Economy Minister Paulo Guedes.&nbsp;</p> <p><strong>Why it matters.</strong> The matter began when website <em>The Intercept </em>began leaking private messages exchanged by members of Operation Car Wash (more below). Many theories arose as to the origin of the conversations, including that Russian intelligence was behind it. The story now goes (according to police anyway) that the information was the product of four people who used to run a credit card fraud operation—they were arrested on Tuesday. The fact that almost every single A-list politician in Brazil got hacked leads one to speculate as to how vulnerable the country might be should a foreign power decide to carry out a cyber attack.</p> <p><strong>No to security.</strong> Upon taking office, President Bolsonaro was given an encrypted mobile phone. He hasn&#8217;t used it much—as it doesn&#8217;t allow him to download apps. Chief of Staff Onyx Lorenzoni admitted the government&#8217;s communications channel of choice is WhatsApp.</p> <p><strong>Evidence.</strong> Justice Minister Sergio Moro&#8217;s flagrant conflict of interest in the case has bothered many high figures in Brasília. He is, all at once, at the center of the scandal that calls into question Operation Car Wash&#8217;s integrity, a victim of the hacking gang, and the ultimate boss of the marshals investigating the case. Mr. Moro didn&#8217;t help himself by suggesting that all material used by the hackers should be destroyed. But the decision is not up to him, and courts should block the move.</p> <ul><li><strong>Go deeper:</strong> <a href="https://brazilian.report/power/2019/07/25/brazil-handle-cyber-security-issues/">Is Brazil ready to handle cyber security issues?</a></li><li><strong>And:</strong> <a href="https://brazilian.report/podcast-brazil/2019/06/12/intercept-car-wash-leaks-moro/">You can&#8217;t spell Car Wash without leaks (Podcast)</a></li></ul> <hr class="wp-block-separator"/> <h2>The Guedes Plan for the economy</h2> <p>After spending his first seven months in office focused on getting the pension reform passed in Congress, Economy Minister Paulo Guedes is reportedly set to launch a series of initiatives aiming at injecting around BRL 4tr into the economy over the next decade. In the government&#8217;s optimistic projections, Brazil&#8217;s per capita GDP could double in the same span. Here are the main points in Mr. Guedes&#8217; plan:</p> <ul><li><strong>Short-term effects.</strong> Reduce the Selic benchmark interest rate by 1 percentage point; allow workers to withdraw money from their severance fund; reduce how much money banks have to hold in deposit with the Central Bank, providing them with more liquidity.</li></ul> <ul><li><strong>Medium-term effects.</strong> Reduce and automate Brazilian bureaucracy; pass tax reform, more pro-business labor reforms, and pension reform.</li></ul> <ul><li><strong>Long-term effects.</strong> Break the state monopoly on public sanitation services; make civil servants subject to labor rules in line with private workers; concentrate less money in the federal government, privileging states and municipalities; strengthen the system for trading public bonds; make it easier to seize the assets of people in default (which could enhance banks&#8217; appetite for riskier clients).</li></ul> <ul><li><strong>Privatizations.</strong> According to a study by Bank of America for the government, the Brazilian state owns BRL 734 worth of assets that would be hard to sell, and BRL 390bn in easier-to-move companies. In the latter group are Correios (postal service), Eletrobras (energy), Serpro (data processing), and the Brazilian Mint.</li></ul> <p><strong>Why it matters.</strong> Despite the commodities bonanza of the early 2000s, Brazil has not been able to become a rich country. Technology woes and staggering inequality remain major hurdles for the country. So far, the country has only managed what Brazilians call &#8220;chicken flights&#8221;—which are low and don&#8217;t last for long.</p> <p><strong>Yes, but…</strong> Most of Mr. Guedes intended moves depend on Congress&#8217; approval. And the pension system soap opera (still far from over) shows that it can be easier said than done.</p> <div class="flourish-embed" data-src="visualisation/466861"></div><script src="https://public.flourish.studio/resources/embed.js"></script> <ul><li><strong>Go deeper: </strong><a href="https://brazilian.report/money/2019/05/30/understand-brazilian-gdp/">What factors impact the Brazilian GDP?</a></li></ul> <ul><li><strong>And:</strong> <a href="https://brazilian.report/power/2018/08/14/recessions-political-ruptures-brazil/">Recessions spell trouble for Brazilian leaders</a></li></ul> <hr class="wp-block-separator"/> <h2>Oil royalties make Rio cities richer—and others jealous</h2> <p>The Supreme Court is expected to step in and arbitrate in a fight between states that produce oil and those that don&#8217;t. The reason for the conflict is a cash pile expected to reach BRL 14.5bn in royalties by 2023. These royalties are what companies pay to oil-producing cities as compensation for the social and environmental impacts of their activity.</p> <p><strong>Why it matters.</strong> In a sluggish economy, state- and municipal-level administrations are fighting tooth and nail for every dime they can get. Right now, only 17% of Brazil&#8217;s 5,570 municipalities get oil royalty money—and between those, there is a great variance in what each receives. Cities like Maricá and Niterói (Rio) get over BRL 1bn per year, while half of the others receive less than BRL 50,000.</p> <p>The National Confederation of Municipalities, a lobbying institution representing mayors, wants all Brazilian cities to get an adequate slice of the pie. It calculates that non-producing cities &#8220;lost&#8221; BRL 50bn between 2013 and 2018.</p> <ul><li><strong>Go deeper: </strong><a href="https://brazilian.report/money/2018/02/13/oil-boom-rio-economy-recession/">Oil boom could help Rio’s economy emerge from the recession</a></li></ul> <h2>Also noteworthy</h2> <p><strong>Car Wash 1.</strong> A new batch of leaks by <em>Folha de S.Paulo</em> and <em>The Intercept</em> shows that Car Wash lead prosecutor Deltan Dallagnol gave a paid lecture to a company that would later figure in the investigation. Mr. Dallagnol also reportedly served as an intermediary between the Federal Prosecution Office and the company, looking to use their due diligence software in investigations.</p> <p><strong>Car Wash 2. </strong>Petrobras yesterday received BRL 425m in leniency deals with companies and persons linked to corruption schemes. According to the Car Wash task force, Petrobras has recuperated around BRL 3.5bn thanks to the investigation.</p> <p><strong>Heist.</strong> A group of criminals, disguised as federal marshals, stole 720 kilos of gold (worth BRL 120m) from a company that transports money and valuable goods through the São Paulo-Guarulhos International Airport. According to the police, someone in the company helped the gang, after they held his family hostage. For the heist, not a single shot was fired. <a href="https://www.youtube.com/watch?v=xYINhk8bSK0">Watch the video</a>.</p> <p><strong>Air travel.</strong> A decision by the National Civil Aviation Agency may give neither of the two leaders in the air travel market in Brazil, Gol and Latam, a single one of Avianca’s former slots São Paulo Congonhas Airport. The near-bankrupt Avianca Brasil has ceased operation and must give up its slots—that is, the authorization to fly to and from an airport at a specific time. All slots will be split between smaller companies, and slots that are not taken can be distributed between the two giants. Regulators say the move aims at reducing market concentration.</p> <p><strong>Amazon.</strong> While on a visit to the state of Amazonas, President Bolsonaro established the paving of BR-319 as a priority. The road connects state capital Manaus to Rondônia&#8217;s capital Porto Velho. The project (which has not been cleared by environmental agencies) would reduce Manaus&#8217; isolation from the rest of the country, but is considered one of the major threats to the rainforest—it would make an area larger than Germany vulnerable to deforestation and the illegal exploitation of natural resources.

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