Pension reform plan to be defined today, says Bolsonaro

Author

Gustavo Ribeiro
February 14, 2019 • Reading Time: 7 minutes

In today’s issue: Pension reform plan to be defined today, says Bolsonaro. São Paulo on alert after crime bosses prison transfer. Poultry scandal.

Pension reform plan to be defined today, says Bolsonaro

President Jair Bolsonaro has left the hospital after 17 days, and promised to reach a consensus today on the government’s pension reform proposal. Investors have reacted negatively to the possibility of a minimum retirement age of 57 for women and 62 for men—below what economy minister Paulo Guedes wanted (65 for all). At 3 pm this afternoon, the president will meet with Mr. Guedes and Chief of Staff Onyx Lorenzoni—who, more often than not, seem to be at odds with one another.

Whoever wins the battle for the president’s ear should determine whether Mr. Bolsonaro will go for a less controversial—but also less effective—reform, as defended by Mr. Lorenzoni, or a more austere bill, backed by Mr. Guedes, which would come up against more resistance in Congress. Depending on the minimum age set by the president, the transition period to the new system could last up until 2030.

Ratings agency Moody’s believes a reform won’t come before the third quarter of 2019. “It could be postponed even further if additional components, such as a labor reform, are tied to a social security reform bill,” said the agency. Moody’s also believes Mr. Guedes is being too ambitious in his plan to save BRL 1 trillion in 10 years—the agency estimates savings of up to BRL 800bn.

Bolsonaro clan fuels political crisis

President Jair Bolsonaro and one of his sons decided to enhance a political crisis that is already too close to the country’s highest office. Secretary-General Gustavo Bebianno is facing accusations he used dummy candidates to siphon public money while serving as chairman of the Social Liberal Party, in the 2018 election. To show he was on firm ground, Mr. Bebianno told the press he had had several phone calls with the president.

However, Carlos Bolsonaro—a Rio city councilor and the president’s social media guru—called him out publicly on Twitter, saying Mr. Bebianno was lying about the calls. And even shared an audio clip of his father telling Mr. Bebianno he wouldn’t talk to him. The president retweeted his son’s post—and later told the press he asked the Feds to investigate the case and that, if proven guilty, Mr. Bebianno will be fired.

Congressman Delegado Waldir—the leader of the president’s Social Liberal Party in the House—said there is “zero chance” of Mr. Bebianno getting axed over the accusations. The president’s military advisors, however, are pushing for Mr. Bebianno’s firing or resignation. The secretary-general said he won’t voluntarily quit his office.

According to Crusoé magazine, Mr. Bebianno is expected to be fired this morning.

Poultry giant mixed up in further sanitary scandal

BRF, the world’s largest poultry producer, announced the recall of 165 tons of innatura poultry sold in Brazil due to risks of salmonella contamination. For international markets, 300 tons were removed—but they didn’t say which countries were affected. The possibly contaminated meat was produced between late October and early November and distributed to 13 states. A team of investigators has been sent to its Dourados plant, in Mato Grosso do Sul, the company said in a securities filing.

The recall is yet another blow to BRF, which is struggling under trade bans in the European Union after accusations that it bribed health inspectors in order to get fraudulent health certifications. According to federal prosecutors, “formulas declared to federal supervision rarely match reality, containing drugs which are not allowed, substances dosed above the legal maximum allowed, or substances that are undeclared.”

Yesterday, BRF stocks crashed by 3.22%—not entirely due to the latest scandal. The company is dealing with power struggles among shareholders and, earlier this week, announced that its divestments plan had worse-than-expected results. BRF raised BRL 4.1bn, against a BRL 5bn projection.

São Paulo on alert after crime bosses prison transfer

Twenty-two leaders of the PCC—Primeiro Comando do Capital, Brazil’s most powerful drug cartel—were transferred to federal maximum security facilities after authorities discovered a BRL 100m plan to free them from jail using foreign militias. The list includes Marcos “Marcola” Camacho, considered the gang’s top official—who was reportedly moved to a prison in Porto Velho, in northern Brazil.

The city of São Paulo is now under alert, with 100,000 police officers on call. Roads are being closely monitored, too. That’s because, in 2006, state authorities tried to transfer PCC leaders, sparking a violence spree across the city. Riots broke out in 74 different prisons, and over 100 people were taken hostage. It demonstrated the criminal gang’s undeniable powers of communication and mobilization. Violent attacks were carried out outside of the prisons, as 59 police officers were murdered in a total of 293 attacks.

The police response was swift, disproportionate and crushing. Death squads formed by policemen and paramilitary groups carried out hundreds of executions. There were 505 confirmed civilian deaths, almost 10 times as many police losses. Many of these deaths showed signs of professional executions. Twenty-five years later, PCC has over 30,000 members spread across nearly every Brazilian state and an annual turnover of up to BRL 800m.

What else you should know

  • Central Bank. With the presidents of the Senate’s permanent committees having been selected, the upper house will be able to hold a confirmation hearing on Roberto Campos Neto—the soon-to-be president of the Central Bank. The hearing has been scheduled for February 26. Mr. Campos Neto should preside over the bank’s next monetary policy meeting. 

  • Rio de Janeiro. Data obtained by UOL points out that the military intervention into Rio’s security system cost BRL 72m—without counting costs on equipment. The operations, however, had mixed results, according to experts. Peripheral communities have reported many episodes of violence and observers say that militia-controlled areas weren’t disturbed.

  • Vale. The Senate will summon Fabio Schvartsman, CEO of giant mining company Vale, to speak before the investigation committee on the Brumadinho dam collapse. The January 25 disaster killed at least 166 people—and the company knew about the risks beforehand.

  • Energy. The government has created a task force to study the renegotiation of the Itaipu Treaty with Paraguay. Both countries share ownership of the Itaipu hydropower plant—one of the world’s largest—with Brazil buying most of Paraguay’s share of the electricity generated. The contract between the two countries setting the prices for electricity expires in 2023, and Paraguay will be allowed to negotiate its share at higher prices.

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