Brazil’s Congress to Probe Crisis at Retail Giant Americanas

Daniel Carvalho
·2 min read

(Bloomberg) -- Brazil’s lower house will investigate the events leading up to the financial crisis at Americanas SA, the retail giant that went into bankruptcy protection in January after unveiling a massive accounting hole of 20 billion reais ($4 billion).

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Speaker Arthur Lira authorized the creation of an inquiry committee on Wednesday and party leaders will now nominate representatives to lead the probe.

While former Chief Executive Officer Sergio Rial and the current top executive have testified in congress since the crisis exploded, a trio of billionaires who are the top shareholders of Americanas have remained largely quiet. The management team that ran the firm until the turn of the year has also refrained from making public comments.

While Americanas has remained operative without widespread firings or store closures due to a capital injection from top shareholders, the incident affected a long chain of suppliers. It has also contributed to tighter credit conditions in Brazil more broadly, as banks turn more conservative due to their exposure.

The billionaire shareholders, Jorge Paulo Lemann, Marcel Telles and Carlos Sicupira, said they were unaware of the accounting issues at the firm. Hedge fund Verde Asset Management, which held some local Americanas bonds, called the incident Brazil’s biggest fraud ever.

Americanas has made a restructuring offer and talks with banks, which are its largest creditors, have advanced with expectations of an agreement in the coming weeks, according to people familiar with the matter.

The investigation will add to the workload in congress, which is also seeking quick votes on the government’s new fiscal framework proposal. Finance Minister Fernando Haddad and Institutional Relations Minister Alexandre Padilha have been quick to say that the committee work won’t affect the government’s agenda in congress.

Earlier on Wednesday, Senate President Rodrigo Pacheco authorized the creation of a separate committee to probe the Jan. 8 insurrection attempt carried out by right-wing groups that refused to accept Jair Bolsonaro’s defeat in October’s presidential election. The committee will include members from both chambers of congress.

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