Buying Brazil (Buying Brazil Trilogy Book 1) Read online

  In the candy deal Hansen’s due diligence team put together a comprehensive review of the Brazilian business environment including an in-depth look at the accounting and tax rules that could impact a foreign owned deal. They also provided a good look at the legal system so a workable and enforceable deal structure could be built. There was enough accomplished in that deal to demonstrate that enforcement of Brazil’s laws had enough flexibility to accommodate just about anything as long as you had someone who knew how to ‘culturally’ work within the taxing authorities and the court systems.

  Laser had to move quickly and would need to take full advantage of all available flexibility because we believed Telephonica Italia was also in the game. Telephonica was not popular with the hardline Brazilian nationalists but you couldn’t overlook the forty plus million Brazilians with Italian roots. There were also other potential players who could come to the table once BrasTel was really in play. Potential bidders like Telefone de Portugal was rumored to be in bed with the ruling party’s biggest rival in the next election, the Workers’ Party … Partido de Trabalhistas.

  The PT, politically left of Cardozo, had publicly stated it wanted to end his aggressive privatization program used by the government to sell off important nationally owned utility companies, banks and toll roads the Government collected during the twenty-one years of military rule. The PT’s platform said there would not be any more sales of national treasures to pay foreign debts but instead would get the foreign obligations forgiven.

  Lazer’s need for rapid progress in a risky, uncertain political climate was why I spent most of the last few days in New York studying our advance team’s recommendations for the in-country professional team. Once we selected local lawyers and accountants to work with us on parallel tracks, my small group would collect whatever was necessary to shape a proposed business deal in a way that responded to the political and structural realities of the years since re-democratizing Brazil. The voluntary transition of the military’s rule to democracy had left a uniquely Brazilian institutional imbalance along with deep scars even though military rulers had orchestrated a cautious, measured transition back to elected civilian government when they believed economic stability had been achieved.

  Laser’s two-man advance team rented a furnished four-office suite on Av. Paulista, São Paulo’s tumultuous combined version of Wall Street and Madison Avenue. The month-to-month rental fit our desire to maintain a low profile. Keeping our heads down was important because in Brazil football was only surpassed by gossip as the national pastime. A pastime that could have a dangerously corrosive effect on progress and the deal itself because of the strong but seemingly invisible tensions between former military leaders and the somewhat recently installed leadership of state and federal governments.

  The cab ride from the Guarulhos International Airport into downtown São Paulo after my overnight flight from New York took more than an hour and a half of inching our way through the morning rush hour traffic to the city center after including a brief stop at the apartment building where the advance team had rented a flat for me and finally onto nearby Av. Paulista. Fortunately for me it was July, the middle of the winter south of the equator because in Brazil air conditioning was a luxury most cabs didn’t offer. That morning the sky was overcast, the air filled with a cool mist and the temperature an uncharacteristically pleasant seventy-four degrees on the American Fahrenheit scale.

  I had prepaid R$120.00 Brazilian for price-fixed cab fare at the airport that by the end of the ride seemed like a bargain when we pulled to the curb in front of a shiny new all glass office building resting behind mature trees and manicured bushes. In American Dollars it amounted to about US$35.00 so the US$10.00 tip I gave the driver more than covered the extra stop as well as helping get one of my heavy briefcases across the sidewalk to the waiting security guard

  “Good morning Robin. Thanks for getting everything set up. Your usual great job.” I brought Robin Stephens with me from Hansen House. She had run a number of tough projects for me in the past and understood the mountain of bits and pieces needed for deal making. As important was the fact that she was a reliable forty, single and focused only on her career and the money she could earn. Robin was great at business but somehow she never managed to get her personal life together. Another thing I liked about Robin was she knew how to survive in this environment with its out of control egos and back-channel maneuvering. “Which one is my office? I want you to take care of something while I unpack. It’s Pedro Rossi; he’s a good pick local legal counsel. He has done just about everything we could need. Tell him he’s hired.”

  Leaning her unremarkably clothed slim five foot seven frame against the doorway to the left of the entrance and smiling, her face as usual without the benefits of makeup, “Good morning. In here, I’m sure Rossi will prefer a call from you. He knows you were due this morning.”

  “Right … I think it’s better if I’m not officially in country yet.”

  “He’ll want to meet the boss before saying yes.”

  “Tell him you’re the boss for now.”

  “What if …”

  “Ask him how much of a fee advance he wants.”

  “When he tells me how much he wants what should I tell him about the project?”

  “Need to know for now. Tell him we need a corporation set up. Have the bylaws say our activities should be described as investment related. He should also start registering us with the Central Bank so we can move money into the country. As far as officers and directors, ask him if he can prepare papers making him ‘Nominee’ for now.”

  This first step was out of sequence with usual deal timing but it was necessary here and not just a cover story. The Hansen team’s report said it could take as much as a year to start a new corporation in Brazil. It also said as a result of this delay most Brazilian lawyers keep registered shell companies on the shelf ready to sell at very high prices to anyone in a hurry. That markup would help us get the attention of our new lawyer on day one.

  “Anything else?”

  “… whatever it takes to get us in business and set up a bank account. Did you find a car and driver? Remember, I want someone who works directly for us not a hotel or service. I don’t need the details of where I go broadcast around town.”

  “I’ve got someone. Don’t worry; he drove for an old Brazilian friend of my father when he had political reasons to stay in New York for five years. He speaks ‘yan-qui’ English. Most important, my father assures me José Carlos understands the way things work in the US.”

  “What about a car? You’ve had two weeks.”

  “I rented an armored four door VW Golf.”

  “A VW …”

  “It’s the low-profile choice with the local big money families when they don’t want to be seen. They say the way the VW’s built makes it perfect for armoring.”

  “Are you an automotive expert now? What about the color?”

  “No expert, but as you know, I ask a lot of dumb questions. Its invisible white like half the Golf’s on the road.”

  “I hope you remembered I’m nearly six feet when you chose a VW.”

  “It’s almost lunch time and I’m getting hungry, why don’t you try it on. José Carlos is downstairs in the garage awaiting your orders boss.”

  When I stepped out of the elevator connecting the lobby to the garage it clearly exemplified southeastern Brazil’s European culture. Nobody wants to sell their land no matter how bad things get. Consequently, accumulating large parcels for construction projects could take decades until heavy inheritance taxes forced heirs to part with bits of it. The natural result is new buildings, whether office or residential, are unusually tall with small footprints, garages deep underground with steeply angled narrow driveway ramps fitted into the building’s cramped dimensions. Ramps so steep that rough, almost stepped surfaces were required so exiting cars could maintain traction during São Paulo’s frequent heavy rains.

  “You get the fro
nt Carl. You’ll have more legroom. It’s also the style here for the patron, the boss, to ride in the front with the driver. Maybe they do it to attract less attention. José Carlos, take us to Restaurant Rubiyat on Faria Lima.”

  “Senhora … its Frei Galvão at that end.”

  “It’s the same damned street, isn’t it?”

  “Here in São Paulo streets can have many names. Parts of streets change names with the politics. During the military years, Brigadier Faria Lima was important to remember. Before, a simple priest was important. Now, who knows what is important.”

  “I know you like steak Carl. I thought meat Brazilian style would make a good first lunch.”

  “What’s different? Mix a little cow and a little fire and you have lunch.”

  “Sure, and if I add a plate it’ll be civilized. The restaurant is close to where Skip is doing some research. I though you would like to see him.”

  “Good idea …” Tall, handsome, blue eyed Stephen ‘Skip’ Watson was 26 years old with a shiny new MBA from Harvard Business School where he had majored in Radcliff women. Sam Watson had visions of his son Skip one day taking his place but everyone else knew Sam would never let go of the reins. Sam told me he wanted Skip on my deal team so he could learn what deal making was all about. Certainly, but I really think Sam was more concerned with keeping an eye on what I was up to and wanted Skip to keep an eye on me. “I hope it’s not a big restaurant. We need a quiet place to talk.”

  “Naturally, but there are some important things we need to talk about without going into deal stuff.”

  “Such as?”

  “… his work habits. I can’t find him half of the time and he was in Rio the two weekends we’ve been here. He’s not carrying his share of the weight.”

  “What do you want me to do, put a bell around his neck?”

  “Remind him this is work not school vacation.”

  “The way things are organized Robin he works for you. You tell him.”

  “We both work for you.”

  The mile and a half to Rubiyat took us twenty-five minutes in traffic that made midtown Manhattan seem like amateur training. At first, I thought José Carlos was too laid back to be a professional driver. It quickly became apparent that trying to aggressively maneuver through or around the mess was useless. “José, is it always this bad?”

  “… only when there are cars on the road. I will wait over there,” pointing to a tree covered sidewalk filled with parked cars and waiting drivers.

  Rubiyat’s doorman opened the car doors for Robin and me with a wide smile and a greeting in English. I guess ‘Tourist’ was stamped on my forehead. If that wasn’t enough, ten steps into the restaurant and the room’s buzz was silenced by a loud ‘Carl’ bellowed with a fine cockney accent. Every face in the room turned toward us … my arrival in São Paulo was now official.

  “… what the hell are you doing here? What’s got you out of your London ivory tower?”

  The outstretched warm hand belonged to Charlie Peters from Barston Bank in London. He and I had shared plenty of closing party pints when I was with Hansen. Barston’s banked a number of my deals and Charlie’s career had been the beneficiary.

  “I heard you were chasing deals down here Charlie. Maybe …”

  “Bull, you never went after other people’s deals.”

  “I’ll have to if you don’t quiet down.”

  “Sorry, you know me. Talk first, think later. Good thing Dad still owns half the bank or I would’ve been out on my ass a long time ago.”

  “We both know he doesn’t own just half. You remember Robin Stephens.”

  “How could I forget Hansen’s deal angel? Hello Robin. Carl, I thought you left Hansen.”

  “Don’t believe everything you hear.” I was hoping a little disinformation would find its way into the right ears. “You know how people talk”.

  “Damned, I’m leaving today. Certainly would have been nice to catch up. When are you going to be back in London?”

  “Soon, take care of yourself.”

  Without waiting for an answer, I headed toward the back where Skip was waving at us. Relaxed, draped across his chair, sandy haired and a little too good-looking, Skip was the picture of a spoiled rich kid. His father expected me to teach him what business was about while Skip was convinced Harvard taught him all he needed to know.

  Meeting Charlie was the last thing we needed. By the end of the day, gossip would have spread word of us across São Paulo. The people with Charlie will get calls from others at lunch in the restaurant. Each would exaggerate just enough about the importance of ‘their’ lunch to impress the other and then both would puff up the story about the important foreigners at Rubiyat today. It wasn’t very different from what would happen in New York, London or Paris only here in São Paulo the story would spread faster and grow larger.

  “Who picked this place … it’s not like you Robin? Any neighborhood dive would have been better.”

  Skip smiled smoothly, “This is where things happen. That’s why I suggested it to her.”

  “Yeah, things happen like telling the world we’re here.”

  “Your friend is eating with three big bankers. There, in the corner, that’s the governor of São Paulo State with a couple of Federal Senators. Those are important …”

  Cutting him off, “They are just the kind of people who can screw up our deal if they get wind of it too early. I told you before you left New York we needed to keep a very low profile. There’s a lot of work …”

  His face turning red, “My father got ahead by knowing the right people. Did anyone ever tell you that? These are the right …”

  “One more word and you’re on the next damned plane out of here.”

  Robin stepped into the narrow space between Skip’s chair and me, “Boys, let’s play nice. I’m hungry and the place smells wonderfully fattening.”

  “You made your point Carl. Next time …”

  “Forget it. The damned overnight flight still has me a little off.” Yeah, a little off, I should have sent him packing right there and then. “Robin’s right, let’s eat. I need to lay out the next few days. We’ve got a lot to do.”

  An hour later Skip was on his way to our American lawyer’s office to collect the results of a research request I had made in New York. Grey & Ross, the gilt-edge New York firm, had offices in São Paulo. From my point of view their presence added very little value because local rules prevented foreign lawyers like them from representing clients in Brazilian courts reducing their role to just little more than a figurehead in local matters even if they had Brazilian attorneys working for them. The rules were so bad foreign firms couldn’t even write a final contract because to be enforceable in Brazil a contract had to be registered with an appropriate court. In short, foreign lawyers could do little more than act as trusted middlemen for their clients in dealings with locals.

  Skip excused himself saying he had one to many cups of coffee and would be right back. As soon as he was gone Robin looked up from her second cup of coffee, “Carl, you’ve got to lighten up on Skip. His father will have your ass and your lovely employment contract will only be useful on the toilet paper roll.”

  “You worry too much Robin. The old man hired me because he knows I can produce the results he needs. He also knows his kid still has a lot to learn.”

  “Be careful Carl. You’ll take the lot of us down with you.”

  “Haven’t I taken care of you? Don’t worry …”

  Robin pushed a piece of pineapple around the plate with her fork, “Yeah, I’ve got a lot of money in the bank but sitting around all day clipping coupons is damned boring.” Looking up from the plate, “How’s the apartment? It’s in the middle of the Jardims, the gardens. They call the neighborhood little Manhattan.”

  “It’s fine … more than fine. The quick shower this morning was great; like being at home and the building is just right. It’s not too fancy and the people I saw looked like solid upper middle
class if there is such a thing here. I wonder about the maid, she looked like a frightened antique. Is she ok?”

  “José Carlos’s older sister. He made sure she understands our rules. She’s been told to stay in the servant’s end of the apartment when you’re around. She’s happy with that because she speaks no English. Her work hours are from eight to five six days. She’ll take care of laundry and anything else you want. Just tell José Carlos if you want her to shop or cook for you and he’ll give her instructions. The whole deal is month-to-month like the office and at the current exchange rate it’s cheap.”

  “I’m sure it will be fine. The taxi from the airport went past a bunch of restaurants I can walk to and there was one street filled with cafés and designer shops.”

  “Yeah, retail therapy is a big deal down here. Remember what I said about Skip.”

  “You worry too much. Did you get me a local cell phone?”

  “It’s in your desk with José Carlos’ number already programmed.”

  “I’m going to hide in the office the rest of the week. I need to read the stuff you guys have put together. Schedule a meeting with the lawyer and the accountant early next week please. Make it our office, not theirs. I also want to see Jorge Miniero from Banco Bradesco on Tuesday or Wednesday. Find a place we can have lunch and a quiet conversation. His number is in the data pack I sent you.”

  “I’ll do my best. It’s a good thing most offices have someone who speaks English. My ears can’t make sense of Portuguese. It’s something like Spanish but I can’t get it.”

  “That’s because what you Texans think is Spanish isn’t. Maybe Pedro Rossi can rent us a secretary who knows how to keep her mouth shut.”

  Robin had a pinched look. “I’m not happy. In other deals, I’ve felt more in control at this point. This place is different. It still feels out of control.”