I remember when Latin America sent one of its tycoons to the top of the list of the world’s billionaires. Carlos Slim Helú, the Mexican telecoms-to-retail magnate, leapfrogged past Bill Gates and Warren Buffett in 2010 to become the richest person on earth.
Slim’s rise fits nicely into the story of what is the most inequitable region of the world — a continent where gargantuan wealth coexists with abject poverty. But he was hardly alone. In 2010, “Forbes” magazine, the global plutocracy’s official scorekeeper, counted nine Latin Americans among the world’s 100 top billionaires.
Among them was Eike Batista, a spanking new magnate from the Brazilian state of Minas Gerais. Nowhere on “Forbes”’s list just three years earlier, he was by 2010 the second-richest Latin American and the eighth-richest person in the world. And he was setting his sights even higher. “Slim had better clean his rearview mirrors because on one side or the other, I’m going to pass him,” he proclaimed to Charlie Rose.
Batista — Eike to Brazilians — portrayed himself as a different breed of titan, not a lucky scion, inheritor of past fortune, but a builder of empire. Unlike other rich Brazilians, he claimed, he didn’t make his money from government contracts and political connections. He was, of course, the son of Eliezer Batista, a former chief executive of Vale, Brazil’s state-run mining colossus. Yet he represented himself as the American-style entrepreneur of legend, pulling himself up by the power of his talent, will and perseverance.
Ultimately, though, Batista was peddling aspirations. Part visionary, part snake oil salesman, he may have thought of himself as a bona fide creator of wealth, unique amid Latin America’s coddled barons of industry and commerce. But what he sold, to eager investors at home and abroad, was Brazil’s dream of greatness. And just as Brazil’s dream collapsed, Batista’s billions evaporated.
The rise and fall of Batista is dramatically rendered in “Brazillionaires”, Alex Cuadros’s enjoyable, deeply reported account of Brazil’s outsize collection of tycoons. Cuadros, a young American journalist, spent the last six years in São Paulo, mostly as the “billionaires reporter” for Bloomberg News. His job included calculating and recalculating the wealth of titans such as the Marinhos of the Globo TV empire, of construction magnates such as the Camargo family and even of Edir Macedo, the founder of the Universal Church of the Kingdom of God.
This reporting provides the book’s backbone. But “Brazillionaires” offers more than a flat collection of billionaire tales. Cuadros shrewdly presents his collage of immense wealth against an underlying background of corruption. There are kickbacks for government contracts. There are gigantic taxpayer subsidies: in 2009 alone, the state-run development bank, BNDES, lent out $76 billion (Dh279 billion), “more than the World Bank lent out in the entire world”. And of course there are lavish campaign contributions, attached to the inevitable quid pro quos. JBS, which leveraged government loans to become the largest meatpacking company in the world, spent $180 million on the 2014 elections alone. “If every politician who had received JBS money formed a party,” Cuadros writes, “it would be the largest in Congress.”
In his telling, Brazilians seem to embrace the cosy relationship between business and government as a source of pride rather than a risk for conflicts of interest. In one passage, Cuadros underscores the contrast between Adam Smith and the 19th-century Brazilian thinker José da Silva Lisboa, viscount of Cairu. Lisboa’s “Principios de Economia Politica” was meant to be an adaptation of Smith’s “Wealth of Nations”. But rather than present a paean to the invisible hand of the market, the viscount offered a rather paternalistic view of economic progress.
“The sovereign of each nation must be considered the chief or head of a vast family,” he wrote, “and thus care for all those therein like his children, cooperating for the greater good.” Swap “government” for “sovereign” and the passage still serves as an accurate guide to the Brazilian development strategy. It’s just that some children — the Marinhos, the Camargos — are cared for better than others.
Of course, Cuadros notes wryly, the winners in this rigged race to the top cannot help believing in their own merits. The nation, they insist, prospers because of them. They deserve their station in life. In a revealing moment, Batista tells Cuadros, “What’s happening in Brazil is the Brazilian dream, and I happen to be the example.”
Batista is Cuadros’s main antihero, occupying most of the book’s second half. His virtue may have been timing. He burst on to the scene in 2008 just as Brazil seemed on the cusp of achieving its long-held aspirations to greatness, included alongside Russia, India and China in what came to be known as the BRIC countries. China was buying much of Brazil’s production of iron and soy. Foreign investors poured money in.
Batista wrapped himself in the flag. Backed with billions in subsidised loans from the state-run development bank, he sold himself as Brazil’s future.
By 2010, he had raised many billions of dollars from Brazilian and foreign investors for five of his companies. There was his mining giant, his power generator and his ports company. There was his manufacturer of platforms from which to drill for oil in Brazil’s vast newfound reserves under the Atlantic. And there was the crown jewel, a petroleum company.
The government in Brasilia loved Eike’s story, which fitted snugly into its plan to build up national champions, lavishly funded with subsidised credit, that could go head-to-head with the mightiest multinationals in the world. BNDES, the only lender in Brazil that charged single-digit interest rates, lent billions to Eike’s projects. And Eike loved the government back, providing lavish campaign contributions to President Luiz Inácio Lula da Silva and his successor, Dilma Rousseff.
When Batista’s luck turned sour — the oil wasn’t gushing quite as he had promised, a grand port project at Acu was years behind schedule — President Rousseff wasn’t in a position to bail him out. She became entangled in her own problems; this year legislators began impeachment proceedings against her for using the state-run banks to finance the government on the sly, and she ultimately let Batista go.
Brazil has stumbled from its decade of grace. China is no longer buying as much iron and soy. Money has been flowing out rather than in. The International Monetary Fund expects the economy to contract by 8 per cent between 2015 and 2017. And Batista has fallen from the “Forbes” list. But there are still 31 Brazilian billionaires, four in the top 100. Most, if not all, benefit in one way or another from the entanglement of business and political power.
It would be wrong, however, to understand Brazil’s plutocracy as the product of some unique outcrop of corruption. The hold on political power by the rich is hardly an exclusive feature of Brazil. Latin America has suffered for generations from the collusion between government and business. Where I grew up, in Mexico, it is the norm.
Indeed, Cuadros is too smart to claim any exceptionalism. “This book is about Brazil and about billionaires,” he writes, “but more than that, it’s about how wealth is accumulated in the modern world and the stories we tell ourselves to explain this process.”
American billionaires also like to talk about their contribution to the world’s prosperity, even as they pour money into American elections to purchase political power. “Amerillionaires” might not have to same ring to it. It would nonetheless ring true.
Eduardo Porter writes the Economic Scene column for “The New York Times”.
Recommended read: Brazillionaires: Wealth, Power, Decadence, and Hope in an American Country, By Alex Cuadros, Spiegel & Grau, 368 pages, $28
