Brazil

Is Brazil, as the theory goes, too big to fail? We may never know, since whenever Latin America's largest economy gets in trouble, it also gets bailed out. Last year, the International Monetary Fund sent in $15 billion to protect Brazil from the aftershocks of Argentina's economic collapse. Last week, the IMF doubled up, putting together a $30 billion rescue package to both stabilize the troubled Brazilian economy and boost international faith in the rest of Latin America. The IMF hopes the package — its largest-ever in dollar terms — will break Brazil's downward spiral of plummeting currency values, rising debt and poor growth prospects. Crucially, the package has the support of the main political parties set to contest October's elections in Brazil. Under its terms, Brazil must maintain a budget surplus of 3.75% of gdp: if the winner of the election does not meet that target, Brazil would forfeit most of the funds, 80% of which have been deferred until next year. Although financial markets and the Brazilian real reacted positively to the IMF's actions — and to the apparent about-face of the Bush Administration, which has long argued against bailouts — some analysts said this latest package undermines efforts to find workable alternatives to crisis-lending. But for large investors in Brazil — like Spanish banks and telcos — the big bailout is a big relief.

FUND MANAGEMENT
Investors Stake Their Claim
The relationship between fund manager and client continues to take a litigious turn. Last week, the investment bank Merrill Lynch & Co. settled a dispute with the British supermarket group J. Sainsbury over alleged mismanagement of Sainsbury's pension fund. The undisclosed settlement helped Merrill avoid a repeat of its court battle last year with Anglo-Dutch concern Unilever, also over pension fund mismanagement. In that case, Unilever had alleged that returns on its pension fund had trailed the market by an amount larger than was permitted under the terms of its contract with Mercury Asset Management, which was acquired by Merrill in 1997. After almost two months in court, Merrill settled, paying Unilever a reported $115 million. Unhappily for Merrill, the outcome of these disputes has caught the attention of some of its other clients — including the British drugmaker AstraZeneca and England's Surrey County Council, which are said to be considering court action as well.

THE BOURSE
Adidas Score
Like the German team, Adidas is a World Cup winner. After investing heavily in sponsorship at the tournament, the German sportswear maker announced a 4% rise in quarterly profits.

Swiss Chef
Nestlé, the world's largest food company, has taken another bite out of the U.S. market. The Swiss giant acquired frozen-snack maker Chef America for $2.6 billion.

Called To Account
Shares in insurance broker Aon fell by almost 30% after it said it was the latest company to be questioned by the sec over accounting practices.

And There's More
WorldCom, already the biggest U.S. corporate scandal in history, said an internal audit has found a further $3.3 billion of improperly reported earnings, taking the total to more than $7 billion.

INDICATORS
Keeping It Together
Mergers — out of fashion after a decade of behemoth-building deals — may have unfairly acquired a bad reputation, according to a study by the Milken Institute, a California think tank. The research, which examined 276 takeovers by public companies over a 15-year period, found more than two-thirds of the deals led to increased efficiency, as well as savings of about $28 billion overall.

Drug Companies
Mining giant Anglo American will supply its workers in southern Africa with anti-aids medicine at no charge. The company, which debated the move for months and now faces a drug bill of up to $60 million annually, estimates that about 23% of its 134,000 workers in the region are hiv-positive. But BHP Billiton, another mining concern, criticized Anglo American, saying drugs alone would not solve the hiv crisis, and adding that it had no plans to follow suit.

Nothing Ventured
Retail investors, stung by sinking markets, have also turned away from venture capital. Individuals accounted for 11% of funds committed to venture capital in the U.S. in 2000, but only 9% in 2001. In addition, many investors defaulted midstream on their commitments, leaving some venture capital funds in the lurch.

BOTTOM LINES
"Staff are hugely enthusiastic about their jobs, they dress well. In all cases the performance in the U.K. is inferior."
Keith Whitson , HSBC CEO, on why his call centers in India and China are better than their British counterparts

"People used to write songs about T-Birds and Corvettes. Today they write regulations."
Bill Ford , Ford CEO, on America's floundering love affair with the car

"It's about bloody time. Far too much time and attention is paid here to environmental groups and not-in-my-backyard people."
Michael O'Leary , Ryanair CEO, welcoming Britain's airport-expansion plans