Good morning! Eleven companies were found guilty of rigging public bidding processes in São Paulo—including big names such as Alstom and Bombardier. The pension reform reaches its final stage in the House. Brazil’s democracy to get more expensive. Brazil to auction mining areas.


Alstom, Bombardier guilty of forming a cartel

Brazil&#8217;s antitrust regulator Cade found 11 companies guilty of fixing prices and rigging public bidding processes—including big names such as Alstom and Bombardier. They defrauded 27 subway and train projects in São Paulo, Brasília, Minas Gerais, and Rio Grande do Sul. Cade blacklisted the companies from public contracts for five years, and slapped the firms with combined fines of BRL 515m. Forty-two executives and engineers who ran the scheme will have to pay BRL 19m combined.</span></p> <p><span style="font-weight: 400;">Despite being part of the ring, German industrial equipment maker Siemens was spared—as it collaborated with the investigation, which started six years ago.</span></p> <p><span style="font-weight: 400;">According to Cade, the evidence showed the companies had divided the states in which some of them would dominate contracts—fixing prices and creating consortiums with the sole purpose of assuring each company would win contracts on their &#8220;turf.&#8221; This system operated from 1999 to 2013.</span></p> <p><span style="font-weight: 400;">Alstom chose not to comment on the decision. Bombardier said it will appeal in court.</span></p> <ul> <li><b>Also interesting:</b> <a href="https://brazilian.report/society/2019/07/05/wealthy-families-sao-paulo-public-transportation/"><span style="font-weight: 400;">Wealthy families in São Paulo ditching cars for public transportation</span></a></li> </ul> <hr /> <h2>House floor starts debating on pension reform</h2> <p><span style="font-weight: 400;">The House floor will include the pension reform bill on its order of the day today. Party leaders are keen on approving the text in a two-round vote by Friday. But for that to happen, they must contain an unlikely rogue element: the president&#8217;s own party. Connected to law enforcement unions, the Social Liberal Party has defended (along with the president) less strict retirement rules for cops—and could propose amendments to change the current rules, which have displeased union leaders.</span></p> <p><span style="font-weight: 400;">There are two risks with that: (1) even if their motion doesn&#8217;t pass, it could delay the vote, making it impossible for the House to approve the reform before going on vacation next week; and (2) it would stimulate other organized lobbies to do the same—watering down the savings the reform would allow.</span></p> <p><span style="font-weight: 400;">President Bolsonaro has been ambiguous about the reform—the single most important piece of legislation his administration has presented. While lobbying for cops, he also made sure to pander to lawmakers, by greenlighting on Monday almost BRL 1bn worth in healthcare projects sponsored by members of Congress.</span></p> <p><span style="font-weight: 400;">Also on the government&#8217;s side is public opinion. Per pollster Datafolha, those who support the reform have, for the first time, outnumbered those against it: 47% against 44%.</span></p> <ul> <li><b>Go deeper:</b> <a href="https://brazilian.report/power/2019/02/18/brazil-pension-reform-congress-path/"><span style="font-weight: 400;">The path Brazil’s pension reform must take in Congress</span></a></li> </ul> <hr /> <h2>Brazilian democracy to get more expensive</h2> <p><span style="font-weight: 400;">Since Brazil outlawed campaign donations from corporations, the federally-financed electoral fund has paid for campaigns. Eyeing next year&#8217;s municipal elections, Congress wants to double the amount in the fund to BRL 3.5bn. The money is divided in accordance with congressional representation—a system that privileges more established political groups. Congress must vote on the Budgetary Directives Law—a sort of guideline for the following year&#8217;s budget—before going on its mid-year holiday.</span></p> <div class="flourish-embed" data-src="visualisation/479509"></div> <p><script src="https://public.flourish.studio/resources/embed.js"></script></p> <h2>Brazil to auction mining rights this year</h2> <p><span style="font-weight: 400;">The Brazilian government wants to auction off roughly 1,000 mining areas containing gold, copper, and iron ore this year. The information was confirmed by the National Mining Agency to <a href="https://reuters.com/places/brazil">Reuters</a>. The auctions were planned for the beginning of the year, but the agency confirmed them for 2019, despite delays.</span></p> <p><span style="font-weight: 400;">Auctions will mix areas for immediate production, those in the research and exploration stage, and those for small &#8220;wildcat&#8221; miners. The government expects to raise up to BRL 30m. However, investors could be cautious about investing in the sector right now. Last week, Congress recommended tougher rules for mining companies, following the January 25 Brumadinho dam collapse—when 240 people were killed after a tailings dam burst.</span></p> <p><span style="font-weight: 400;">Brazil&#8217;s mining rights&#8217; backlog is immense: permits for mineral exploitation in almost 20,000 areas have expired or were lost by previous holders. That&#8217;s the equivalent of 10% of the pending mining licenses in the country. </span></p> <hr /> <h2>Also noteworthy</h2> <p><b>Freedom of speech 1.</b><span style="font-weight: 400;"> Last week, right-wing blog </span><i><span style="font-weight: 400;">O Antagonista</span></i><span style="font-weight: 400;"> published that the Federal Police had requested Coaf, Brazil&#8217;s money laundering enforcement agency, to scrutinize bank accounts belonging to Gleen Greenwald—head of </span><i><span style="font-weight: 400;">The Intercept</span></i><span style="font-weight: 400;">, the website publishing leaks damaging to Justice Minister Sergio Moro (under whom the Feds operate). The Federal Accounting Court intervened, giving 24 hours for the Economy Ministry to inform whether Coaf looked into Mr. Greenwald&#8217;s accounts.</span></p> <p><b>Freedom of speech 2.</b><span style="font-weight: 400;"> Members of the court reportedly believe there is no investigation. They think the information was a false flag from authorities who would like to investigate Mr. Greenwald.</span></p> <p><b>Credit.</b><span style="font-weight: 400;"> The law creating the so-called &#8220;good payers&#8217; list&#8221; will take effect today. It creates a database with information of bank customers who pay their dues on time—even without the person&#8217;s consent. The previous government defended the bill as a way to make credit cheaper, as it would reduce risks for lenders. But it remains to be seen how this database will operate once the new data protection law comes into effect next year—as it only allows firms to use data with users&#8217; consent.</span></p> <p><b>Aviation.</b><span style="font-weight: 400;"> Close to bankruptcy, Avianca Brazil has lost all of its time slots (authorizations to fly to and from airports in certain times) in the airports of Congonhas, Guarulhos (both São Paulo), and Recife. The company&#8217;s assets were to be auctioned tomorrow, but its most valuable possessions are the slots themselves. The much-anticipated auction (by both Avianca&#8217;s competitors and creditors) is now once again uncertain.</span></p> <p><b>More Doctors. </b><span style="font-weight: 400;">After Jair Bolsonaro won the presidential election, the Cuban government decided to pull out from the More Doctors Program—which places medical professionals in remote and peripheral areas. The government has since struggled to replace them with Brazilian professionals. Now, it wants to pardon student debt loans (from a federal fund to finance education) for those who join the program.

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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.