BGA Cable: Brazil Update


After a year of relative calm, political fireworks exploded in Brazil on May 17. Joesly Batista, chairman of the Brazilian meatpacking firm JBS, testified that the current Brazilian President, Michel Temer, approved bribes being paid to the former leader of the country’s Chamber of Deputies, Eduardo Cunha, who is currently serving a jail term. Supporting his accusation, audiotapes were released which suggested that at a minimum, Temer was aware of the bribes. The case is now being investigated by Brazil’s highest court of law. This immediately led to calls for Temer’s resignation and/or impeachment. Temer, adamantly denied any wrongdoing and vowed not to step down. 

These events occurred in what was already a politically highly charged environment. Brazil’s previous President, Dilma Rousseff of the PT was impeached and her predecessor Lula, also of the PT, is under investigation for corruption in the Lava Jato’ scandal. Aecio Neves, the PSDB’s 2014 Presidential candidate was forced to step down as the party’s leader as was Eduardo Cunha, also of the PMDB, from his leadership of the Chamber of Deputies. With various investigations implicating a substantial portion of the members of Congress across multiple parties, the political system is widely considered as corrupt and ineffective. Large demonstrations have erupted throughout Brazil to demand the removal of Temer.

Contact BGA to read the full cable.

Our Associates are closely monitoring developments so we can keep you updated on the Brazilian political situation and their potential implications for financial markets.  Contact us to schedule a call with our experts to hear our more detailed views.

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