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Son of Brazil’s president Jair Bolsonaro charged with corruption

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Brazilian prosecutors have charged a son of President Jair Bolsonaro with corruption, a development that threatens to ensnare the rightwing leader in scandal following a period of political calm.

Investigators in Rio de Janeiro late on Tuesday charged Flávio Bolsonaro, a senator, with embezzlement, money laundering and criminal association, the culmination of an investigation that began almost two years ago.

The authorities alleged that Flávio Bolsonaro ran a “rachadinha” scheme along with several associates while a Rio state lawmaker before becoming a senator.

Such schemes, a feature of Brazilian politics, typically involve elected politicians using state funds to take on a large number of employees, who then funnel back their salaries to their boss.

Investigators believe that hundreds of thousands of dollars was funnelled back to Flávio Bolsonaro and then laundered through a variety of fronts, including a chocolate shop, with the help of an associate, Fabrício Queiroz, who was also charged.

Flávio Bolsonaro denied the allegations. “It was expected, but it will not be sustained because they lack any evidence. It’s nothing but a badly orchestrated and evil tale,” he said in a statement.

A state court in Rio must decide whether to accept the charges before the case can proceed. But the development will nonetheless prove an embarrassment to his father, who only weeks ago claimed he had put an end to corruption in Brazil.

“The Flavio case demonstrates that corruption has not ended in Brazil,” said Carlos Melo, a professor of political science at the Insper business school. “[Jair] Bolsonaro’s rhetoric is like that of any politician. The idea that he would end corruption is an electoral fallacy. It’s not supported in reality.”

Mr Bolsonaro, a former army captain, was elected president in 2018 by tapping into popular anger about rampant political corruption laid bare in the landmark Lava Jato — or Car Wash — graft probe.

Since then, however, he has backed away from anti-corruption efforts and instead opted to cut deals with the political establishment in Congress.

These agreements with the so-called Centrão in effect staved off any risk that Mr Bolsonaro could be impeached and led to the first period of political stability of his tenure.

“Now everyone in Brasília has an interest in quietly sweeping the [corruption] issue under the rug. And that’s exactly what they’re doing,” said Eduardo Mello, a professor of politics at the Getúlio Vargas Foundation.

Prof Mello highlighted that corruption had fallen off the political radar in recent months. Although Brazil has been badly hit by the coronavirus crisis, the president is enjoying high approval ratings after doling out Covid-19 cash relief to millions of the county’s poorest citizens.

“Bolsonaro no longer needs to pretend to care about corruption because this is no longer a major issue. He’s in a good position to guarantee himself a place in the runoff in the election in two years. He just needs to appear less corrupt than his opponent,” Prof Mello said.

Additional reporting by Carolina Pulice in São Paulo



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Emerging Markets

NYSE to suspend trading of China’s Cnooc next month

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The New York Stock Exchange is to start delisting proceedings against China National Offshore Oil Corporation to comply with an executive order from Donald Trump that bans Americans from investing in companies with ties to the Chinese military.

The NYSE on Friday said it would suspend trading in Cnooc’s American depository shares on March 9, after determining that the company was “no longer suitable for listing” following the order that the former US president signed in November.

The order banned investing in several dozen Chinese groups that were last year put on a Pentagon blacklist of companies that are accused of working with the People’s Liberation Army and threatening US security. Trump set a January 28 deadline for the ban to take effect, but President Joe Biden pushed the deadline back to May 27.

The NYSE move comes as Biden evaluates a number of assertive actions that Trump took against China during his last year in office. The commerce department last year put Cnooc on a separate blacklist — called the “entity list” — that makes it hard for US companies to sell products and technology to the Chinese oil group.

The Biden administration has not made clear whether it intends to keep Trump’s executive order in place. But the new president and his officials have so far adopted a tough stance towards China over everything from its economic “coercion” to concerns about its clampdown on the pro-democracy movement in Hong Kong to the repression of more than 1m Uighur Muslims in the northwestern Chinese province of Xinjiang.

Earlier this month, Biden used his first conversation with Chinese president Xi Jinping since assuming office to raise concerns about Hong Kong and Xinjiang, and aggressive Chinese actions towards Taiwan. Antony Blinken, secretary of state, also described the detention of Uighurs in labour camps as “genocide”.

Jen Psaki, White House press secretary, has said the administration was conducting a number of “complex reviews” of the China actions that Trump took. The former president put dozens of other Chinese companies on the Pentagon and commerce department blacklists, including Huawei, the Chinese telecoms equipment group.



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Bond sell-off roils markets, ex-Petrobras chief hits back, Ghana’s first Covax vaccines

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The yield on the benchmark 10-year Treasury exceeded 1.5 per cent for the first time in a year and the outgoing head of Petrobras warns Brazil’s President Jair Bolsonaro against state controlled fuel prices. Plus, the FT’s Africa editor, David Pilling, discusses the Covax vaccine rollout in low-income countries. 

Wall Street stocks sell off as government bond rout accelerates

https://www.ft.com/content/ea46ee81-89a2-4f23-aeff-2a099c02432c

Ousted Petrobras chief hits back at Bolsonaro 

https://www.ft.com/content/1cd6c9fb-3201-4815-9f4f-61a4f0881856?

Africa will pay more for Russian Covid vaccine than ‘western’ jabs

https://www.ft.com/content/ffe40c7d-c418-4a93-a202-5ee996434de7


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Petrobras/Bolsonaro: bossa boots | Financial Times

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“Brazil is not for beginners.” Composer Tom Jobim’s remark about his homeland stands as a warning to gung-ho foreign investors. Shares in Petrobras have fallen almost a fifth since President Jair Bolsonaro said he would replace the widely respected chief executive of the oil giant.

Firebrand Bolsonaro campaigned on a free-market platform. Now he is reverting to the interventionism of leftist predecessors. It is the latest reminder that a country with huge potential has big political and social problems.

Bolsonaro reacted to fuel protests by pushing for a retired army general to supplant chief executive Roberto Castello Branco, who had refused to lower prices. This is politically advantageous but economically short-sighted.

Fourth-quarter ebitda beat expectations at R$60bn (US$11bn), announced late on Wednesday, a 47 per cent increase on the previous quarter. This partly reflected the reversal of a R$13bn charge for healthcare costs. Investors now have to factor the cost of possible fuel subsidies into forecasts. The last time Petrobras was leaned on, it set the company back about R$60bn (US$24bn at the time). That equates to 40 per cent of forecast ebitda for 2021.

At just over 8 times forward earnings, shares trade at a sharp discount to global peers. Forcing Petrobras to cut fuel prices will make sales of underperforming assets harder to pull off and debt reduction less certain. Bidders may fear the obligation to cap prices will apply to them too.

A booming local stock market, rock bottom interest rates and low levels of foreign debt are giving Bolsonaro scope to spend his way out of the Covid-19 crisis. But the economy remains precarious. Public debt stands at 90 per cent of gross domestic product. The real — at R$5.40 per US dollar — remains near record lows. Brazil’s credit is rated junk by big agencies.

Rising developed market yields will make financings costlier for developing nations such as Brazil. So will high-handed treatment of minority investors. It sends a dire signal when a government with an economic stake of just over a third uses its voting majority to deliver a boardroom coup.

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