Jair Bolsonaro alters controversial gun decree

Good morning. Bolsonaro alters controversial gun decree. Government gets narrow win in Congress. Petrobras approves privatization of subsidiary. Natura confirms blockbuster deal with Avon. (This newsletter is for platinum subscribers only. Become one now!)

Bolsonaro alters controversial gun decree 

President Jair Bolsonaro has made changes to his decree loosening gun ownership rules, after congressional leaders and members of the Justice system called it “unconstitutional.” However, while he did remove some controversial points of the legislation, he also added some others. First, what was scrapped from the decree:

• Assault rifles are no longer allowed. With the exception of guns used for hunting, only handguns will be permitted. Certain types of ammunition (incendiary, chemical) will be restricted.

• If someone is caught carrying a weapon under the influence, they will lose their permit. Furthermore, permit renewals will require proof of employment, technical capacity, and mental health exams.

• Activities in shooting clubs will no longer be open to any minor with permission from a parent or guardian. Now, only teens of 14 to 18 years old, with permission from both parents, can go to gun ranges.

Gun decree — What has been included:

• While residents of rural areas can bear arms, the president included a form of “anti-landless movements” article—restricting that right to landowners.

• Municipal guards will self-regulate permits for their members. Members of the Armed Forces will be able to import weapons, ammo, and other controlled products.

• Hunters and members of shooting clubs will be able to purchase more than the limit of 5,000 rounds of ammo for each weapon—providing it asks the Army for authorization.

Government wins in Congress… just 

The Jair Bolsonaro administration caught a huge break on Wednesday, as Congress continued to vote on provisional decrees set to expire on June 3. Senators approved the foreign ownership of airlines, which could increase competition in the sector. The House also began voting on the decree establishing the current layout of the presidential cabinet—but Speaker Rodrigo Maia ended the sitting after tensions between lawmakers increased.

The vote continues today, with one last (and controversial) article still to be analyzed: the one forbidding tax auditors from reporting crimes to prosecutors. The leadership of Mr. Bolsonaro’s party wanted the matter to be decided by a roll call vote—a way to embarrass members of Congress who want to approve an article clearly aimed at curbing corruption investigations—which led to name-calling in the House. “The atmosphere became tense,” said Mr. Maia.

Despite approving a matter sensitive to the government, the House made sure to put its own imprint on the measure:

• The money laundering enforcement agency (Coaf) was removed from under the purview of Justice Minister Sergio Moro (who intended to use it in anti-corruption probes) and has returned to the Economy Ministry.

• The indigenous affairs agency (Funai) will no longer be subject to the Human Rights Ministry, and will return to the Ministry of Justice. Funai also regains the prerogative to demarcate indigenous lands, which had been given to the Agriculture Ministry.

• After the House finishes the voting, the Senate must still approve the decree before June 3.

Meanwhile… 

The House’s Constitution and Justice Committee approved a tax reform bill—showing the government how fast Congress can operate when it wants to. And, as the House seems unwilling to give up its leading role on the matter, the government could be forces to get behind the initiative. The bill, however, will now be put on hold, while the pension reform is analyzed by congressmen.

Petrobras approves privatization of subsidiary 

Brazil’s state-controlled oil and gas company Petrobras reported it will reduce its share of fuel distribution unit BR Distribuidora from 71% to 40%, by way of a secondary offering of shares. However, Petrobras said the move will only take place in “a favorable environment on a national and international level.”

In April, Petrobras had already announced its intention of reducing its stake in BR Distribuidora. The company was first listed on the stock exchange in late 2017, when Petrobras gave up 30% of its shares in a BRL 5bn operation.

Under new CEO Roberto Castello Branco, the company has hit the gas of its divestments plan, recently announcing that it is selling 8 of its 13 oil refineries, in a move that could raise USD 15bn. The privatization of refineries would end Petrobras’ monopoly over the fuel market in Brazil—which has been the source of political tension.

Natura confirms blockbuster deal with Avon

Brazilian cosmetics giant Natura has announced its acquisition of Avon Products—a move which had long been speculated by analysts. With the deal, Natura becomes an USD 11bn conglomerate. The company was the best-performing share on the São Paulo stock exchange yesterday, closing the day up 9.43%. The deal, however, still needs the green light from regulatory agencies.

According to a note to investors, Natura & Co—which also controls brands such as The Body Shop and Aēsop—now becomes the world’s 4th-largest cosmetics conglomerate. Analysts expect synergies between USD 150m-250m per year. However, Avon—which pioneered the direct-selling model—has faced challenges in a social media-driven world. The company has lost equity value and market share, and recently slashed 2,300 jobs.

In Brazil, the cosmetics sector generated BRL 106.3bn in revenue in 2017, according to 2018 data from Euromonitor. That places the country only behind the U.S., China, and Japan. Natura & Co dominates 11.7% of the market, followed by Unilever (11.1%), and Boticário (10.8%). With the growth in sales below expected for the first quarter, companies are looking for organic products as a way to entice consumers.

• Go deeper: Why are luxury brands leaving Brazil? 

What else you should know today

Crisis. The aid package drafted by the Economy Ministry to help states in dire financial situations (imposing austerity measures in exchange for loans) is ready and has been waiting for an official announcement for 3 weeks now. Congressmen have advised the government to grant loans to states which are not in crisis—in order to gather more political support. 

Corruption. A former executive at the Odebrecht construction group has accused at least two bankers of helping the company launder money issued from corruption schemes. One of them is the current head of Banco Paulista—who also served as president of São Paulo’s stock exchange in the 1990s. The other heads Trendbank.

Demonstrations. On May 26, the same day Jair Bolsonaro’s supporters are planning protests against Congress and the Supreme Court, activists from Rio de Janeiro favelas will hold a demonstration of their own. Called “Stop Killing Us,” they want to denounce police brutality in peripheral areas.

Education. One week after thousands of students and teachers protested a BRL 7.4bn budget cut in the Education Ministry, the federal administration decided to ‘unfreeze’ BRL 1.6bn in funds for the sector (21% of the planned cut). Government officials, however, claim the decision bears no relation with the protests. “We saw the tremendous impact [the Education Ministry] has,” said Waldery Rodrigues, a special secretary to the Economy Ministry.

Leadership. A study elaborated by the International Labor Organization shows that 75% of companies say their initiatives to promote gender diversity in upper management contribute to improving their revenue. Brazil has lowered the gender gap among company executives at a much faster pace than other Latin American countries. Despite having more years of formal education, Brazilian women still earn, overall, 23% less than their male counterparts.

Domestic abuse. The Senate approved the inclusion of trans women under the protection of the Maria da Penha Law—aimed at creating mechanisms to reduce domestic violence against women. Until 2017, trans women who were victims of abuse by their partners could only ask for protection under regular assault laws. But judges have changed their understanding of the law, using it in cases when the victims are trans and even gay men.[/restricted]

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