Trouble for Odebrecht and Andrade
The presidents of two of Brazil’s largest construction companies, Marcelo Odebrecht (of Construtora Odebrecht) and Otávio Azevedo (of Andrade Gutiérrez) were arrested by police on 21 June. Reports said they were held as part of the on-going investigation involving the payment of bribes to giant state oil company Petrobras. A total of 25 construction companies and Petrobras contractors are alleged to have been involved in corrupt payments totalling over US$3bn. One of four brothers, Marcelo Odebrecht took over from his father to run the family-owned group in 2008. The group now operates through 15 divisions in 21 countries, and employs an estimated 180,000 staff. It also faces allegations that during the presidency of Lula da Silva (2003-2010) it benefitted improperly from loans made by Brazil’s national development bank, BNDES, at below-market interest rates.
Bradesco to bid for HSBC
Brazilian bank Bradesco, the second largest in the country, has said that it will make a formal bid for the Brazilian assets of the London-based global bank HSBC in July. The news follows HSBC’s announcement that it would be cutting back its global workforce and selling its subsidiaries in Brazil and Turkey. Bradesco’s president, Luiz Carlos Trabuco, was quoted by the local press as saying, “We made an offer and now we are assessing the situation. A final offer will only be made in July, according to the seller’s timetable. The size of the cheque we’ll write won’t be known until the last minute.” Other local banks are also thought to be interested in the acquisition, including among them the local branches of Spain’s Santander and BBVA, along with Brazil’s Itaú. Santander Brasil’s president, Jesús Zabalza, said he would consider making a bid. The value of HSBC’s Brazilian assets is estimated at around US$4bn; the bank has 853 branches in the country.
Nissan Motor thinking big
In an interview with the Reuters news agency, José Luis Valls, director for Latin America at Nissan Motor Corp, said, “I don’t want to play in the second league any more. I want to play in first, and I want to go after the championship”. Valls was explaining Nissan’s decision to seek a bigger market share across the region. The Japanese manufacturer is already well established in Mexico, and has announced a US$600m investment in Argentina due to start next year (through the Renault-Nissan joint venture). “We want to play a role in the regional market of 7m vehicles,” Valls said. A first objective would be to increase Nissan’s market share in Argentina from 1% to 5%. Although car sales have contracted amid economic troubles in both Argentina and Brazil, Valls insisted that the market needed to be assessed over the medium and long term. “We need a foothold in Brazil and another in Argentina to compete in the region and generate revenue” he said. The new plant in Córdoba, Argentina, will produce three pick-up models, launching its NP30 Frontier model in early 2018, followed by a Renault pick up, and later, under contract with the German manufacturer, a Mercedes Benz model.
Venezuela turns on Procter & Gamble
In June the Venezuelan government accused the local subsidiary of US company Procter & Gamble (P&G) of taking part in the so-called ‘economic war’ against the country by selling feminine hygiene products at excessively high prices. After reports that a box of eight tampons and a pack of sanitary towels were selling for VEB1,400 each (around US$7 at the highest official exchange rate, but still representing around one week’s minimum salary), the minister for women, Gladys Requena, accused the company of carrying out “criminal acts against the Venezuelan people”. In a public statement, P&G said it had followed official guidelines on “fair pricing” set by the government. It also noted that it was selling other products such as regular sanitary towels at the much lower price of VEB19. Economists noted that the higher-priced products had probably been imported more recently and transacted at the much higher new free floating exchange rate, Simadi, which hovers at around VEB187/US$. Venezuela’s (illegal) parallel exchange rate, meanwhile was trading at about VEB481.9/US$ on 30 June, according to the (Miami-based) website dolartoday.com, which publishes its daily rate based on trade at the Venezuela-Colombia border.
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