Police carried out five arrests, more than two dozen interrogations and over 100 search warrants, seizing jewels, luxury vehicles, artwork and an airplane in an asset freeze to cover up to 8 billion reais (US$ 2.5 billion) in alleged damages.

The federal judge overseeing the case, Vallisney de Souza Oliveira, ordered the chief executive of meat packer JBS SA and 39 others under investigation to suspend their corporate roles, avoid all capital market activity and forfeit their passports in order to avoid jail.

JBS shares fell 10%, the biggest drop in six months, at the prospect of billionaire brothers Wesley and Joesley Batista, who run JBS and their family’s holding company J&F Investimentos, respectively, from serving at the group’s firms.

The probe of the pension funds is the latest in a string of investigations into corruption at the vast overlap of Brazilian business and politics, rattling Latin America’s largest economy and feeding political instability.

The four pension funds under investigation, which controlled about 280 billion reais in assets last year, have been an important source of investment in Brazil’s credit-starved economy, but political connections at the state-run firms have raised questions about influence in their decisions.

The pension funds caught up in Monday’s investigation are those of state-run banks Caixa Econômica Federal and Banco do Brasil, postal service Correios and oil giant Petrobras, which has been ground zero of the graft investigations roiling the nation.

Yet police said their investigation focused on losses to pensioners from reckless or fraudulent investments throughout the Brazilian economy.

Other executives affected by the judge’s order include the chief executive of wood pulp maker Eldorado Brasil Celulose SA, also controlled by the Batista family, José Carlos Grubisich; and Denise Pavarina, the head of the asset management unit at lender Banco Bradesco SA.

Press representatives for J&F and Eldorado said their executives were collaborating with the investigation. JBS referred comment to J&F.

Bradesco said its asset management units “follow the regulations in funds under management and rules by regulators” and that the bank is cooperating with authorities.

Pension funds Previ, Petros and Funcef said they were collaborating with police. Petros added that the investigation involved decisions made in 2011. Postalis did not immediately respond to a request for comment

Caixa, Bradesco, Banco Santander Brasil and fund manager Rio Bravo Investimentos Ltda confirmed that their asset management units were also targeted by the operation.

Santander Brasil said the federal police asked for documents related to investments by the pension funds in the rig lesser Sete Brasil, which is under bankruptcy protection, and in a fund called Global Equity.

Mercopress

With the occupation, the rural workers put pressure on the federal and state governments to act on the demands they had presented during a protest just days before. 

The acts, they explained, occurred in order to bring the attention of the government and of society as a whole to the situation of  neglect that farmers experience, the same farmers who, among other problems, year after year, are suffering from a drought. 

Among the demands are: amnesty in the payment in the seeds swap program, re-ordering of debt according to the real conditions of payment for small farmers, readjusting of farm insurance, Proagro; intervention of the State in the regulation of food prices, stock and selling of rural farm products.

The protesters remained for two hours inside the bank until the Special Operations Battalion (BOE – Batalhão de Operações Especiais) emptied the branch in an action ordered by the Military Police of the State Government. 

According to the activists, around 60 people from the countryside were abused, searched, identified and taken by the city police to make statements.  Seven people were accused and held in a private jail.

The sharp increase in asset concentration was due to different mergers announced last year that increased the strength of the country's largest financial institutions, the newspaper said.

As of December 31, 2007, the five largest Brazilian banks by asset volume were, in order: Banco do Brasil (government-controlled), Bradesco, Itaú, Caixa Econômica Federal (government-owned) and Banco Real.

The five had total assets of close to 1.3 trillion reais (equivalent to 557.94 billion USD at the current exchange rate), which represents 52.32% of the total for Brazil's financial system, according to the central bank figures.

Last year, Itaú acquired Unibanco and became the largest bank in all of Latin America; Banco do Brasil acquired Nossa Caixa; and Spain's Santander bought Real to take its place on the list of the country's largest banks.

The five biggest financial institutions held close to 2.04 trillion reais (875.54 billion USD at the current exchange rate) in assets, equivalent to 65.72% of the nationwide total.

The acquisitions also changed the rating with the list now headed by Itaú and followed by Banco do Brasil, Bradesco, Santander and Caixa Econômica Federal.

According to Márcio Torres, an expert with the Serasa consulting firm who was interviewed by Valor, acquisitions are likely to continue in 2009 because "the consolidation process is not going to stop."

He added that the global financial crisis also will lead to greater consolidation because it will prompt customers to move their deposits to the larger banks.

"The next three years will be of intense competition in the Brazilian financial sector, especially among the larger banks, and in that sense there's still room for further consolidation," according to a report released last month by Banco Fator.

Mercopress

This information was disclosed by a BB spokesperson, in a press statement, and shows that the disbursements up to now have grown 34% when compared to loans made for the 2007/2008 crop. The largest volume, 4.1 billion reais (US$ 2.2 billion), was for cost operations, against 2.4 billion reais (US$ 1.3 billion) in the same period in 2007.

This increase was necessary, mainly, due to the high prices of fertilizers, up on average 120% over the last 12 months, according to figures supplied by the National Confederation of Agriculture and Livestock (CNA).

The greatest demand for agricultural credit generally takes place between September to October, and the BB expectation is for another 11.4 billion reais (US$ 6.2 billion) to be made available by the end of the year, 15% more than in the period from July to December last year. In the month of October alone, the funds turned to the sector should exceed 2.7 billion reais (US$ 1.5 billion).

Apart from fund for covering costs and investment in agriculture, the BB also promises to keep its eye on the performance of the deposit balances in savings accounts to, if necessary, make available greater volumes of funds for agricultural credit.

ABr

According to information provided by the institution, ACC and ACE contracts advance to exporters in the Brazilian currency funds equivalent to the value of the sale they made in foreign currency. In the case of ACC, the funds are granted before shipping to finance the production of the goods to be exported. The ACE, in turn, is used after shipment, i.e., after the sale.

From January to April this year, the Bank of Brazil has already approved U$ 4.7 billion in both of these kinds of export financing contracts, growth of 23% when compared to the first four months of last year.

In April, exchange contracting, which includes export financing, grew 96% over the same month last year, and reached US$ 3.7 billion. From January to April, these operations have totaled US$ 11.3 billion, with a positive variation of 33%.

Brazilian exports in April totaled US$ 12.44 billion, representing growth of 26.6% over the same month last year. The main products exported in April were soy grain, crude oil, iron ore, coffee, chicken meat and beef, vehicles and sugar, among others.

The five main buyers Brazilian in April were the United States, with imports of US$ 2.17 billion, Argentina, US$ 1 billion, China, US$ 1 billion, the Netherlands, US$ 704 million and Germany, US$ 641 million. The markets that grew most in the period were the Middle East, Eastern Europe and the European Union (EU).

Anba

Brazil’s Bovespa Index dropped 940.52 points, or 2.34%. Mexico’s benchmark Bolsa Index fell 432.77 points, or 2.05%, while Argentina’s Merval Index lost 54.93 points, or 3.04%.

Brazilian stocks sank, as investors digested a mixed batch of local earnings reports and continued to fret over the outlook for U.S. interest rates.

Attacks by a drug gang that left 91 dead, half of them policemen, didn’t seem to have contributed to the market downturn. Fear of new attacks, however, shortened the period the Bovespa, the São Paulo stock market, kept open, this Monday, May 15.

On the earnings front, aircraft maker Embraer said late Friday, May 12, that its first-quarter net profit plunged to 86.9 million reais from 233.8 million reais a year earlier, missing expectations. Results were hurt by an appreciation of the real and a drop in deliveries.

Meanwhile, oil giant Petrobras late Friday said its first-quarter net profit rose 33% from a year ago to 6.68 billion reais but missed analyst estimates. Results were hurt in part by higher taxes.

Banco do Brasil SA posted a record first quarter net profit of 2.343 billion reais, up sharply from 965 million reais a year ago and above market forecasts. Results benefited from growth in the bank’s client base.

Elsewhere, Mexican shares dropped for a fourth straight session on continued profit taking amid worries that U.S. interest rates will rise higher than initially expected.

Before the recent bout of profit taking Mexico’s bolsa had risen strongly on optimism about local economic and earnings growth. In a sign the economy remains on solid footing, the Finance Ministry reported today that Mexico’s industrial production surged 9.7% in March from a year earlier.

Argentine issues followed the region’s descent into the red amid profit taking and concerns about rising U.S. interest rates and global inflation.

On an up note, a major investment bank upgraded Argentina to "outperform" from "marketperform." "We have been surprised at the staying power of Argentina’s recovery, and believe that the economy still has significant impetus, as long as commodity prices remain high," the bank said.

Thomson Financial – www.thomsonfinancial.com

Meanwhile, Mexican shares extended recent gains, as investors were cheered by strong employment figures and continued earnings optimism.

Brazil’s Bovespa Index dropped 163.15 points, or 0.41%, while Mexico’s benchmark Bolsa Index added 46.45 points, or 0.23%, and Argentina’s Merval Index fell 16.58 points, or 0.87%.

Brazilian stocks slumped, as investors locked in some profits following a three-day rally on optimism about the outlook for interest rates at home and in the U.S.

The Brazilian central bank, as expected, lowered the Selic base interest rate by 75 basis points to 15.75% per year, marking the seventh-consecutive rate cut amid indications of tame inflation.

Earlier this week, investors were also cheered by minutes from the U.S. Federal Reserve’s last FOMC meeting showing that the end of the U.S. monetary tightening cycle may be near.

Fueling expectations for further interest-rate cuts in Brazil, the private Getúlio Vargas Foundation reported that its General Price Index, or IGP-M, dipped 0.5% in the 10 days through April 20, compared with a 0.1% decline in the same period in March. The data helped to ease concerns about the inflationary impact of high global oil prices.

Adding to positive sentiment, Brazil posted a current account surplus of US$ 1.35 billion March, up from February’s surplus of US$ 725 million, the central bank said. That brought the 12-month current account surplus to US$ 13.32 billion, or 1.61% of gross domestic product.

On a less upbeat note, the Brazilian Census Bureau (IBGE) said that Brazil’s official jobless rate rose to 10.4% in March from 10.1% in February.

In corporate news, Banco do Brasil S.A. was in focus after Brazil’s national monetary council approved late yesterday an increase in foreign capital in the bank to 12.5% from 5.6%.

Elsewhere, Mexican shares extended a recent run-up on continued optimism about the first-quarter earnings season. Cement giant Cemex late yesterday reported a 14% gain in first-quarter net profit to US$505 million from US$444 million in the year-earlier period. In addition, the company reached its sales goals.

Lending additional support to the market, the National Statistics Institute reported late in today’s trading session that Mexico’s unemployment rate fell to 3.4% in March from 3.6% in February.

In corporate news, Televisa said a fund owned by billionaire Carlos Slim’s son bought about a 2.8% stake in U.S. Spanish-language television firm Univision Communications.

The market’s gains were limited somewhat today by investor caution ahead of the Bank of Mexico’s monthly policy meeting tomorrow. The bank is widely expected to pause or end its eight-month monetary easing cycle, leaving the overnight rate at 7.25%.

Argentine issues dipped, as investors took profits following a recent rally. In economic news, national statistics agency INDEC reported today that its index of economic activity, which is a proxy for gross domestic product, surged 9.5% in February from a year earlier and climbed 1% from January. On a month-on-month basis, GDP had been flat in January and December. The data suggests that the Argentine economy, which grew a robust 9.2% for all of 2005, remains on solid footing.

Thomson Financial – www.thomsonfinancial.com

Banco do Brasil’s 2005 profits were 4.2 billion reais (US$ 2 billion), up 37.4% over 2004. And the Caixa had record profits in 2005 of 2.07 billion reais, (US$ 970 million) up 46% over 2004.

Spokespersons for both banks emphasized that in 2005 their results reflected the conciliation of commercial objectives with social functions.

In a note, the Caixa said it had growth in commercial loans, where 95% of its loans went to small businesses, and investment funds. Meanwhile, the Caixa’s strongest social function area remains in home loans, which rose 41% in 2005.

The president of the Banco do Brasil, Rossano Maranhão, said the institution’s profits showed it was possible for a market bank to make investments in sectors such as family farming.

Banco do Brasil’s loan portfolio reached 101.8 billion reais, consolidating its leadership in the loan sector (15.3% of the sector). Meanwhile, the institution’s loans to the agricultural sector rose 19% in 2005, going to both agribusiness and family farms.

Agência Brasil

The quarter’s results represented an annualized Return on Equity of 40.8% and earnings per share of R$ 1.80.

In the quarter, R$ 565 million was accounted free of tributes, from recovery of undue taxes. With that, the recurring result of third quarter of 2005 was R$ 873 million, which represents a Return on Equity of 23.5%.

The performance, which was below market’s consensus, is due to the increase in Income and Social Contribution Expenses, which were higher because of the effect of exchange rate variation and the fact that, in the third quarter there wasn’t the accounting of Interest on Equity that reduces those expenses.

The Individuals Loan Portfolio grew 3.6% in third quarter of 2005 and 15.0% in the past 12 months, raised by the strong increase in pay-roll operations, which grew 28.5% in the quarter and 174.3% in the past 12 months.

The Coverage Ratio (personnel expenses over service fees), until third quarter of 2005, reached 105.5%, against 98.4% in the same period last year. The Efficiency ratio, which measures the percentile of operational income over administrative expenses, came to 53.5%, against 56.7% in third quarter of 2004, both annualized.

The growing earnings and the increase in Shareholders’ Equity allowed the BIS ratio to be above the 11% demanded by the Brazilian Central Bank. At the end of the period, BB reached 17.4% for this ratio, compared to 15.7% in the same period 2004. The ratio allows BB to increase its Loan Portfolio by almost R$ 80.1 billion.

Banco do Brasil S.A. – www.bancodobrasil.com.br

"We found the trail by which money from government ended as PT’s slush funds. Clearly it shows how public funds were used for private interests," said Friday Senator Alvaro Dias from the opposition Brazilian Social Democracy Party (PSDB).

Senator Dias demanded that evidence of irregularities uncovered by the Congressional Investigation Committee be immediately presented to the Attorney General’s office, so prosecutors can begin a criminal investigation of Lula’s administration.

Based on the findings of the legislative committee investigating corruption allegations, 10 million reais (approximately US$ 4.5 million) were diverted from the state-run Banco do Brasil to the ruling party PT.

The diversion of funds was announced Thursday by Lower House member Oscar Serraglio who heads the committee investigating the alleged PT network for financing political campaigns and ensuring votes in Congress.

Banco do Brasil has acknowledged that last October it opened an internal investigation to probe the diversion of funds "loaned" to an advertising agency linked to the PT.

"We discovered that the loans were part of an operation to divert money from the bank to PT through public relations expert Marcos Valério," indicated  Serraglio.

Valério revealed before a Congressional committee that during 2003 and 2004 he collected the equivalent of US$ 22 million for PT treasurer Delúbio Soares, part of it "loaned" through the Bank of Brazil.

Opposition leaders said that following four months of investigations, they had finally found the evidence they were looking for: evidence that financial irregularities were not limited to illegal campaign financing, as the PT has repeatedly contended.

"The evidence shows diversion of public funds to benefit the ruling party. Now, all President Lula administration officials are under suspicion," said Senator Arthur Virgí­lio do Carmo from the opposition PSDB.

Senator Alvaro Dias said the opposition so far had focused its attacks on the PT and had been lenient towards Lula, but the new revelations "have shown a completely new picture".
Folha do Sao Paulo reports that a close presidential advisor admitted President Lula was "concerned" because most probably the conclusions from the Congressional investigation committee are "truthful."

However he insisted President Lula was unaware of the illegalities and blamed PT treasurer Soares for the slush fund network operation.

This article appeared originally in Mercopress – www.mercopress.com.