An Unconventional Analysis of the Petrobras 2014 Financial Statements

An Unconventional Analysis of the Petrobras 2014 Financial Statements

5 things everybody ought to know about the Petrobras 2014 Financial Statements which are not on their books.

The 2014 audited financial statements for Petrobras have just been released. It is a refreshing moment for many analysts who are now dissecting each line of the report, happy as clams at high tide.

However, important facts may have gone missing in translation as the company struggles with its restructuring plan.

The big Gorilla is slowly swinging by the room while everyone else is concentrated on crunching the numbers.

Point #1: Recording losses in the financial statement proves that corruption affected the company in a tangible way.

This is the first time a Brazilian company has openly admitted the existence of a corruption scheme and has attempted to measure its impact by putting dollar figures on the effects corruption has had on their books.

No matter how the press, government, auditors or anyone else frames the fact, it is a rare historical moment when one can mathematically gauge how corruption can affect the bottom line of a publicly listed company.

Point #2: Executives will think twice before entering corruption schemes.

For many decades, Brazilian executives – often surrounded by armies of corporate lawyers – felt they were untouchable and going to jail was for mere pickpockets.

As a matter of fact, we have reached a major milestone in Brazilian corporate accountability. There is a clear prospect that high profile people will indeed go to jail for their inappropriate actions.

Now, I ask you: if you were a Brazilian CEO and saw your colleagues in danger of spending time behind bars because of their involvement in corruption and bribery schemes, wouldn’t you take extra care next time you were approached by a corruptor? I wonder how many of those CEOs are now doing their own internal audits to make sure they don’t have corruptees on their teams and making sure they’re not liable.

Corporate leaders and their banking counterparts will be much more conservative in dealing with ethical borderline issues. They certainly know the implications of being caught in the midst of Bribery and Corruption Schemes.

Point #3: Independent investigations prove their worth when measuring the impact of corruption on an organization.

Picture for a moment if there were no meaningful facts uncovered during the fraud investigations at Petrobras…  There would be no way to quantify and qualify company losses due to corruption. Besides that, we would enter a cycle of “he said”,she said” debates with very little meaningful insight into how much money was involved in the schemes.  It would be very easy to refute any write-offs related to the impact corruption had on the company.

However, I’m sure the auditors had access to very precise information to present US$2 billion in losses and US$14 billion in impairment charges in the financial statements.

These estimates are a sure reflection of the thorough investigation independently done by Brazilian police and officials. This means that these independent investigators had access to actual facts and data – a testament to the amazing work done by the Brazilian police.

Point #4: The Petrobras crisis is a major test for Brazilian democratic institutions

Imminently, the Petrobras scandal will hit the courts. High profile executives, bankers, politicians and lobbyists will be judged and prosecuted. It will take some time, but it’s certain that some important people will end up spending a few months in a Brazilian jail – not the best place to be.

But, how will Brazilian institutions deal with this episode? Will there be an attempt to reduce the autonomy of the Brazilian Federal Police – responsible for finding the most relevant evidence in this case? Will the Brazilian Parliament expel old school politicians involved in corruption? Will the Supreme Court act in an independent manner?

Brazilian democracy is relatively new and this may be one of the most important tests it will face in its short history.

Point #5: Where there is smoke, there is fire.

It’s hard to believe there were so many people allegedly involved in the Petrobras corruption ring. The numbers involved are also staggering. $17 Billion in asset and corruption charges: many countries don’t have a GDP that big. But, are there other Brazilian institutions that may follow the same pattern of corporate compliance and accountability?

How about the companies on the energy sector? How about the infrastructure sector? Could they be operating along the same premises?

Recently, I was casually chatting over the water cooler with a financial analyst in Brasilia and mentioned my amazement over the Operation Car Wash findings. He paused and replied,

“Well… if you think Petrobras had a problem, don’t be surprised when (if!) they decide to open the BNDES books.”

Food for thought…


Photo credits: Ken Teegardin

Why You Should Never Leave a Voicemail in Brazil

Why You Should Never Leave a Voicemail in Brazil

You may be wondering why you never get your voicemails answered in Brazil. You may be scratching your head now. Read more to find out why.

Leaving messages in Brazil doesn’t work

Leaving voice messages in Brazil can be a major waste of your time and huge source of frustration. But, you need to understand how things work here.

The reality is that very few — I mean, close to none — Brazilians check their voicemail.

If someone listens to your messages, certainly that person does because they know you are a foreigner!

There are several reasons why people don’t use voicemail in Brazil.

First, it’s not a custom. Simply put, no one is used to doing it.

Second, it costs money. You can leave as many messages you want for free. However, typically whoever receives them will need to pay to have access to their phone voicemail system.

Third, contrary to those in North America, Brazilian voicemail menus are cumbersome to navigate. To get to your message, the person will need to press a number of keystrokes and wait for very lengthy messages until it reaches the message you have left them – besides paying an access fee.

People will simply ignore their phone alerts indicating there is a message on their voicemail system.

How to leave asynchronous messages in Brazil

Since you are not able to leave voice messages, what’s the most effective way to contact people? Here are a few useful tips for you:

  • Call your contact at times when you are sure they are at their desk. I usually get better results when I call people at the beginning of their work day (from 9:00 am to 9:15 am local time) and before they leave for lunch (around 11:45 am)
  • Be prepared to call many times. Be patient, contacting people will always take a few tries until you are able to reach them.
  • Find alternatives to reach them. For instance, talk to their assistant and build rapport to find out the best time to reach the person.
  • Once you got in touch with your contact, ask the best way to communicate asynchronously. Ask them if they prefer to use SMS, skype, smoke signs or any other type of communication.

E-mail is also out of the question if you want to get an response – I’ll elaborate on email communication in a later posting. But, for now try other means of communication.

Currently, Brazilians are incredibly responsive to Whatsapp messenger. This may be a better alternative to using any other type of communication.

Don’t give up easily

Just to give you an example, recently it took me 3 weeks to get on hold of an accounting expert here in Brasilia. I had no choice but to connect with him – he is one of the best accountants in town and a specialist on the information I needed.

Regardless of my attempts, this person never responded to my calls and emails. I finally contacted his assistant and figured out he was under a pressing deadline. I asked her when the best time would be to connect with him.  Later that same week, I gave him a call just before lunch, around 11:55 am, and he answered the phone. That was a breaking point. I was able to schedule an appointment and now we are communicating via SMS.

In Brazil, you need to be persistent and always keep your cool. Try to connect using different approaches and insist until you succeed.  That’s how things work here.


Photo credits: Jason Denys

One Book about Brazil you must read: “Deu no New York Times” by Larry Rohter

One Book about Brazil you must read: “Deu no New York Times” by Larry Rohter

Larry Rohter is a well-known New York Times journalist who spent considerable time covering Brazilian politics. His book “Deu no New York Times” is a collection of articles published in the NYT during his stay in Brazil.

One of the most notorious facts about Rohter is that he almost became a persona non grata in Brazil when he wrote an article implying that former Brazilian president Luiz Inácio Lula da Silva had a drinking problem. In fact, he was close to be deported from the country, being saved only by diplomatic pressure and free speech advocates.

His book “Deu no New York Times” is a collection of articles about culture, society, politics, the Rain Forest, economy and science in Brazil.  He writes about the discrepancies the country experiences and the diverse cultural experience of living in Brazil.

The local Brazilian press claims that Rohter knows more about Brazil than many Brazilians. I wouldn’t go that far, but would say that he has captured some interesting facts of Brazilian life only visible to foreigners.

What I like about this book is that it has a series of short articles showing day-to-day issues in Brazil, almost always using a tong-in-cheek humor.  All the articles are written in a smart and direct way, very consistent with Rohter’s style.

If you are learning Brazilian Portuguese and want to venture into something different than the usual grammar and vocabulary textbooks, this would be an interesting read for you.  You will certainly be entertained and have a few laughs along the way as you read this book.

This is one book about Brazil I surely recommend.

Book: Deu No New York Times
in Brazilian Portuguese
Author: Larry Rohter
416 pages
Publisher: Editora Objetiva (2008)


Buy it Now at Buy Now at

Full disclosure: this posting contains affiliate links.

Book Review: They Don’t Speak Spanish in Brazil

Book Review: They Don’t Speak Spanish in Brazil

They Don’t Speak Spanish in Brazil is one of the best books about doing business in Brazil recently released. Joseph and Cláudia describe, in a very informal and clear way, what you will find, in fact, when owning a business in Brazil.

If you are interested in learning about the business culture in Brazil from an insider’s point of view, this book is for you.  Joseph is a former executive of a multinational company operating in Brazil and Claudia is a Brazilian CPA.  Both of them have extensive professional experience in Brazil and know what they are talking about.

A nice of aspect of this book is the number of real life examples and stories they use to illustrate each point made. The book provides an on-the-ground perspective on important topics, such as women in business, Brazilian taxation, challenges of the Brazilian life and the cost of doing business in the country.  Especially interesting, also, are the number of examples of taxation issues, with actual numbers, giving a glimpse into the taxation idiosyncrasies you’ll find in Brazil.

Don’t waste your time downloading huge pdfs from the web about Doing Business in Brazil. Instead, buy this book. You will be much better served as far as relevant information is concerned. It’s a great book about a quite complex subject.  I strongly recommend it.

Book: They Don’t Speak Spanish in Brazil
Authors: Joseph H. Low III, Cláudia Brito Low
276 pages
Publisher: Jhl3 Publications (2013)
Buy it Now at


Full disclosure: this posting contains affiliate links.

5 Steps to Effectively Delegate in Brazil

5 Steps to Effectively Delegate in Brazil

How can you effectively delegate work in Brazil?

Have you ever experienced a situation when you delegated work to your team in Brazil, only to find out weeks later that nothing had been done? If you are experiencing problems delegating in Brazil, keep reading this article.

Delegating in Brazil

Here is a typical situation. You travel to Brazil, walk into a room to meet your local team, describe your strategy and work out all the details. At the end of the day, you ask your team if the scope is clear and if anyone has any further questions.  Everyone nods their head positively. You take your plane back to home and feel that great sense of accomplishment. “We had a very productive time in Brazil.” You tell your CEO.

Four weeks later, you arrive back in Brazil for your monthly visit and realize nothing has been done.

Nothing… Nada… Zip… Zilch… Zero… Zed!

What was lost in translation? You are shocked and have no idea how to get things back together.

How to Get Things Done in Brazil

Every time you tell people in Brazil what to do, you always get that strange sense that not much will actually be accomplished. You know this from experience, right?

Brazilians have a terrible time saying “no!”, which makes delegating a very tricky situation. There is always that question in the back of your mind, “Are these folks in the meeting room nodding because they know what they are supposed to do or are they just pretending?” You’re always hesitant when committing to any project timelines.

So, here is a delegation technique you can use in your projects. I learned this unique tool in a management training program by Mauricio de Souza Lima, an expert in management issues. This has literally resolved most of the delegation issues I had in Brazil.  I have slightly changed his approach, based on my own experience, and here is the sequence of steps I currently use.

#1 Know what you need from your team

First and foremost, you need to know what needs to done before delegating it. You need to have a clear picture of what you want to accomplish, before communicating it to your team.

Have clear objectives.

Formulate your objectives and identify what you know and what you don’t. This way, you will know what’s required and be able to discover the best way to assign it to your team. Being results driven will save an enormous amount of effort and promote a better alignment between you and your team.

#2 Ask every person on your team, “Do you think this is really necessary?”

Explain the work that needs to be done to your team. Carefully look at each person’s face and ask if the task you are requesting is really necessary.

Ask: “Do you think this is really necessary?”

Do they think this is essential for their work? Is it something really required, that they really need?

Listen carefully, because if you don’t get a unqualified “yes!” it means you are getting a “no”. In other words, if they giving a hesitant “sort of…”, “ummm…yeah, I guess…” it means they don’t think what you are proposing is necessary.

Note that, in terms of commitment, there is no way something can be half required, half necessary.  It’s like being pregnant. It’s impossible to be half pregnant. If you are getting half-yeses, you’ll need to investigate. People are only half committed, and that’s not good.

The rule is: one will do something only when they are convinced that what they are doing is essentially necessary.

If your staff tells you that a given task may not really be required, listen carefully to what they are saying. What you are proposing may be one of those redundant tasks that no one knows why is being done.

Don’t try forcing work that is considered unnecessary down their throats. They simply won’t do it. They’ll tell you they will, but won’t.

Listen first to what they have to say before coming to any conclusions. There might be a good reason why something is actually not required. They can save you tons of money by letting you know that some reports or tasks are useless. Your work is to validate their rationale and change your strategy accordingly.

#3 Ask every person on your team, “Do you know how to do it?”

You might assume that everyone is fully trained in their responsibilities in the organization. Don’t take their knowledge for granted. When delegating in Brazil, you should always ask your employees if they have the skills and resources to do what you are asking them to do.

Ask: “Do you presently have the skills necessary to do the task?”

I had some very interesting surprises when asking this simple question. In one of my projects, I assumed that everyone on the team had similar skills. When I asked that question, one of my employees raised her hand and said she didn’t know how to structure one of the research papers I had assigned her. This was very timely because I had the chance to pair her up with someone else on the team who did this type of work very efficiently. Subsequently, she learned a new skill and in the next round of work, she was already trained in that area.

Your team will also no longer fear saying they don’t know something. People need to feel empowered to learn and not to feel ashamed of not having a certain skill. It will help your team to grow.

#4 Ask each one on your team, “Are you the right person for this assignment?”

When someone doesn’t think they are responsible for the task, they will be in conflict with other people on their team.  Or, they may feel they are not getting their fair share of the work.

Ask:  “Should you be the person responsible for doing this task?”

If the person is OK with the task, it has been delegated. You are done!

However if the person, scrunches up their nose, watch out…carefully. At this point, you should consider opening up on task ownership and let the person know what other people are doing. For instance:

“Ok, we are working as a team. You know that Joe is doing “this” and Mary is doing “that”. Why do you think you should be doing nothing?”

You will be surprised with the responses you get, “Oh! I didn’t know they were doing “this” and “that”!”

#5 Check your managerial attitude

This delegation strategy won’t work if you don’t believe the responsibility for doing the work belongs to the people you just delegated it to.

If anyone doesn’t do their work, what will be the repercussions?  Some employees are very smart and know if they don’t do the work they are assigned, nothing bad happens. In that case, not delivering doesn’t bear any negative consequences – which is very bad from a managerial perspective.

Everyone on your team should be accountable for what they own… even if they are in a land far, far away, like Brazil.

Summing up

Next time you delegate in Brazil, follow these five simple steps:

  • Have your objectives clear in your mind.
  • “Do you think this is really necessary?”
  • “Do you know how to do the task?”
  • “Should you be the person responsible for doing this task?”
  • Keep an eye on your managerial attitude.

Know clearly what you want to get done and make sure everyone is accountable for their piece of the pie.


Let’s have a conversation. Leave a comment with your experience delegating to a team that is far away from you. Join me now in this discussion!


Photo credits: Renato Targa