Brazil: New Notes on Belo Horizonte Baldy’s Plastic, Fantastic Pipeline of Invisible Money

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The Bald One: The DNA Propaganda king is the key man in Brazil’s oddly bifurcated political slush-fund scandal, and yet the case does not bear his name, for reasons I cannot understand. It’s as though Shakespeare gave Hamlet the title The Triumph of Fortinbras or Gertrude Has a Bad Hair Day.

With degrees in engineering and economics, Bahian banker Daniel Dantas, 50, owner of the Opportunity group, is one of the richest men in Brazil. His empire was built based on pension funds and foreign partners. In 1998, Dantas was at the heart of investigations into suspected favoritism in the privatization of the Telebrás system. Last year (2004), Brasil Telecom — controlled up to that point by Dantas — was accused of hiring Kroll to spy on Telecom Italia. The investigations reportedly overflowed the boundaries of the corporate world to involve federal officials.

Privatization of the state is a system under which a state functionary has replaced the law, and different rules are applied to different people. Civil servants use the offices of the state for their personal enrichment and state functions are either not performed at all or performed for the benefit of those who use the state for illicit purposes. –Vladimir Brovkin

“Não tenhais medo dos homens, pois nada há de encoberto que não venha a ser revelado, e nada há de escondido que não venha a ser conhecido.” –Matthew 10:6; epigram of the final report of the CPMI of the Postal Service

The following is just me thinking out loud, inefficiently and probably without sufficient solid information to go on. Caveat lector.

The Diario do Amazonas (Brazil) editorializes today on the long-awaited indictment of Sen. Azeredo of Minas Gerais on charges that his 1998 gubernatorial campaign laundered illegal private donations and public money through the publicity budgets for sporting and entertainment events and the like, including a motocross championship and (I think I read) Rock in Rio.

News coverage of the indictment tends to focus on the Kremlinological aspect. Will the Toucans (PSDB), who are having their national convention at the moment, back Azeredo? The big headline, therefore: Former president Cardoso utters what sounds like a version of a mantra often heard from his successor as well: “These things must stop, no matter who gets hurt.”

See also

The Amazonian editorialist:

A denúncia revela que o plano originário em Minas foi uma espécie de laboratório para o esquema de caixa 2 usado mais tarde pelos petistas. Em ambos os casos, havia desvio de recursos públicos para financiar campanhas políticas em total desrespeito às leis vigentes no País.

The charge reveals that the scheme that originated in Minas Gerais was a kind of laboratory for the “slush fund” scheme used later by the PT. In both cases there was misappropriation of public funds to finance political campaigns in total disrespect of Brazilian law.

It surprised me to read this, because I recall reading that the Supreme Court declined to indict all but one of the defendants of the “financial-political partisan nucleus” for misuse of public funds.

A number of commentators pointed to this as the principal difference between the [alleged] “big monthly of Minas” and the [alleged] national big monthly.”

The basis of this claim of moral equivalence is apparently new evidence presented by the federal attorney last week.

Whether or not there is a moral equivalence between the two scandals — “We are all prostitutes” — and particularly on this specific point, will be hotly debated, I am sure.

One form that debate takes is to try to quantify the pillaging of the public treasury that allegedly took place.

Who stole what, and how much? (It is very common to read, in the Tupi noise-machines and blog comments, that “Under Cardoso, they stole millions, but Lula is stealing billions.” This seems unlikely, but in any event cannot be plausibly asserted until the beans get counted.)

In those cases where public money was stolen, that is. There seem to be two problematic behaviors here (1) siphoning off public money ( from state-owned firms) and (2) taking undeclared private campaign donations.

Defenders of the government will ask how the “Minas big monthly” can be called a “dress rehearsal” for the “national big monthly” if the dollar amounts allegedly involved in the “dress rehearasla are much larger, the undue use of public funds (if any) in the “opening night” scheme are more limited, and the period of operation of the “dress rehearsal” was allegedly much longer?

And indeed, the indictment in the “dress rehearsal” case reads less like the description of an R&D lab than of a widget factory running at 110% capacity in order to fill its Christmas orders in time.

Unfortunately, Brazilians are not going to have any answers to those questions before 2010 — the next presidential election year, coincidentally.

No caso do fundo Visanet, a Polícia Federal rastreou, desde a sua origem, a verba utilizada em pagamentos à empresa DNA, do publicitário Marcos Valério Fernandes de Souza, feitos com recursos de cota do Banco do Brasil no Visanet, no valor de R$ 73,8 milhões. O banco sempre negou que o dinheiro fosse público.

The “new evidence” in the “big monthly” case, as reported by the Folha de S. Paulo:

In the case of the Visanet fund, the federal police traced to its origins the money used to pay the DNA advertising agency headed by Marcos Valério, which were made with funds invested in Visanet by the Bank of Brazil, in the amount of R$73.8 million. The bank had always denied that the money was public.

Did I understand the point correctly there?

If so, how much of that R$73.8 million was used to pay DNA Propaganda?

And how much of that was misused and waylaid — that is, paid out for services not actually rendered and tucked in away in bank accounts for later withdrawal by sneaky politicians or their secretary-girlfriends?

DNA and its partners do face something like 700 criminal counts, but then again, no one has said that there was fraud in every single account it ever worked on. Sometimes ads did actually get produced, it seems.

Visanet is the Companhia Brasileira de Meios de Pagamento, a credit card and payments network run by a consortium of banks in partnership with Visa International.

Which actually makes this story on-topic for a blog that tries to follow news about electronic money.

In 2005, Reuters provided this snapshot of Visanet’s alleged role in the affair, which at least starts to suggest the main points of intersection between the strange saga of Daniel Dantas and the shrieking, and weirdly bifurcated, political slush-fund scandal.

I say “weirdly bifurcated” because it really does seem incredible to me that the case should be divided up into a “dress rehearsal” and “opening night” in this way.

From all that I have read about it, there is one mechanism pumping along, night and day, throughout, like an oil-well in West Texas or the big backyard of the bawdy Saudis: Belo Horizonte Baldy’s Plastic, Fantastic Pipeline of Invisible Money.

Which reminds me a bit of the “International Food Court”at the Springfield fair, at the beginning of that episode of The Simpsons, you know the one: The point of view cuts away from all the different restaurants featuring different national cuisines to show that all of them are fed from the same vat of “mystery meat.”

There are those who will tell you that the reason it is bifurcated in this way is because the administration of justice is politicized in an extremely unhelpful way and to an undesirable degree in Brazil. The theory makes some general sense to me.

The only member of the PT government answering to charges of misappropriating public money for these skeevy purposes is Luis Gushiken, a former cabinet-level Lula aide who was in charge of government advertising budgets at one point.

But again, it always seems to me that, in all these cases, the common factor seems to be, not political party affiliation, but the fact that nearly everyone involved as an alleged middleman is in the advertising and public relations racket.

The same actually goes for the “sex Senator’ scandal, whose central figure is a former TV Globo talking head turned political marketer — and Playboy Brasil (Editora Abril) nudie cutie — Mônica Veloso. See

Which is why I tend to think that if you could manage to filter out all the political noise, what you tend to come up with is the question, “what exactly is it with the Brazilian advertising and media industries, anyway?”

What brave new world is this, that has such creatures as Belo Horizonte Baldy, Daniel Dantas and Ali Kamel in it?

It really seems to have less to do with who is playing the political game on any given Sunday than it does with the people — Nassif refers to them as the “permanent operators” — who own the stadium, write the rulebook, hire the beer vendors, and pay (off?) the referees.

Três empresas de telefonia ligadas ao Opportunity, de Daniel Dantas, e o consórcio controlador dos cartões Visanet foram identificados pela CPI dos Correios, segundo análise preliminar, como origem de mais de dois terços dos depósitos de terceiros recebidos no Banco do Brasil pela DNA Propaganda Ltda.

Three telephone companies with ties to Daniel Dantas and Opportunity, as well as the consortium that controls the Visanet credit card system, were identified by the CPI of the Mails, according to a preliminary analysis, as the origin of more than two-thirds of the deposits received by DNA Propaganda in its Bank of Brazil account.

A DNA é uma das empresas com participação acionária de Marcos Valério Fernandes de Souza, acusado de ser operador do suposto pagamento de propinas a políticos conhecido como “mensalão”.

DNA is one of the companies in which Marcos Valério, accused of operating the alleged political bribery scheme known as the “big monthly,” has a stake.

Um levantamento inicial feito pela CPI foi entregue à Reuters na noite de terça-feira (27) por um parlamentar, com o compromisso de não ser identificado. O documento mostra que a conta 601.999 da DNA Propaganda na agência 3608 do Banco do Brasil recebeu no período analisado (últimos cinco anos) R$ 230 milhões em depósitos.

An initial study performed by the CPI was provided to Reuters by a lawmaker on the condition that the lawmaker not be identified. The document shows that Account No. 601,999, belong to DNA Propaganda, at Branch No 3608 of the Banco do Brasil, received R$230 million in deposits in the last five years.

A própria DNA abasteceu a conta com depósitos e transferências que somam R$ 71 milhões. Os demais R$ 159 milhões resultam de depósitos de 27 empresas, na maioria identificadas como clientes ou empresas de comunicação, e de órgãos do governo de Minas Gerais.

DNA itself filled the account with deposits and transfers of R$71 million. The other $159 million were deposited by 27 firms, most identified as clients or media companies, as well as agencies of the state government of Minas Gerais.

A análise inicial mostra que o maior depósito individual de uma empresa para a DNA, no valor de R$ 44,217 milhões, tem como origem a Companhia Brasileira de Meios de Pagamento, segundo o relatório da CPI.

An initial analysis shows that the largest individual deposit, in the amount of R$44.22 million, originated with [the Visanet consortium], according to the CPI report.

Trata-se de uma associação criada em 1995 pela Visa Internacional, Banco do Brasil, Bradesco e Banco Real, responsável pelos cartões de pagamento eletrônico Visanet.

Visanet was an association created in 1995 by Visa International, the Banco do Brasil, the Bradesco bank and the Banco Real, which manages electronic the electronic payment card network Visanet.

MAIORES DEPÓSITOS EM CONTA DA DNA PROPAGANDA NO BANCO DO BRASIL

[Table] Largest deposits in the DNA Propaganda account at the Banco do Brazil, in R$millions

  • Opportunity telephone holdings (Telemig Celular, Amazônia Celular and Brasil Telecom) — 62,123
  • Visanet — 44,217
  • Eletronorte — 16,5
  • Servinet — 6,4
  • Fiat Automotive — 4,6
  • TV Globo — 3,6
  • Goverment of Minas Gerais 2,7

A assessoria de imprensa da DNA informou que a agência detém, desde 1994, a conta publicitária dos cartões de crédito do Banco do Brasil, que operam pelo sistema Visanet.

DNA spokespersons said the agency has handled the ad contract for Banco do Brasil credit cards, which operate on the Visanet network, since 1994.

A Companhia Brasileira de Meios de Pagamento (Visanet) informou em comunicado “que os pagamentos efetuados para a agência de publicidade DNA foram aprovados como verba de marketing para o lançamento de novos produtos, incentivo à emissão e ativação de cartões de crédito e débito do Banco do Brasil, principal emissor de cartões do país”.

Visanet said in a press release “that the payments made to the DNA ad agency were approved as part of the marketing budget for new product launches, issuance incentives and the activation of debit and credit from the Banco do Brasil, the principal issuer of cards in Brazil.

Outra operadora de cartões, a Servinet, depositou R$ 6,4 milhões. A Redecard fez dois depósitos que somam R$ 144 mil. Até as 20h20, a Redecard não havia comentado a informação.

Another payment card operator, Servinet, deposited R$6.4 million. Redecard made two deposits totalling R$144,000. By the deadline for this report, Redecard had not commented on this information.

And Servinet? Did they comment?

A Telemig Celular e a Amazônia Celular, controladas pelo Opportunity, fizeram nove depósitos que somam R$ 61,3 milhões. Outra controlada do Opportunity, a Brasil Telecom, fez um depósito de R$ 823 mil.

Telemig and Amazônia, controlled by Opportunity, made nine deposits totaling R$61.3 million, while another Opportunity company, Brasil Telecom, deposited R$823,000.

Segundo a assessoria de imprensa da Brasil Telecom, a DNA realizou em 2003 uma campanha de utilidade pública, em rádio, em toda a área de cobertura da operadora.

Brasil Telecom said DNA did a public service campaign, on the radio, throughout its coverage area in 2003.

As duas outras operadoras divulgaram um comunicado conjunto informando que “todos os pagamentos realizados às empresas DNA Propaganda Ltda. e SMP&B Comunicação Ltda. foram decorrentes tão somente de relação estritamente comercial existente entre as partes, fundamentada em efetiva prestação de serviços de publicidade pelas agências às Companhias”.

The two other cell-phone companies issued a joint press release informing that “all the payments to DNA Propaganda and SMP&B Communications were strictly related to a business relationship among the parties, based on the provision of advertising services by those agencies to the Companies.”

A estatal Eletronorte fez três depósitos que somam R$ 16,5 milhões. O governo de Minas Gerais fez depósitos na conta da DNA por meio de sua conta única, da Secretaria de Fazenda e da Secretaria de Saúde, no valor de R$ 2,7 milhões.

That state-owned Eletronorte made three deposits totaling R$16.5 million. The government of Minas Gerais deposited money in the DNA account through its consolidated account for the state treasury and health secretary, in the amount of R$2.7 million.

Formado em engenharia e economia, o banqueiro baiano Daniel Dantas, 50, dono do grupo Opportunity, é um dos homens mais ricos do Brasil. Seu império foi construído em cima de fundos de pensão públicos e de sócios estrangeiros. Em 1998, Dantas esteve no centro das investigações sobre suspeitas de favorecimento na privatização de empresas do Sistema Telebrás. No ano passado, a Brasil Telecom -controlada até então por ele- foi acusada de contratar a Kroll para espionar a Telecom Italia. As investigações teriam extrapolado o mundo empresarial, atingindo figuras do governo federal.

[SIDEBAR] With degrees in engineering and economics, Bahian banker Daniel Dantas, 50, owner of the Opportunity group, is one of the richest men in Brazil. His empire was built based on pension funds and foreign partners. In 1998, Dantas was at the heart of investigations into suspected favoritism in the privatization of the Telebrás system. Last year (2004), Brasil Telecom — controlled up to that point by Dantas — was accused of hiring Kroll to spy on Telecom Italia. The investigations reportedly overflowed the boundaries of the corporate world to touch federal officials.

Segundo a assessoria de imprensa da Eletronorte, “todos os serviços de publicidade da empresa são contratados via DNA, que foi escolhida por meio de licitação pública em 2001, obedecendo a legislação”.

According to Eletronorte’s press office, “all the advertising services of the company are provided by DNA, which was chosen through a public auction in 2001, in compliance with the law.’

A Subsecretaria de Comunicação Social disse que o governo mineiro tem contrato com a agência DNA, para prestação de serviços de publicidade, desde dezembro de 2003, para atendimento às áreas de saúde e meio ambiente.

The Minas government’s press office said it had a contract with DNA for publicity in the areas of health care and the environment, dating to December 2003.

It had prior contracts with the agency, however.

“Portanto, a transferência de recursos à agência destina-se ao pagamento de serviços de produção e veiculação de campanhas publicitárias”, disse a subsecretaria à Reuters.

“Thus, the transfer of funds to the agency comes as payment for production and distribution of publicity campaigns,” the government press office told Reuters.

A assessoria de imprensa da DNA disse à Reuters que os depósitos correspondem ao pagamento pela prestação de serviços a essas empresas, incluindo criação, produção e veiculação de publicidade. Segundo a assessoria, a DNA tem condições de provar a execução de todos os serviços.

DNA’s press office told Reuters that the deposits correspondent to payments for services rendered to those companies, including the creation, prodution and distribution of advertising. According to DNA, it can prove that it provided all of the services for which it was paid.

O levantamento da CPI também inclui três depósitos da Fiat Automóveis, totalizando R$ 4,6 milhões.

The CPI also mentions three deposits by Fiat, totaling R$4.6 million.

“A DNA foi agência de propaganda da Fiat de agosto de 2000 a abril de 2005 na publicidade de varejo no Estado de Minas Gerais. É uma relação comercial normal e absolutamente transparente”, disse a assessoria da Fiat.

“DNA was our ad agency from August 2000 to April 2005 and handled retail advertising in Minas Gerais. This is an absolutely transparent business relationship,” said a Fiat spokesperson.

Os documentos da CPI mostram também dois depósitos da Construtora Norberto Odebrecht totalizando R$ 149 mil. Em um comunicado, a empresa diz que o relacionamento com a DNA começou em 2002.

The CPI documents also show two deposits from the Odebrecht construction firm totalling R$149,000. In a press release, the company said its relationship with DNA began in 2002.

“Pelo contrato, que foi rescindido em 15 de julho passado, a construtora obrigava-se, na primeira fase do projeto, a remunerar a agência com um percentual de 0,45% sobre o valor geral das vendas”, o que representou para a DNA “a quantia de R$ 387 mil”, diz a empresa no comunicado.

“According to the contract, which was rescinded last July 15, Odebrecht was obliged, during the first phase of the project, to pay the agency 0.45% of the value of all sales,” which would represent for DNA “a sum of 387,000,” the company said in a written statement.

A empresa afirma ainda que “uma segunda fase do projeto foi iniciada em abril de 2005” e tinha a mesma forma de representação da etapa anterior, “o que significaria uma remuneração da ordem de R$ 202 mil” à DNA, se não tivesse havido a rescisão do contrator.

Odebrecht also says “the second phase began in April 2005” and had the same terms as the prior period, “which would have implied payment of R$202,000” to DNA, had the contract not been revoked.

O Sistema Pitágoras de Ensino depositou R$ 186 mil. A família do ministro do Turismo, Walfrido Mares Guia, é acionista da empresa, que também é cliente da DNA Propaganda.

The Pitágoras Education System deposited R$186,000. The family of Tourism minister Mares Guia is a shareholder in that firm, which is also a DNA client.

Mares Guia — an excellent name for the Tourism minister of a country with a very long coastline and fabulous beaches — just resigned in the “Minas monthly” scandal, co-indicted with Senator Azeredo.

The headlines: [In huge type] “Lula minister indicted!” [In small type] “Senator Azeredo says he did not do it.”

O relatório da CPI identificou dois depósitos da TV Globo, somando R$ 3,6 milhões, e dois da Globosat, que somam R$ 180 mil.

The CPI also identified two deposits by TV Globo, totaling R$3.6 million, and two from Globosat, totaling R$180,000.

Segundo a Central Globo de Comunicação, “como todos os veículos de comunicação que veiculam publicidade, a TV Globo pagou comissão legalizada a uma agência de publicidade regularmente estabelecida”.

According to Globo Communications Central, “like all media companies that air or publish advertising, TV Globo paid a [legalized [?]] commission to a properly constituted ad agency.”

A Editora Abril é identificada como responsável por um depósito de R$ 303 mil. Em nota oficial, o Grupo Abril afirma que “mantém relacionamento comercial com a grande maioria das agências de publicidade do país e que pagamentos de comissões em nome de agências fazem parte das práticas normais da atividade”.

The Editora Abril is identified as making a deposit for R$303,000. In an official statement, it said it “has a business relationship with the great majority of ad agencies in Brazil, and payments of commissions to those agencies is a normal activity.”

Other persons contacted explained exactly what the money was spent on. Abril and Globo did not.

O relatório da CPI demonstra que a DNA também fez transações bancárias com as empresas de comunicação Folha da Manhã (Folha de S. Paulo), Ogilvy Brasil, Grupo Três (IstoÉ), For Comunicação, Símbolo Editora e Editora JB (Jornal do Brasil e Gazeta Mercantil).

The CPI showed that DNA also had dealings in this account with the Folha da Manhã [Folha de S. Paulo], Ogilvy Brasil, Grupo Três (Istoé magazine), For Communications, the Símbolo publishing house, and the Editora JB (Jornal do Brasil, Gazeta Mercantil).

O relatório informa que a DNA autorizou transferências eletrônicas (TEDs) para a Folha da Manhã, Editora JB e Grupo Três que, por algum tipo de erro, foram devolvidas à conta da agência e contabilizadas como depósitos. A assessoria da DNA informou que compra regularmente espaço publicitário dessas empresas para seus diversos clientes.

The report shows that DNA authorized electronic fund transfers to the Folha da Manhã, Editora JB and Grupo Três that, due to some sort of error, were returned to the agency account and accounted for as deposits. DNA says it regular buys ad space from this companies for various clients.

“Some sort of error”?

DNA Propaganda had quite a business ecosystem, as they say.

All right, so I guess the main question here is this : A lot of these companies and government agencies make a point of saying they received all the services they paid for, so that none of the money was left over for decanting into political slush funds.

To what extent is that true, to what extent not true? Criminal charges say it was not at all true in some cases, but I have yet to see anyone produce a big fat spreadsheet accounting for all the money. I imagine the beancounters at the federal police police are working on one, though.

Mino Carta has taken Globo to task for demonizing parties simply for having dealings with the agency — the mote in another’s eye — and not applying the same standard to itself — the mote, if not the beam, in its own.

That seems fair enough to me.

Upon leaving office, Mrs. Garotinho, the last governor of Rio, provided the account number of an offshore account she said Globo used for caixa dois purposes. Never followed up on, either in rebuttal or confirmation, that I know of.

The CPI of the Mails — which wandered far afield from a simple videoscandal over some postal service guy taking a measly little bribe — concluded … well, you know what? It is Saturday, I have nothing else to do, maybe it is time for me to finally read the whole 1,857-page report.

I just finished Thomas Pynchon’s Against The Day and am looking for new bedside reading.

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