From a Bloomberg report… Jul 21, 2015
A Brazilian prosecutor investigating the national development bank’s deals abroad said he estimates more than $2 billion in losses because of loans to junk-rated countries…
The prosecutor, who is assigned to Brazil’s budget watchdog, said the losses are tied to $12 billion of loans from a workers fund that the BNDES state bank shouldn’t have been made because they were too risky and rates were too low. More than two-thirds of that cash funded projects from Angola to Venezuela by builder Odebrecht SA… …
Reports Bloomberg. “We’re questioning the real social benefits of these loans,” says federal prosecutor Marinus Marsico, who led the nine-month preliminary investigation.
“If BNDES’s goal is to promote national development, why was the bank allocating scarce funds to a couple of private companies overseas?”
As an example, political policy announcements of pending Brazilian funding for projects like railways in Ethiopia were being floated over the past two years. It seemed odd to hear at the time. Now we can speculate as to why.
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