Rousseff, Allies Mobilize Against Opponents of Economic Policies

Firing of Bank Analyst and Injunction Against Banco Santander Unit Tied to Criticism

SÃO PAULO—With a drumbeat of negative economic news weighing on Brazilian President Dilma Rousseff’s chances at a second term, her administration is testing a new strategy: shoot the messenger.

In recent days, pressure from the ruling party has resulted in the firing of a bank analyst and a court injunction against a financial research firm; both had warned clients of possible stock market declines if Ms. Rousseff is re-elected in October.

Such views are widely shared by economists, who’ve repeatedly downgraded Brazil’s growth prospects in recent months. Ms. Rousseff’s rivals have stepped up their attacks on her economic policies.

Now, with just over two months until the election, Ms. Rousseff’s administration and the ruling Workers’ Party have gone on the offensive, accusing some in the financial sector of piling on the president to benefit the opposition, which is viewed as friendlier to business.

The head of the Workers’ Party last week criticized as “electoral terrorism” one bank’s research report predicting a market selloff. Ms. Rousseff told reporters early this week that she would complain personally to the president of the bank, the Brazilian unit of Spain’s Banco Santander. Meanwhile, her political mentor, former President Luiz Inácio Lula da Silva called on the institution to fire the author of that report, who was eventually sacked.

Santander, which earned almost $2.5 billion in Brazil last year, posted a note on its website apologizing to customers. Chairman Emilio Botín said Tuesday that the bank had fired the unnamed analyst because the employee “made a mistake.” A person inside the company who asked not to be identified said that other employees involved with the letter had been sacked as well.

The developments are already having a chilling effect on financial institutions. Employees of several firms told The Wall Street Journal that they are scrubbing political references from research notes rather than risk the administration’s wrath.

Mailson da Nobrega, a former Finance Minister of Brazil, said it is a worrisome development that could hurt investors if economists censor themselves for fear of reprisals.

“This could lead to a decrease in the quality of economic analysis in Brazil,” said Mr. da Nobrega, who now runs the Tendencias think tank in São Paulo. “By all counts, we have to lament this episode.”

A spokesman for the government wouldn’t comment.

The dust-up began last week when a newsletter sent by Santander in the bank statements of thousands of high-income clients was made public. In a column dubbed “You and Your Money,” Brazil’s fifth-largest bank said recent stock market gains could fizzle if Ms. Rousseff begins moving up in public opinion polls.

That projection is similar to those put out by other analysts; the nation’s Ibovespa stock index has, in fact, rallied when polls numbers have shown Ms. Rousseff’s popularity slipping and declined when she has regained ground. But this time, the president and her backers were swift to denounce the letter as political meddling.

“It’s unacceptable for any country to accept any level of interference from any member of the financial system…in electoral and political activity,” Ms. Rousseff told reporters.

Mr. da Silva was less restrained. At a meeting of union metal workers on Monday night he said the analyst “doesn´t understand s— about Brazil and about Dilma’s administration. You can fire her and give her bonus to me.”

It isn’t the first time that Santander has dismissed an employee following a run-in with Ms. Rousseff’s administration. In 2011, the bank fired its chief economist, Alexandre Schwartsman, following a much-publicized spat with the head of state-controlled oil giant Petrobras over the use of new stocks sales to help fund the government’s operations.

Santander and Ms. Rousseff’s office declined to comment. But Mr. Schwartsman said the administration is trying to distract voters by criticizing analysts instead of tackling the nation’s economic woes.

“The government has chosen to break the thermometer rather than attack the fever,” said Mr. Schwartsman, who now heads his own São Paulo consulting group, Schwartsman & Associados Consultoria Econômica.

Other analysts also have come under fire in recent days.

Finance Minister Guido Mantega rebuked the International Monetary Fund this week for a report characterizing Brazil’s sluggish economy as “fragile.”

Meanwhile, a coalition of political parties led by the Workers’ Party, obtained a court order forcing a São Paulo financial research firm to stop an Internet advertising campaign that it claimed disparaged Ms. Rousseff.

Empiricus Research touted its research to investors under the headings “Know how to protect your assets if Dilma is re-elected” and “Which stocks should go up if Aécio wins the election,” a reference to Ms. Rousseff’s main challenger, Aécio Neves of the Brazilian Social Democratic Party.

Brazil’s complex election laws prohibit paid electoral advertising on the Internet and limit some types of criticism of candidates. Electoral Court Minister Admar Gonzaga said the Empiricus campaign was “possibly imbalanced.”

Rodolfo Amstalden, one of the firm’s partners, said Empiricus hasn’t yet decided whether it will fight the injunction. However, he contends the firm wasn’t stumping for one candidate or another, rather just dispensing advice based on the two most likely elections outcomes.

“We felt violated in our right of expression,” Mr. Amstalden said. “This wasn’t a political campaign. We have more than 200,000 clients and our responsibility is to inform them.

Fonte: The Wall Street Journal

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