Good morning! The pension reform has finally been approved by a Special House Committee. Former Rio governor confirms bribes to host the 2016 Olympics. A new bank to open in Brazil. More leaks undermine Justice Minister Sergio Moro’s endurance. And more.

Pension reform moves forward: key points

After 16 hours, the House&#8217;s Special Committee on the pension reform approved the bill by a wide 36-13 margin—showing the effectiveness of Speaker Rodrigo Maia&#8217;s vote-whipping strategy. Despite heavy lobbying from organized groups—and even the president—to water down the reform, its core was preserved, even if some changes catering to rural producers reduced savings to just below the psychological BRL 1 trillion mark.</span></p> <p><span style="font-weight: 400;">The minimum retirement age was set at 65 for men and 62 for women (teachers have special treatment, being allowed to retire 5 years younger). The minimum time of work for private workers is 20 years for men and 25 for women—for civil servants, it&#8217;s 25 years for both. Those who enter the job market will now be automatically included in the new pension system—current workers will have four transition paths, combining remaining time of work and age.</span></p> <p><span style="font-weight: 400;">But while the report was a major win for the administration, President Bolsonaro was called a &#8220;traitor&#8221; by police unions—one of his core group of supporters. For Speaker Rodrigo Maia, that&#8217;s only the beginning of pressure on lawmakers—civil servants&#8217; lobbies (one of Brasília&#8217;s strongest) will only get stronger. That&#8217;s why Mr. Maia wants to rush the two-round roll-call vote on the House floor, in order to limit outside interference.</span></p> <p><span style="font-weight: 400;">Congress goes on vacation in two weeks. It&#8217;s a narrow window of time, but is doable if there&#8217;s a concentrated effort by the government, according to party leaders.</span></p> <ul> <li><b>Go deeper:</b> <a href=""><span style="font-weight: 400;">How the Brazilian population will change this century</span></a></li> </ul> <hr /> <h2>Rio did cheat its way into hosting the Olympics</h2> <div id="attachment_20204" style="width: 990px" class="wp-caption alignnone"><img aria-describedby="caption-attachment-20204" class="size-full wp-image-20204" src="" alt="brazil olympics rio bribery" width="980" height="664" srcset=" 980w, 300w, 768w, 610w" sizes="(max-width: 980px) 100vw, 980px" /><p id="caption-attachment-20204" class="wp-caption-text">Brazilian officials celebrate Rio being picked host city of 2016 Olympics</p></div> <p><span style="font-weight: 400;">Back in 2016, former U.S. President Barack Obama suggested that Rio de Janeiro got the nod to host the Olympics thanks to a &#8220;cooked&#8221; process. While this seemed like sour grapes from Mr. Obama—who was lobbying for Chicago to get the event—he has apparently been proven right, as jailed former Rio Governor Sérgio Cabral admitted to prosecutors having paid bribes to secure the competition would come to Brazil.</span></p> <p><span style="font-weight: 400;">The vote-for-cash scheme has been investigated by authorities for years now, and Mr. Cabral&#8217;s deposition confirmed many of the investigators&#8217; suspicions.</span></p> <p><span style="font-weight: 400;">According to Mr. Cabral, Lamine Diack, president of IAAF (the ruling body on athletics), and former gold-medal swimmer Aleksandr Popov received cash for voting for Rio. The Brazilian politician also said kickback negotiations were brokered by Carlos Nuzman, the former president of the Brazilian Olympic Committee—and who was briefly arrested in 2017 on suspicion of corruption and money laundering.</span></p> <p><span style="font-weight: 400;">The money (USD 2m) was allegedly transferred through a network of offshore shell companies by businessman Arthur Soares, a.k.a. &#8220;King Arthur.&#8221; In exchange for his &#8220;services,&#8221; King Arthur secured BRL 3bn’s worth of contracts with Rio state). All those mentioned by Mr. Cabral denied any wrongdoing.</span></p> <ul> <li><b>Go deeper:</b> <a href=""><span style="font-weight: 400;">Remember Brazil&#8217;s ongoing corruption scandals: Car Wash, Olympics, etc. (Dec. 2017)</span></a></li> </ul> <hr /> <h2>A new bank on the horizon</h2> <p><span style="font-weight: 400;">Investment brokerage firm XP announced it will launch its own bank by the end of Q3 2019. The firm, which administrates over BRL 273bn in investments (5% of the market), got authorization from the Central Bank back in December 2018 and will roll out its new products gradually. The first will be a form of loan as collateral to a financial asset.</span></p> <p><span style="font-weight: 400;">XP is 49%-owned by Itaú, Brazil&#8217;s largest bank. But CEO Guilherme Benchimol guaranteed that neither Itaú nor another bank will purchase the company&#8217;s remaining half. However, XP is open to the idea of holding an initial public offering.</span></p> <p><span style="font-weight: 400;">The Brazilian banking system remains highly concentrated—even with the rise of fintechs. Brazil&#8217;s top 5 banks, which control most of the credit in the country, still have fees way above inflation. Over the past two years (the period in which fintechs have been around), fees rose by 14% on average—against 7.5% inflation over the same span. Instead of lowering their fees to compete with fintechs, big banks are taking them over instead.</span></p> <ul> <li><b>Go deeper: </b><a href=""><span style="font-weight: 400;">How sky-high interest rates are choking economic growth in Brazil</span></a></li> </ul> <hr /> <h2>Also noteworthy</h2> <p><b>Trade. </b><span style="font-weight: 400;">With his attention turned to the upcoming election, Argentinian President Mauricio Macri praised the trade deal between Mercosur and the European Union—promising a further deal, with the US. President Macri told newspaper </span><i><span style="font-weight: 400;">La Nación</span></i><span style="font-weight: 400;"> that he and Brazil&#8217;s Jair Bolsonaro are discussing that possibility.</span></p> <p><b>Argentina.</b><span style="font-weight: 400;"> Brazil&#8217;s neighbor is facing a serious financial crisis, which has had deep impacts on Brazilian exports. Car production in Brazil dropped 9% in June, as Argentina is the largest exporting market for local producers. Last month, as a result of weaker sales, 800 jobs were closed in the sector—pushed by the shut down of a factory and the elimination of a third shift in another.</span></p> <p><b>Child labor.</b><span style="font-weight: 400;"> During one of his weekly Facebook live transmissions, President Bolsonaro spoke highly about child labor. He said working &#8220;builds character,&#8221; no matter the age, and that he himself worked &#8220;from when [he] was 9, 10 years old, and lost nothing because of it.&#8221; The president said he misses the time &#8220;when people had more duties than rights,&#8221; but said he would not try to legalize child labor, as he would be &#8220;massacred&#8221; for doing so.</span></p> <p><b>Car Wash 1.</b><span style="font-weight: 400;"> A prominent Car Wash prosecutor shared on social media a post by a right-wing blog with </span><a href=""><span style="font-weight: 400;">recordings, allegedly of Leandro Demori</span></a><span style="font-weight: 400;">, editor of </span><i><span style="font-weight: 400;">The Intercept</span></i><span style="font-weight: 400;">. The website has been publishing leaked messages between prosecutors and former Judge Sergio Moro, casting doubts over their conduct. While the recordings show only small bits of audio, impossible to draw any conclusion from, right-wing groups say it reveals that the journalists doctored the content of the messages they leaked.</span></p> <p><b>Car Wash 2.</b><span style="font-weight: 400;"> Weekly magazine </span><i><span style="font-weight: 400;">Veja </span></i><span style="font-weight: 400;">will publish a new round of leaks today, stating that Mr. Moro did indeed illegally coach Car Wash prosecutors. Judges in Brazil are not allowed to do so, as they should remain as neutral umpires.</span></p> <p><b>Education.</b><span style="font-weight: 400;"> Researchers and teachers are planning a new protest against education budget cuts for August 13. According to recent data published by Brazil&#8217;s official statistics agency, racial and social divisions still cripple the country&#8217;s education system. Illiteracy rates are three times higher among blacks and mixed-race people (9%, as opposed to 3% among whites).

Read the full story NOW!

BY Gustavo Ribeiro

An award-winning journalist with experience covering Brazilian politics and international affairs. His work has been featured across Brazilian and French media outlets.