Brazil’s Bolsonaro says Caixa president is ‘appalled’ with corruption found

RIO DE JANEIRO, BRAZIL – President Jair Bolsonaro on Thursday, August 19, said that the president of Caixa Econômica Federal (Brazil’s savings bank) Pedro Guimarães, conducted investigations and is “appalled” by the corruption found in the state-owned bank.

“I asked everyone to do an audit of the past and he said he is appalled at what he has found in the past few months about corruption in Caixa,” the president said to supporters outside the Alvorada Palace on Thursday morning.

Guimarães has been in charge of Caixa for the past 2 and a half years. He took over at the start of Bolsonaro’s term, on January 1, 2019.

When releasing the bank’s second quarter results, Guimarães himself said that the economic losses of past managements are related to investments made by the Employee Tenure Guarantee Fund (FGTS) or “badly made” loans, all of which are already known.

Caixa’s net profit reached about R$6.3 (US$1.2) billion in the second quarter, but, according to Guimarães, the result should have stood between R$8 billion and R$9 billion.

The difference in the figures is due to impacts such as the reduction of the FGTS management fee, under Caixa’s responsibility, he said. In the year, the change affected R$3 billion of the public bank’s profit.

Another factor is the need to provide for economic losses due to issues in past administrations, from 2009 to 2015, according to Caixa’s president. In the period, the current management estimates a loss of over R$46 billion.

“In the past, these factors were very important. Today, they are not very relevant and Caixa is able to increase its profits despite the FGTS rate reduction and economic losses with bad loans and investments,” he said at a press conference.

To generate profit for the bank, all it takes is not to “steal” and not to lend to companies that will not pay back, and not to sponsor soccer teams, according to Guimarães. “I prefer to lend to 500,000 micro-companies, whose default is much lower and which are scattered throughout Brazil,” he said. “It is better than lending to 2 big corporations. The chances of corruption are low since the average loan is R$100,000 and not R$10 billion or R$15 billion,” he said.

BNDES

In addition to suspicions of Caixa, Bolsonaro said that a study of suspected irregularities in the National Bank of Economic and Social Development (BNDES) is ready. According to the president, annual installments of international loans are not being paid back.

The offensive on BNDES is an oft-repeated rhetoric of Bolsonaro, who said during the 2018 presidential race that he would “open the institution’s black box.” The bank spent R$48 million on an internal audit in the past, but found no illegalities.

The alleged new suspicions involving BNDES will likely be addressed next week during a live stream on social media, Bolsonaro said.