Prospect of change in government fuels demand for Brazilian stocks and currency, while strategists warn fiscal risks remain under either candidate
Brazil’s real outperformed most major currencies as election uncertainty remained in focus — Photo: Daniel Dan/Unsplash
Renewed expectations of a change in government after Brazil’s October presidential election boosted risk appetite in local markets, helping some assets outperform emerging-market peers. The real was among the five strongest currencies tracked by Valor on Monday (21).
In fixed income, expectations of an opposition victory also drove a decline in risk premiums across most of the interest-rate curve, with the exception of the very short end. The local risk-on mood received further support from global markets, as oil prices fell for a fourth straight session and government bond yields declined broadly across developed economies.
The stronger appetite for risk also lifted the benchmark Ibovespa stock index back above 186,000 points. Gains were held back by declines in mining company Vale and oil giant Petrobras shares.
The move came alongside a surge in major U.S. stock indexes, led by the Nasdaq, which closed at a record 27,122.094 points, surpassing its previous closing high of 27,093.901 reached in June.
Fiscal caution
Although the latest polls continue to show President Luiz Inácio Lula da Silva of the Workers’ Party (PT) and Senator Flávio Bolsonaro of the Liberal Party (PL) statistically tied in a potential runoff, Deutsche Bank’s Latin America economics and strategy team sees reason for caution.
The bank’s analysts said either candidate would face difficulty delivering substantial fiscal adjustment early in the next administration because of a “highly fragmented political landscape.”
In a report, the team said only a “modest” political and fiscal risk premium is currently priced into fixed income.
“We see lower rates under most fiscal regimes, but remain cautious given a tight election and fiscal uncertainty.”
The strategists are therefore maintaining only a curve-steepening position, designed to benefit from a wider gap between January 2029 and January 2031 DI (Interbank Deposit) futures rates.
On Monday, the January 2029 rate fell to 13.71% from 13.83%, while the January 2031 rate dropped sharply to 13.91% from 14.03%.
Equity gains
The decline in futures rates helped bolster the Ibovespa, which closed 0.74% higher at 186,596 points. Gains were limited by a 1.12% drop in Vale and a 1.03% decline in Petrobras preferred shares.
Beyond supporting the broader market, expectations of a possible change in government have recently increased demand for somewhat riskier stocks, Bank of America said.
BofA analysts said in a report that local investors have become more constructive on Brazilian equities, while foreign investors remain reluctant to increase risk exposure.
Defensive positioning remains concentrated in names such as electrical equipment maker WEG and infrastructure operator Motiva, while a higher-beta basket led by car rental company Localiza, toll-road operator EcoRodovias and truck and machinery rental company Vamos has attracted more interest, mainly as a tactical adjustment to the macroeconomic outlook.
Real outlook
Some foreign banks are also taking a more cautious view of the real. Deutsche Bank has reduced its position in the currency and now holds a neutral view, warning that “risks remain two-sided and positioning looks stretched” ahead of the election.
“Near-term risks are rising as fiscal and political concerns related to the elections intensify and seasonality turns less favorable in the second half. All of this is happening against an external backdrop that is less supportive for emerging-market currencies,” economists and strategists Francisco Campos,Beatriz Nunes, Christian Rojas and Carlos Muñoz-Carcamo said in a report.
The Deutsche Bank team nevertheless said Brazil’s favorable external accounts and high carry continue to support the real.
The exchange rate per U.S. dollar closed 0.7% lower at R$5.10 in the local market on Monday.
Hawkish comments from Federal Reserve officials during the day may have supported the U.S. currency, even as Treasury yields fell at the intermediate and long end of the curve. Short-term yields edged higher.
Late in the session, the two-year Treasury yield was at 4.75%, up from 4.75% in the previous session, while the 10-year yield fell to 4.97% from 4.99%.
*By Bruna Furlani,Maria Fernanda Salinet,Arthur Cagliari,Luana ReisandGabriel Caldeira— São Paulo
Meat giant will keep its BDRs trading locally, while JBS S.A. remains able to issue debt to professional investors
Wesley Batista Filho and Gilberto Tomazoni — Photo: Divulgação/JBS
Nearly 20 years after going public in Brazil and just over a year after moving its primary share listing to New York, JBS is changing how it issues securities in the Brazilian market.
Debt offerings will no longer be issued by JBS S.A. and will instead come from Netherlands-based JBS N.V.
The company said in a filing with the Securities and Exchange Commission of Brazil (CVM) on Monday (Sept. 21) that shareholders approved keeping JBS S.A. registered solely under category B, which allows companies to issue securities such as debt but not publicly traded shares in Brazil.
Local issuance
JBS S.A. will still be able to issue securities such as debentures in Brazil, but those offerings will be restricted to professional investors rather than the broader investing public.
Brazilian Depositary Receipts, or BDRs, will continue to trade in the local market.
JBS N.V. currently has two classes of shares. Class A shares, equivalent to common stock, trade on the New York Stock Exchange and serve as the underlying shares for the company’s BDRs.
Class B shares are held exclusively by J&F, the holding company controlled by the Batista brothers. Each Class B share carries the voting power of 10 Class A shares.
J&F move
The change comes two days after J&F said it had applied to register as a publicly held company in Brazil under category B.
J&F also controls companies including Âmbar Energia, Eldorado and Flora. The registration would allow the group to issue debt securities in Brazil, something it does not currently do.
The move reflects J&F’s transformation from a holding company into an operating company, as Valor reported Monday.
Wesley Batista Filho is set to take over as CEO in January 2027, replacing Gilberto Tomazoni.
In Monday’s filing, JBS said that “completion of the registration cancellation is subject to the satisfactory conclusion of the CVM’s review of the request, which is expected to take place in accordance with the terms and deadlines established under CVM Resolution 80.”
*By Nayara Figueiredo and Camila Souza Ramos— São Paulo
International retail groups gain market share as Brazilian chains face weaker sales, higher debt, court-supervised restructurings
Alexandre Bompard, of Carrefour — Photo: Nathan Laine/Bloomberg
Large international retail groups are weathering the current retail slowdown better than their Brazilian counterparts, while domestic chains are growing more slowly and increasingly turning to court-supervised restructurings. This is likely to further widen the gap in market share, strengthening the position of foreign operators in the revenue generated by Brazil’s retail sector.
The conclusion is part of a Valor analysis comparing the performance of Brazilian and foreign companies operating in the same segments based on their results so far this year. The differences are emerging at a time when Brazil has increased protection for sales of low-value imported goods.
President Luiz Inácio Lula da Silva signed into law on September 10 a measure that eliminates import duties on international purchases of up to $50, a tax that became known in Brazil as the “blusinha tax.” The measure is expected to reduce federal tax revenue by R$5 billion to R$6 billion in 2026, according to the Independent Fiscal Institution (IFI), a Senate-affiliated fiscal policy watchdog. Given that the previous tax rate was 20%, Valor estimates that at least R$25 billion worth of foreign goods priced at up to $50 will enter Brazil this year. That is equivalent to twice Renner’s net apparel revenue in 2025, making it the country’s largest fashion retailer.
Congressional approval of the measure was one of Lula’s priorities ahead of the October elections, and industry associations at the time described it as an electoral move.
An analysis of the major groups whose revenues can be compared shows that macroeconomic conditions and company-specific management decisions have hurt Brazilian retailers’ sales in recent years. These factors have weighed more heavily on their results than any significant positive factors benefiting foreign retail chains, widening the gap between the two groups.
Adding to the pressure, some Brazilian chains are heavily dependent on sales in the North and Northeast, regions hit harder by the broader slowdown in retail activity. Even after the federal government’s decision to increase cash-transfer program Bolsa Família payments by 15%, providing an additional boost to consumer spending in those regions, bank analysts on Friday (18) questioned whether the extra income would initially go toward reducing household debt and delinquencies.
At the same time, the data show that foreign groups are also feeling the effects of weaker household consumption as household debt rises. So far, however, they appear to have withstood the pressure better.
According to the analysis, France’s Carrefour has been outperforming Grupo Mateus, a Maranhão-based retailer with a strong presence in the North and Northeast and a similarly diversified store portfolio, in same-store sales. Both companies operate in cash-and-carry and food retail.
Same-store sales are used as a gauge of underlying performance because they strip out the effect of new store openings, which typically boost revenue.
From January through June, Carrefour’s sales in Brazil were virtually flat in local-currency terms, declining 0.1% from a year earlier, while Mateus’ sales fell 7.7%. A year earlier, the Brazilian chain had posted 5.7% growth.
Carrefour’s operating profit in Brazil rose 0.9% from January through June, while Mateus’s fell 22.3% to R$888.5 million. “In Brazil, still a complex market, our adaptation plans and cost-reduction initiatives allowed us to further improve profitability and resume sales growth in the second quarter,” Carrefour CEO Alexandre Bompard wrote in his message accompanying the earnings report.
Likewise, Chile-based food retailer Cencosud, despite difficulties stabilizing some of its regional chains, posted results that were less pressured than Mateus’s. The Brazilian company has deliberately prioritized profitability over market share, abandoning an aggressive commercial strategy adopted in recent years.
Cencosud, which owns chains including Giga Atacado, Prezunic, and Perini, has seen sales affected by store remodeling and closures. Even so, its same-store sales decline was smaller than Mateus’s.
From January through March, the foreign group’s sales fell 1.4%, and the decline widened to 8% in the second quarter. Those figures were still less severe than Mateus’s, whose sales fell 7.3% and 8%, respectively. Bank analysts had projected a smaller decline of 5% to 7% for Mateus from April through June.
Ana Paula Tozzi, CEO of AGR Consultores, says large international groups give their Brazilian operations access to data, systems and management expertise, as well as funding from abroad—advantages that can make a difference in more challenging periods. “These businesses are operating in a perfect environment, but they operate with a long-term plan and a culture focused on the long term, and that is essential in more turbulent times,” she said. “It’s reassuring to know there is somewhere to turn—the parent company—when things get difficult,” she said.
While Carrefour delisted its Brazilian subsidiary in 2025 and Cencosud has no shares publicly traded in Brazil, Mateus went public on B3, Brazil’s stock exchange, in 2020.
The Brazilian group said its sales have reflected “a consumer environment that remains under pressure, marked by high household debt and changes in the composition of consumers’ shopping baskets,” according to its earnings report for April through June.
The company also said it has remained focused on profitability and that the strategy has delivered results. Gross margin was 23.2% from January through June, up 0.1 percentage point.
For João Soares, a Citi analyst, Mateus has been hurt by its heavy exposure to the North and Northeast, where it is a leading food retailer and consumer spending has weakened more sharply than in other parts of Brazil. The chain has also continued to prioritize profitability over sales, a strategy that has weighed on revenue. One-third of the nine states where the company operates are growing below the national retail average, according to IBGE data through June: Piauí, Alagoas, and Pará.
The chain has also been affected by its decision to reduce sales over the counter at its cash-and-carry stores. Mateus discontinued that activity this year for strategic reasons, affecting comparisons with the same period a year earlier.
“Management believes most of this adjustment [prioritizing profitability over sales] has been completed,” Soares said in an August report. “But management’s comments reinforced the cautious view on same-store sales in the short term,” he wrote. Grupo Mateus did not comment beyond its statements in the earnings report.
In the comparison between the companies, Cencosud’s sales across all stores fell 18% in the first half. Mateus, however, posted 12.5% growth, mainly due to the consolidation of a new business acquired in 2025—Novo Atacarejo—, the opening of 25 stores over the past 12 months, and higher sales at its wholesale and electronics businesses.
In convenience-store retail, another segment of the food market, Oxxo is growing faster than direct competitor GPA. Oxxo is owned by Mexico’s Femsa, which took full ownership of its Brazilian operations this year after previously holding a 50% stake. GPA, meanwhile, is undergoing an out-of-court restructuring and owns the Mini Extra and Minuto Pão de Açúcar chains.
In February, Brazilian company Raízen, part of Cosan Group, exited the business amid rising leverage by selling its stake in Grupo Nós, the joint venture that operated Oxxo stores in Brazil. The business has continued to post above-market growth.
In the first quarter after the partnership was dissolved, Oxxo Brazil grew 6.9%, followed by 11.6% growth in the second quarter. GPA’s convenience business grew 0.3% from January through March and fell 2.3% from April through June.
With R$4.5 billion in debt, the retail group that owns Pão de Açúcar filed for an out-of-court restructuring in March, and the plan has yet to receive court approval.
In its second-quarter earnings report, GPA said the decline in sales reflected the effects of the out-of-court restructuring, which caused supply problems at stores and ultimately affected revenue. “This effect peaked in May and has since begun to improve gradually. Sales returned to growth in June, in line with the gradual recovery in inventory availability and the normalization of operations,” the company said in its report.
The chain also cited the execution of a “strategy to prioritize more profitable channels,” which led to the end in 2026 of the “Aliados” project, aimed at transforming neighborhood stores under the CompreBem banner. It also cited moderate demand and a consumer environment under pressure. Oxxo and GPA did not comment.
In practice, weaker consumer spending affects all retailers exposed to the broader economic environment, including foreign groups. But some chains may also be more vulnerable because management decisions have failed to deliver the expected results.
“Changing management and strategy every three to four years sends a bad signal to the team and the market. GPA has frequently changed its leadership recently. Meanwhile, some chains grew too fast and opened too many stores in a short period, as was the case with Mateus, so eventually you have to pay the price,” Tozzi said.
Analysts say foreign groups still have the option of raising financing through their parent companies abroad, where interest rates are lower. Carrefour, for example, operates through a local bank that turns to its headquarters for capital.
In the home-improvement retail market, the outlook points to a challenging environment for both Brazilian and foreign chains.
“Several local chains have closed stores recently across all three states where we operate [Rio Grande do Sul, Santa Catarina and Paraná]. We often joke that the business that has grown the most in the region is real estate for rent,” said Peter Furukawa, CEO of Rio Grande do Sul-based Quero-Quero, which has about 580 stores nationwide.
Furukawa said the closures have created opportunities for the retailer to expand in some cities. At the same time, the chain has taken steps to respond to the slowdown in demand.
Among those measures, the company expanded this year its offering of cash purchases and products aimed at higher-income consumers, seeking to offset the decline in credit available to lower-income customers. The chain operates its own financial-services arm, Verdecard.
“We made a slight move toward more sophisticated assortments. The measures we have been taking in this tougher environment began in the middle of last year, when we realized that the deterioration in the economic backdrop was not going to change, and we are starting to see the results,” the CEO said. Quero-Quero’s same-store sales fell 2.5% from January through March and rose 6.7% from April through June.
French retailer Leroy Merlin reported flat same-store sales in Brazil in the first half of this year compared with 2025, according to management, putting it ahead of the market average. The sector declined 0.8% through June, according to IBGE.
Ricardo Dinelli, CEO of Leroy Merlin Brazil, said the company had to make choices and scale back some investments in a tougher market environment, selecting which projects to move forward with and being more transparent with employees about the approach. The retailer is Brazil’s largest home-improvement chain, with annual sales estimated by the market at R$9 billion to R$10 billion.
“We have had to make some course corrections recently and look inward to see whether what we were offering was really enough,” he said. “For example, we had projects involving made-to-measure products, such as curtains, that we started in some stores, but we decided not to expand them to more stores because it wasn’t the right time and we have other priorities,” he said. “We are putting more emphasis on our services offering. We have more than 160 types of services, and that business is not flat—it is growing faster [than the chain as a whole],” he said.
According to Dinelli, 2025 was also a difficult year, with sales stable compared with 2024, but he expects demand to increase as El Niño arrives and temperatures rise in the coming months. “Hot weather has a positive impact on our sales,” he said. The chain has not opened any stores this year; its latest opening was in Bauru, São Paulo state, in 2025. It has 53 stores nationwide.
Study says agribusiness could supply the industry with ample feedstock
Biomethane production remains concentrated in developed countries. Emerging economies, however, also have opportunities because of their available feedstock, particularly agricultural and livestock waste, according to a study by Brazilian researchers supported by the Low Carbon Mobility Institute (MBCBrasil).
The study found that gas produced by biodigesting waste could provide emerging economies with a renewable transportation fuel that supports their climate goals, energy-diversification strategies, circular economies, and rural development.
The study, “From Waste to Wheels—Turning Organic Waste into Renewable Fuel for Transport,” was written by researchers Glaucia Mendes Souza of the University of São Paulo (USP), Clayton Barcelos Zabeu of the Mauá Institute of Technology (IMT), Heitor Cantarella of the Campinas Agronomic Institute, and Luiz A. Horta Nogueira of the Federal University of Itajubá. They compiled research to highlight the potential for biomethane adoption worldwide.
According to the document, today’s most mature biomethane markets are all in developed economies, including Sweden, Germany, Italy, France, the Netherlands, Denmark, Finland, Switzerland, the United Kingdom, Norway, and California. Other markets are expanding, including Brazil, the United States, China, India, Spain, Ireland, Austria, and Belgium. Biomethane is produced in approximately 40 countries and used as a fuel in about 30 markets.
The researchers said data from the International Energy Agency (IEA) show that the largest untapped opportunities for biomethane production are precisely in regions with substantial agricultural production, livestock farming, and urban growth, including Latin America, Sub-Saharan Africa, and South and Southeast Asia. Global production potential for biogas and biomethane is 1 trillion cubic meters a year, equivalent to about one-quarter of worldwide gas demand.
The availability of feedstock for biomethane production “is linked to economic development and population growth. As emerging economies expand their agricultural production and urban populations, the volume of organic waste they generate also increases,” the study said.
The researchers listed the main feedstock types and the countries with the greatest potential to use them. Animal manure is abundant in Brazil, India, China, and Argentina. Brazil, India, Thailand, and Indonesia have large volumes of agricultural residues. In contrast, Latin America and Southeast Asia have abundant agro-industrial waste.
Among nonagricultural sources, China, India, and Indonesia have the potential to use municipal organic waste, while landfill gas and wastewater sludge offer significant potential in large urban centers in emerging economies.
The researchers emphasized that countries such as Brazil, India, and China “already have experience adapting biomethane technologies to conditions in developing countries and can provide valuable lessons for other emerging markets.”
To encourage the biomethane market, the study cited countries that have adopted individual policies or combinations of measures, including fuel-blending mandates, sector-specific renewable-energy targets, physical infrastructure development, and financial or tax incentives.
The researchers also cited a study by the IEA, the Food and Agriculture Organization of the United Nations (FAO), the Global Bioenergy Partnership (GBEP), and the European Biogas Association. It found that many biomethane projects succeed by making their other products—such as biofertilizers—and environmental services—such as carbon credits—economically viable. Additional revenue streams for a biomethane project may include waste-management services, biofertilizer, renewable carbon dioxide, carbon credits, and guarantees-of-origin certificates. According to the study, these additional sources can account for between 20% and 60% of a biomethane project’s total revenue.
Justice Flávio Dino asks for more time after tense session, potentially pushing decision beyond October election
Supreme Court justices (from left): Flávio Dino, André Mendonça, Alexandre de Moraes, Dias Toffoli and Gilmar Mendes — Photo: Gustavo Moreno/STF
Brazil’s Supreme Federal Court (STF) suspended its session Tuesday (Sept. 15) without reaching a decision on a Federal Police report containing messages sent by former banker Daniel Vorcaro, owner of Banco Master, to a mobile phone number attributed to Justice Alexandre de Moraes. Justice Flávio Dino asked for more time to review the case.
The session was consumed by arguments among the justices and a procedural motion filed by Gilmar Mendes seeking to have the case considered alongside Moraes’s request for an investigation into Justice André Mendonça for alleged abuse of authority. As a result, the court never reached the central question of whether Moraes should be investigated.
Dino has up to 90 days to return the case for consideration. If he uses the full period allowed under court rules, the proceedings would resume, at the earliest, in early December. Justices consulted by Valor said Dino is unlikely to seek to put the case back on the agenda before the October elections.
At the start of the session, Justice Kassio Nunes Marques recused himself, a move that could alter the balance when the court eventually considers the merits of the case — whether Moraes should be investigated.
Nunes Marques cited his position as president of the Superior Electoral Court (TSE), saying he had no doubt the proceedings could affect the electoral process. Justice Dias Toffoli again stepped aside, as he has in all Banco Master cases since business ties emerged involving a fund linked to Fabiano Zettel, Vorcaro’s brother-in-law.
Dino requested more time after an argument between Justices Mendes and Mendonça — one of several heated exchanges during the session. He said the atmosphere in the courtroom made it impossible for the justices to deliberate, noting that Brazil was only days away from a presidential election.
“We are speaking in terms that degrade the Court’s image. Your Honor has been watching this for hours. If Your Honor is going to keep watching, I will not. We are in no position to deliberate. The atmosphere is only going to get worse, and society is watching,” Dino told Chief Justice Edson Fachin.
Even after Dino requested more time, the justices continued casting votes on the procedural motion. The session ended with a 4-3 vote against considering the two cases together. Fachin, who is overseeing the Moraes case, was joined by Luiz Fux,Mendonça and Cármen Lúcia.Cristiano Zanin, Mendes and Moraes voted in favor of combining the proceedings.
Dino had earlier supported considering the cases together but withdrew his vote after requesting more time to review the matter.
Courtroom clashes
The session featured repeated accusations and direct confrontations, particularly between Mendonça and some of the court’s more outspoken members, including Moraes and Mendes.
The most heated exchange came after Prosecutor General Paulo Gonet, who is also mentioned in the Federal Police report over alleged ties to people connected with Banco Master, defended himself.
“It is astonishing that someone of Paulo Gonet’s stature is subjected to this kind of insinuation. This is what is reckless [on Mendonça’s part]. A man driven by a policing mentality, alongside his police chiefs. The shamelessness of this man is astonishing,” Mendes shouted.
“The shamelessness is yours, Your Honor. Respect me. Respect me. This is not a joke,” Mendonça shouted back.
“Go ahead and cry, go ahead and cry,” Mendes replied.
“I’m not crying. There’s no crying here. Show some respect,” Mendonça said.
In another clash between the two, Mendes accused Mendonça of taking a “political-electoral” approach to the Banco Master case.
“There is an unmistakable political-electoral bias in the way this matter was handled. An obvious political-electoral approach. You don’t do that. Decent people don’t do that,” Mendes said.
Mendonça fired back.
“Your Honor is being reckless, Justice Gilmar. Don’t point your finger at me. You are not speaking to just anyone. Respect this Court.”
At another tense moment, Mendonça said there was a “parallel Federal Police” responsible for allegedly monitoring Supreme Court justices.
“We now have a parallel Federal Police. A parallel Federal Police carrying out surveillance. Don’t think you’re safe either, Justice,” Mendonça said.
Moraes then said he himself had been investigated at Mendonça’s direction.
“Who is afraid of the Federal Police? Who called the Federal Police and demanded that a colleague be included in a cooperation agreement? And we will bring that here, Chief Justice. We will bring it here and call witnesses, whom I will name,” Moraes said.
Moraes described the Federal Police report mentioning him as a “fraudulent investigation” carried out by Mendonça.
“Everything that was done, this fraudulent investigation into me, began long ago. Justice André, in a meeting, said: ‘Include Justice Alexandre.’ Why? Because he is serving a political group that tried to stage a coup in this country,” Moraes shouted, as Mendonça repeatedly said: “That’s a lie.”
Mendonça was appointed to the Supreme Court by former President Jair Bolsonaro, who is serving a prison sentence after being convicted over an attempted coup.
Mendonça argues that when he asked the Federal Police to identify the recipients of Vorcaro’s messages, he did not know Moraes’s name would emerge. He said he requested the report because the messages mentioned Gonet and Federal Police Director General Andrei Rodrigues.
Fachin’s handling
Fachin’s management of the case also drew criticism from fellow justices.
Moraes said there was nothing for the court to vote on because neither the Federal Police nor the Prosecutor General’s Office (PGR) had requested an investigation into him, which he argued would make the opening of a formal inquiry impossible.
“Is there any request to investigate me? No. What exactly are you going to vote on?” Moraes asked.
Dino, meanwhile, criticized Fachin for taking over the case himself, arguing that the move upset the balance among the Supreme Court’s members.
“This is a court of equals, and so we have to follow the rule. And the rule says that in no court in the country may a president remove a rapporteur,” Dino said.
Cármen Lúcia’s dismay
Cármen Lúcia remained silent for almost the entire session, speaking only when it was her turn to vote on Mendes’s procedural motion.
She said she was in a state of “deep consternation and sadness” over the situation facing the Supreme Court.
“I’m sad. Not only because of the issue that brings us here, but because this Supreme Court has caused civic unease among all Brazilian citizens. I even feel ashamed that, 20 days before the election, everyone’s attention is focused on Supreme Court matters,” she said.
Gonet’s response
In a separate development Tuesday, Gonet submitted a statement to the Federal Prosecution Service’s Superior Council calling “preposterous” claims that he should not remain involved in the Banco Master case.
He also named other authorities who attended a 2024 event in London where he acknowledged having encountered Vorcaro.
“The invited authorities took part in panels over the course of the event. There were also moments when attendees socialized. It was only then, and together with several other guests, that I was with Mr. Daniel Vorcaro. It was in that single context that I met him in person (the only time up to then and to this day). Again, at the time, there was nothing public about illegal activities by Banco Master or its executive. Nothing of the sort had come to my attention,” Gonet said.
The Federal Police report made public by Mendonça earlier this month shows Vorcaro seeking information, allegedly from Moraes, about the investigation into him that would lead to his first arrest, ordered in November last year.
The former banker was also seeking protection. In the messages, for example, he asked whether “Andrei” and “Paulo” could intervene on his behalf. Shortly before his arrest was ordered, he asked whether he should leave the country.
The Federal Police document also said Moraes edited a R$131 million legal-services agreement between Vorcaro and attorney Viviane Barci, the justice’s wife. Investigators said the metadata from the digital document identified a username linked to Moraes as the author of the last change made to the draft.
*By Giullia Colombo,Tiago Angelo,Mateus Coutinho,Gabriela GuidoandMariana Andrade— Brasília and São Paulo
Executives at Valor 1000 winners say fiscal adjustment, greater predictability are essential for investment and growth
Valor 1000 awards ceremony honored leading companies across 28 sectors, with Itaú named Company of the Year — Photo: Felipe Gabriel/Valor
Two recurring issues on the corporate agenda have taken on greater urgency. One is the consumption tax overhaul, which enters a new phase in 2027 and aims to implement a simpler, more efficient system—which has long been needed—by 2033. The other is the adjustment of public finances, another essential item on the agenda, which is in a different position: its implementation remains uncertain, despite being part of the election debate.
These two issues, which have always been crucial to the quality of Brazil’s business environment, rank among the main concerns of the country’s largest companies, according to the Valor 1000 ranking, whose winners were honored Tuesday (8) at an event at the Unique hotel in São Paulo.
Serasa Experian compiled the ranking in partnership with Valor and Época Negócios. FGV/SP’s Center for Financial Studies validated the survey criteria.
The resilience of Brazilian companies, which continued to grow revenue despite a challenging environment, was highlighted by Frederic Kachar, CEO of Editora Globo and Sistema Globo de Rádio. He stressed how difficult it is for short- and medium-term interest rates to decline in real terms as long as public debt remains high. For Kachar, the lack of a substantive debate over fiscal adjustment in the presidential campaigns is a source of frustration. “This issue can no longer be postponed. Fiscal adjustment is necessary,” he said.
“In Brazil, we are facing institutional crises and challenges that need to be addressed urgently,” said Maria Fernanda Delmas, editorial director of Valor and Editora Globo’s business and economics brands, in opening the event.
“The work of the companies we are honoring today is an integral part of people’s lives and of building a country. We know this is an ongoing process, with successes and mistakes, and that it is subject to our critical coverage as a way of contributing to a better society. It can also inspire many other businesses and professionals to follow a better path,” she said. “We seek to look at companies’ financial health, but also at the broader responsibility of each corporation—its commitments to the communities where it operates, consumers, employees, public authorities, suppliers and other partners, the environment, and investors.”
Executives at the winning companies assess the current environment from this broader perspective.
“Social policy and fiscal policy have to go hand in hand. The more disciplined you are fiscally, the more you can control inflation and create room for social programs,” said Milton Maluhy Filho, CEO of Itaú Unibanco, the 2026 Company of the Year and winner in the financial sector.
The executive said public finances should be at the top of every presidential candidate’s priorities. “Whoever wins the election needs to urgently propose a budget reform, make the budget more flexible, eliminate a large portion of fixed spending, and tackle this problem. We need to create room to cut spending and better prioritize investment,” he said. “This will require action by the executive and legislative branches and by society as a whole. That would create room for private credit, both domestic and foreign, so that we can start talking about productivity.”
The trajectory of public debt is a concern for industrial executives. Gustavo Werneck, CEO of Gerdau—the winner in the steel and metals sector in the Valor 1000 ranking—issued a strong warning. “The lack of fiscal adjustment puts pressure on interest rates and inflation. We are approaching a point of no return. Government officials and those seeking office can no longer simply talk about it. We cannot enter 2027 without a commitment to fiscal adjustment focused on reducing public spending,” he said. “Without adjustment, there is no public investment. Without economic growth, companies won’t invest. It is a fundamental issue for Gerdau’s investment decisions.”
Alberto Kuba, CEO of WEG, the top-ranked company in the machinery sector, shares that view. He noted that the company works with long-term plans but expressed concern about the current environment. “Without fiscal adjustment, perceptions of [high] country risk will persist.”
For Henrique Fernandez, CEO of Intelbras, the winner in the electronics sector, putting public finances on a sounder footing is imperative. “Without it, interest rates will remain high for longer, making credit more expensive, curbing consumption and delaying investment decisions,” he said. “High interest rates that persist for a long time mean more selective demand and longer decision-making cycles among customers,” the executive said.
Valter Pitol, managing director of Cooperativa Agroindustrial Consolata (Copacol), the top-ranked company in agribusiness, sees a challenging outlook despite the company’s strong results. “For 2027, we see a lot of fiscal uncertainty, a higher cost of capital, and a weaker real,” he said. According to Pitol, a deterioration in the fiscal outlook could lead Copacol to postpone planned investments.
The concern cuts across industries. Diogo Corona, CEO of Smart Fit—the winner in specialized services—said fiscal policy affects the entire economic backdrop, including interest rates, inflation, the exchange rate, and overall confidence. “A more predictable environment helps support investment and consumption decisions,” he said.
“We need interest rates to be less restrictive,” said Leonardo Mesquita, co-CEO of Cury Construtora, the winner in real estate development. “Once interest rates return to more normal levels, we will be able to make investments with a longer-term view.”
Executives say greater predictability would be especially welcome at a time when companies are undergoing significant adjustments because of the ongoing tax overhaul.
The introduction of the Contribution over Goods and Services (CBS) will require changes to billing, accounting, and procurement processes at Sabesp, the winner in the water, sanitation, and environmental services sector. “The main challenge will be managing the transition safely while maintaining operational continuity and the quality of tax information,” said CEO Carlos Piani.
Éder Odvar Lopes, CEO of Inpasa, the top-ranked company in bioenergy, sees the tax overhaul as a historic transition. He said the biggest hurdle could be the regulation of special regimes, including regional tax incentives. “For a company operating in several states and with extensive supplier networks, the main task is adapting systems, tax processes, contracts, and financial flows to the new model,” he said.
Marcelo Oberg, CEO of Sotreq, the top-ranked company in wholesale and foreign trade, said the biggest test is not adapting to new tax rates and levies but preserving working capital. “It is essential to have mechanisms ensuring that the stock of tax credits from the previous system, particularly ICMS [state value-added tax], can be recovered so companies can maintain healthy cash flow,” he said.
At RD Saúde, which owns the Droga Raia and Drogasil pharmacy chains and won in retail, the preferential tax treatment provided for certain medicines is viewed as a step forward. “The measure could help expand access to and adherence to treatment, particularly among patients with chronic conditions,” said CEO Renato Raduan. “We are well advanced on this agenda, with our systems and processes being prepared to ensure a safe and proper transition to the new model,” he said, describing the reform as structurally positive.
André De Angelo, CEO of Acciona Brasil, the leader in construction and engineering, highlighted the impact of the tax overhaul on long-term concession contracts. “These contracts will span different tax regimes over their terms,” he said. “That affects financial models and requires mechanisms to restore the economic and financial balance of contracts with the granting authorities.”
According to Carlo Bergamaschi, executive director of Valgroup, the winner in plastics and rubber, the transition is highly demanding, particularly for a company operating in several states with a complex value chain. Changes to the rules and implementation timelines for different stages of the overhaul add to the complexity. Even so, he is optimistic. He believes the new system could bring significant improvements, such as reducing tax evasion and informality—“which means a fairer competitive environment,” he said.
The 2026 edition of the ranking assessed 1,034 companies based on financial performance. In a second stage, the highest-ranked companies were evaluated using ESG criteria—environmental, social, and governance practices—to determine the leaders in 28 sectors of the economy.
In a year marked by numerous challenges—from high interest rates and rising debt at home to wars that have severely disrupted global supply chains and heightened geopolitical tensions—these companies managed to grow both revenue and profit.
The Valor 1000 awards are organized by Valor Econômico and Época Negócios, with gold sponsorship from Alelo, Caixa Seguridade, Huawei, and Deloitte; silver sponsorship from FGV Educação Executiva, Vibra, MBRF, Febraban, and XP; and bronze sponsorship from Intelbras, CNI Sistema Indústria, Sicredi, and Mineração Taboca. Azul is the event’s official airline, and GAC is its official vehicle partner, with support from FIESP and Eletromidia and partnerships with Serasa Experian and FGVcef/FGV-SP.
Partnership will be structured through the Canadian company’s new Brazilian subsidiary
Canadian mining company Aclara Resources announced Tuesday (8) that it has signed a contractual joint venture agreement with the Japan Organization for Metals and Energy Security (Jogmec) to explore and develop deposits of heavy rare earth elements in ionic clays in Brazil. The partnership will be structured through a new Brazilian subsidiary of the Canadian company.
In a market filing, Aclara clarified that the Carina project, its flagship asset in the state of Goiás and scheduled to begin operations in 2028, will remain outside the joint venture and continue to be wholly owned by the company.
Jogmec is responsible for securing strategic natural resources for Japan and is the same organization that signed a memorandum of understanding with the government of Goiás in March to cooperate in the research, technology, and exploration of critical minerals and rare earths. That same month, the state signed another agreement of this kind with the U.S., a memorandum that was questioned by members of the federal government.
Under the agreement with Aclara, Jogmec will exclusively finance up to $3 million in exploration expenses during an initial three-year earn-in period. If certain conditions are met, the Japanese organization may elect to invest an additional $1.5 million, extending the investment period by another year.
Jogmec will also have the option to acquire a 30% stake in one of Aclara’s exploration projects in Brazil if it fulfills all of its financial commitments. Once the 30% partnership is established, all future development costs for the selected project will be shared proportionally by the two partners, according to Aclara’s statement.
If it exercises the option to acquire the 30% stake in the selected project, the Japanese organization will also secure the right to purchase an amount of production equivalent to its 30% stake, plus an additional 10% share of the project’s future output. The purchases will be made on normal commercial market terms to support the project’s long-term financing and development.
According to Aclara, Jogmec may also transfer its stake and associated purchase rights to one or more Japanese companies or consortia, subject to the terms and conditions of the joint venture.
“The agreement also creates a natural pathway for future offtake agreements with Japanese companies through Jogmec’s priority rights,” Aclara CEO Ramón Barúa said in a press release. “As new discoveries are made, they have the potential to strengthen the resource base supporting our company’s vertically integrated rare earth supply chain.”
Under agreement, Jogmec will finance up to $3m in exploration expenses during initial three-year period — Photo: Victor Moriyama/Bloomberg* By
Michael Esquer, Valor — São Paulo Source: Valor International
https://valorinternational.globo.com/
Six major chains keep lending growth below inflation and provisions broadly stable, but shorter-term arrears are increasing faster than overall delinquencies
At Centauro, overdue balances rose sharply in the 31-to-60-day range in the first half of 2026 — Photo: Divulgação
Brazil’s largest retail chains have kept a tight rein on credit this year, limiting financing to customers to protect themselves against the risk of consumer defaults. The strategy has helped prevent a rise in provisions for credit losses.
Six retailers with combined annual gross sales of just over R$120 billion had R$40 billion in consumer credit outstanding in the first half, Valor calculations show. In real terms, after adjusting for inflation, their combined loan book shrank 1.2%.
Despite the conservative approach, this year’s figures show that shorter-term delinquencies, of up to 90 days, are rising faster than overall overdue balances—a potential warning sign for retailers.
Credit restraint
The findings are based on a Valor survey of first-half financial statements from publicly traded fashion, electronics and sporting-goods retailers. The analysis covered provisions for doubtful accounts, total overdue balances, delinquencies of more than 90 days and the size of each company’s overall credit portfolio in Brazil.
The companies included home-appliance, electronics and furniture retailer Casas Bahia, omnichannel retailer and marketplace Magazine Luiza, Grupo SBF’s sporting-goods retail chain Centauro, and fashion retailers C&A, Renner and Riachuelo. Valor selected them because they are the publicly traded retail groups with consumer-finance operations. Food retailers and drugstore chains generally do not offer longer-term installment plans.
The six chains had a combined credit portfolio of R$40.95 billion at the end of June, up 3.43% from a year earlier. That was below the 4.64% inflation rate over the same period, as measured by the IPCA consumer price index.
Provisions for doubtful accounts were virtually unchanged at R$3.7 billion. They were stable or lower at Magazine Luiza, Casas Bahia, Renner and Centauro, while increasing at C&A and Riachuelo.
Total overdue balances across the retailers rose 6.7% from a year earlier to R$9.81 billion in the first half.
That increase was faster than the rise in accounts overdue by more than 90 days. In that category, outstanding balances grew 3.5% to R$6 billion, broadly in line with the expansion of the overall credit portfolio.
The figures suggest that more recent delinquencies are putting greater pressure on the overall level of late payments.
Looking at individual companies makes the deterioration in consumers’ ability to keep up with payments more apparent.
Early arrears
At fashion retailer Renner, for example, balances overdue by 31 to 89 days rose 14.8% to R$1.5 billion. By contrast, amounts overdue by up to 30 days fell 7.6% from a year earlier.
“This suggests that consumers start paying for a recent purchase and then, after the first month, begin falling behind on installments,” said a former commercial director at a department-store chain.
At Centauro, balances overdue by 31 to 60 days increased twelvefold to R$4.7 million. In the 61-to-90-day range, the amount quadrupled to R$3.1 million, the company’s so-called aging list shows (the figures are net of provisions for expected credit losses). The figures are net of provisions for expected losses.
For comparison, the total amount more than one day overdue also rose sharply, though at a slower pace. It more than tripled, from R$5.1 million in June 2025 to R$16.8 million in June 2026.
Casas Bahia, which has been under court-supervised restructuring since August, has long relied on installment financing as one of its strengths. The company saw overdue balances on its store-financing plans rise 34.5% in the 61-to-90-day range. Amounts overdue by 31 to 60 days increased 27.1% in the first half of 2026 from a year earlier.
Among all the delinquency periods analyzed, ranging from six to 180 days, those two brackets showed the steepest increases in overdue Casas Bahia installments.
Overall delinquencies in the retailer’s credit portfolio rose at a slower pace, though the increase was still significant. Total overdue balances climbed 24.7% to R$1.7 billion in the second quarter of 2026 from a year earlier.
In its financial statements, Casas Bahia said it continues to monitor conditions cautiously and maintain a conservative approach, “ensuring the strength and sustainability of the portfolio.”
The retailer told Valor that delinquencies had risen more sharply in the early and intermediate stages, but said lower insolvency rates at longer maturities were a positive sign. It also said its delinquency rate increased from 8.4% in the second quarter of 2025 to 8.9% a year later, an increase it views as broadly stable.
Conservative lending
Renato Donatti, a senior director at Fitch Ratings, said Brazilian retailers have tightened lending standards in recent years after higher interest rates drove up the cost of capital. The aim has been to avoid taking on excessive default risk, a strategy that has helped keep the sector’s credit portfolios from becoming unbalanced.
Some retailers operate their own finance companies, while others have partnerships. Renner owns Realize, Riachuelo operates through Midway, and Magazine Luiza holds 50% of Luiza Cred, with Itaú Unibanco owning the other half. Among privately held chains, department-store chain Pernambucanas owns Pefisa.
Still, Donatti said store financing remains one of the few sources of credit available to some consumers.
“There is a consumer who is outside the banks’ radar, and retailers need to provide capital to that person for the sale to happen. The issue is that a more conservative approach became necessary, especially among finance companies linked to retailers,” he said.
Donatti expects these businesses to remain cautious when originating credit, adjusting limits and repricing risk while continuing to prioritize asset quality and profitability.
Riachuelo strategy
At Riachuelo, which Fitch sees as currently having a less restrictive credit policy than its peers, provisions for doubtful accounts rose faster than the average among the six retailers surveyed.
Its 15-to-90-day delinquency rate, however, was stable from April through June at 3.8%, while the rate for balances more than 90 days overdue increased from 26.8% to 28.4%.
Net provisions after recoveries and discounts represented 5.1% of the total portfolio, compared with 5.3% a year earlier. The slight decline in the ratio reflected faster growth in the portfolio.
“This result highlights improved provisioning efficiency as the portfolio expands,” Riachuelo said in a statement to Valor.
Asked whether it would maintain its strategy in the near term despite high interest rates and heavily indebted households, Riachuelo said improvements in its credit models allow it to expand lending. The company pointed to better delinquency indicators at shorter maturities, in contrast with some other chains.
“We intend to maintain this dynamic, while still taking a conservative stance, adjusting supply based on our reading of the market and the performance of new vintages.”
C&A provisions
C&A increased its provisions against credit losses by 22%, from R$52.1 million in June 2025 to R$63.7 million a year later, while its credit portfolio grew 6%. Total overdue balances increased slightly faster, by 7.3%.
Credit-card delinquencies reached 15.4% from April through June, the highest level since the third quarter of 2024 for balances more than 90 days overdue.
Still, the company’s overall delinquency rate fell to 4.4% in the second quarter of 2026 from 4.8% a year earlier. Net credit losses after recoveries also edged down 0.9%.
Asked whether it planned to maintain tighter lending standards, C&A gave no indication of a shift.
“We have internal models that help us forecast future delinquency and, based on that, since last year we have made adjustments to our lending policy in anticipation of this deterioration in the macroeconomic environment,” the company said in a statement to Valor.
C&A added that it seeks the best possible balance between serving customers and protecting profitability. Its figures show net revenue rose 1% in the first half, while gross margin increased 1.5 percentage points to 57%.
Sales trade-off
Retailers could theoretically expand credit to support a stronger sales recovery this year. All major publicly traded fashion chains saw revenue growth slow during the World Cup quarter.
For now, however, the high cost of getting that decision wrong has pushed the option aside.
Renner said in a statement that a more aggressive lending policy could provide some short-term benefit to sales, but that the gain would not compensate for greater vulnerability in a difficult macroeconomic environment. The company said conditions would need to improve consistently before it reconsidered its policy.
The fashion retailer kept its credit assessments cautious this year, helping reduce its portfolio by 1% from a year earlier to R$6.4 billion as of June. Its provisions for doubtful accounts were also stable.
But the more recent portion of its delinquent portfolio deteriorated: balances overdue by 31 to 89 days rose from 20.9% of the relevant portfolio in June 2025 to 24.2% in June 2026.
“We remain conservative in extending credit. Although delinquency is under control and our short-term indicators remain healthy, the macroeconomic environment still calls for caution, particularly among the most financially pressured income groups,” the company said.
Magalu portfolio
Magazine Luiza has taken a broadly similar approach. Its credit portfolio grew just 1.8% from a year earlier to R$20 billion as of June, below inflation, while provisions declined 0.9%.
Total overdue balances also accounted for a smaller share of the portfolio, falling by just over 10% in a year. Unlike at the other retailers, short-term delinquencies of 15 to 90 days declined.
The cautious credit stance has an impact on sales, given the sector’s heavy reliance on financing to support growth. But for Magazine Luiza, that trade-off is consistent with its current strategy of pursuing growth while prioritizing profitability.
Deal follows agreement between government and congressional leadership that also unlocked other priorities; however, concentrated legislative push ends without constitutional amendments finalized
Congress exempts from taxes foreign purchases up to $50 — Photo: Carlos Moura/Agência Senado
Brazil’s Congress voted to make permanent a presidential decree (MP) on Thursday (3) exempting foreign purchases of up to $50 from federal taxes—better known as the “blusinhas tax.” The move delivers on an agreement between President Luiz Inácio Lula da Silva (Workers’ Party, PT) and the presidents of the Senate, Davi Alcolumbre (Brazil Union of Amapá), and the Chamber of Deputies, Hugo Motta (Republicans of Paraíba).
Alongside the blusinhas measure, the talks also covered approval by the Senate’s Constitution and Justice Committee (CCJ) of proposed constitutional amendments (PECs) on public security and the six-day workweek.
The legislative process, however, was neither smooth nor fully complete. The public-security PEC, for instance, advanced only as far as approval of its main text, with three amendments still pending; the proposal isn’t expected to return to the floor until after the elections. The “blusinhas” vote, originally scheduled for Tuesday (1), required lengthy negotiations over compensation for affected sectors. There was also some expectation that the 6×1 proposal might reach the floor, though Alcolumbre had made no commitment to that effect.
The week’s results underscored both the administration’s ability to coordinate with congressional leadership and the limits of that coordination. The government managed to advance an agenda with strong political and economic appeal, while Alcolumbre and Motta delivered part of their agreement with Lula without committing to every subsequent step.
In the Senate especially, the partial progress of the two constitutional amendments showed that political agreement doesn’t guarantee floor approval. Still, concentrating votes during the “concentrated effort” week gave the government a measure of legislative visibility at a moment when it was rebuilding ties with leadership in both chambers.
The six-day workweek proposal cleared the CCJ and was sent to the floor under a special expedited timetable. The text cuts the maximum workweek from 44 to 40 hours and guarantees two paid days of rest, with no reduction in wages. A floor vote is now expected sometime between the first and second rounds of the elections.
The public-security PEC likewise advanced only partially. The CCJ approved the main text of the report by Senator Rogério Carvalho (PT of Sergipe) but left three amendments pending—among them a provision, since removed, that would have directed revenue from betting companies to public-security funds.
The blusinhas measure required even more prolonged negotiation, moving forward only after two days of talks over compensation for affected sectors. Its approval in both chambers stood as the week’s central legislative achievement. The Institute for Retail Development (IDV) said in a statement that it was “deeply concerned” about the measure’s passage, arguing that it restored “a serious asymmetry in the tax burden” between goods imported via foreign platforms and those manufactured in Brazil.
Beyond this package, Congress approved two additional provisional decrees during the week. One was the Move Brasil MP, launched in May alongside other initiatives aimed at audiences more sympathetic to the opposition.
It authorizes up to R$30 billion in financing to help taxi drivers and app-based drivers replace their vehicles and was expanded to cover school-transportation workers as well. After the loan program struggled to gain traction, the government had already extended the maximum financing term from 72 to 84 months and raised the maximum eligible vehicle price from R$150,000 to R$200,000.
Lawmakers also approved a provisional decree aimed at reducing case backlogs at the National Social Security Institute (INSS), capping off a week of concentrated legislative activity in which the government and congressional leadership advanced several proposals with significant political and social weight—even as some commitments were left for later.
Alexandre de Moraes’s request alleges abuse of authority and political targeting after André Mendonça unsealed a report citing messages from former Banco Master owner Daniel Vorcaro
Alexandre de Moraes — Photo: Brenno Carvalho / Agência O Globo
Supreme Court Justice Alexandre de Moraes has asked for fellow Justice André Mendonça to be investigated for alleged abuse of authority, administrative misconduct and impeachable offenses.
Moraes also accuses his colleague of compromising judicial impartiality and favoring political groups in investigations into Banco Master and fraud involving Brazil’s National Social Security Institute (INSS).
The request, sent to Supreme Court Chief Justice Edson Fachin, came two days after Mendonça unsealed a Federal Police report citing messages sent by former banker Daniel Vorcaro, Banco Master’s owner, to a contact attributed to Moraes. In the messages, Vorcaro sought to interfere with and obtain information about investigations that led to his arrest in November last year.
The episode triggered an unprecedented crisis at the Supreme Court, which has now intensified with the request for an investigation into Mendonça.
Mendonça did not immediately respond to requests for comment.
Call for investigation
Moraes used the so-called fake news inquiry, which he has overseen since 2019, as the basis for requesting the investigation.
In the decision sent to Fachin, Moraes said he ordered Federal Police Director-General Andrei Rodrigues on Tuesday (Sept. 1) to provide intelligence reports produced “in response to the need to document numerous irregularities and illegal acts” in the handling of Operation “Sem Desconto”, involving the INSS, and Operation Compliance Zero, involving Banco Master. The decision does not make clear whether the Federal Police produced the reports on its own initiative.
Moraes said the irregularities identified by the Federal Police indicated that Mendonça sought to “steer the production of evidence toward falsely accusing Supreme Court justices of crimes, expressly naming Justices Gilmar Mendes, Dias Toffoli, Luiz Fux, Alexandre de Moraes and Nunes Marques, as well as the prosecutor general and the director-general of the Federal Police.”
The information provided would also have shown a series of alleged irregularities, Moraes said, including the “usurpation” of the police authorities’ “control over the investigations,” improper handling of plea-bargain negotiations and the steering of investigations toward specific targets for political reasons. Those alleged targets included Moraes himself and Senate President Davi Alcolumbre (Brazil Union Party).
Evidence challenge
In addition to potentially leading to an investigation into Mendonça, Moraes’s request could result in evidence gathered in the Compliance Zero and Sem Desconto operations being invalidated.
Among other issues, Moraes challenges the chain of custody of the evidence — the set of procedures established under Brazil’s Code of Criminal Procedure governing how evidence collected in criminal cases must be handled, preserved, processed, stored and disposed of.
Moraes argues, for example, that measures ordered by Mendonça, such as granting early access to raw data extracted from devices before the Federal Police had filtered the material and verified its authenticity, breached the chain of custody and harmed “the criminal investigation, including by allowing several leaks.”
He said a Federal Police intelligence report found that Mendonça’s decisions in the two cases could, in theory, have amounted to “usurpation of the police authorities’ control over the investigations, with a clear loss of impartiality due to ‘growing indications of bias in the conduct of judicial oversight, reflected in increasingly intense thematic steering toward a specific investigative line,’ as well as a breach of the chain of custody of the seized evidence.”
Moraes also accuses Mendonça of acting for personal and political reasons. One indication, he argues, is that Mendonça allegedly steered the investigation toward particular targets, including Alcolumbre. Moraes also refers to himself in the third person in several passages of the decision.
“The Federal Police points to several actions by the reporting justice, André Mendonça, that, in theory, constitute administrative misconduct, impeachable offenses and abuse of authority, including the targeting of specific individuals for investigation for personal and political reasons, in an attempt to incriminate Justice Alexandre de Moraes and Senator Davi Alcolumbre,” one passage of the decision says.
Moraes says neither the Federal Police nor the Prosecutor General’s Office (PGR) accused him of committing crimes. He argues that Mendonça therefore sought to investigate him in an effort to uncover criminal offenses that could be used against him.
Fachin’s review
Shortly after Moraes’s order became public, Fachin requested information from Moraes, Mendonça, the PGR and the Federal Police about the report citing Vorcaro’s messages.
The measures are intended to establish the full circumstances surrounding the production of the report ordered by Mendonça on conversations found on Vorcaro’s phone that exposed his relationship with Moraes.
The chief justice wants to review all the information before submitting the report to the Supreme Court’s full bench to discuss what steps should be taken, including the possibility of opening an investigation into Moraes.
Among the information Fachin requested were details on compliance with the Judiciary Organic Law, any access to private documents or confidential information, and the circumstances surrounding a police operation. Fachin also wants clarification on the conditions under which Mendonça ordered the report to be produced.
Police presence
Before the crisis escalated, the court’s longest-serving justice, Gilmar Mendes, said he had suggested to Fachin that Federal Police officials be barred from working in justices’ chambers.
Mendes said such arrangements tend to influence the handling of investigations overseen by Supreme Court justices. He also said he considered such close relationships between investigators and judges inappropriate.
Four Federal Police officials currently work at the Supreme Court. Two are assigned to Mendonça’s chambers. Moraes is also assisted by one, while another works in the court’s security division.
On Thursday (Sept. 3), as he left the Senate chamber, Alcolumbre was asked about Moraes’s request concerning Mendonça. He said he was unaware of the decision.
“I don’t know anything about it. I don’t know what the decision was,” he said.
(Gabriela Guido contributed reporting.)
*By Tiago Angelo, Giullia Colombo and Mateus Coutinho — Brasília
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