BNDES confirms funding contracts with rancher arrested under Operation Car Wash

The National Development Bank (BNDES) has verified that it provided financing for companies owned by rancher José Carlos Bumlai, arrested Tuesday (Nov. 24) by Federal Police as part of the 21st stage of Operation Car Wash. The bank explained that it entered two types of financing transactions with Grupo São Fernando, the corporate group the businesses belong to—one contract for direct lending and one with a third-party, signed between 2008 and 2012.

One of the companies, São Fernando Açúcar e Álcool Ltda, headquartered in Dourados, Mato Grosso do Sul, received $106 million from BNDES to fund a sugar and ethanol plant. In addition to the credit made directly available from BNDES, an indirect contract was signed with another company of the same group, São Fernando Energia, for $27.3 million, to implement production processes at São Fernando Açúcar e Álcool. Under this contract, the funds were funneled to the company through third-party financial agents, Banco do Brasil and BTG.

“As usual in this type of operation, Banco do Brasil and BTG acted as intermediaries responsible for carrying out credit analysis and meeting the credit risk. The funds were made available to São Fernando pursuant to all BNDES policies, to the highest integrity and compliance standards,” BNDES said, explaining that this is the usual operating model in the sugar and ethanol industry.

The bank went on to maintain that, contrary to media reports, the company entry in the Federal Revenue Service registry was that of an active business when the contract was signed. Moreover, the bank argued, it is not accurate to say that the funding was channeled to a company that had fewer than ten employees. “No judgment as to the operation or staff size of a cogeneration unit should be made without regard to the overall plant operation,” he said.

BNDES assured that all transactions adhered to its internal policy, affirmed it has collateral to cover the debts, and said credit recovery is under way. “We're pursuing all [appropriate] legal remedies, including debt enforcement by seeking liquidation of São Fernando,” the bank said.

Testimony called off
In another development of the case, the testimony of rancher José Carlos Bumlai to the Congressional Committee of Inquiry (CPI) that investigates BNDES in the Chamber of Deputies was postponed to next Tuesday (Dec. 1st) due to Bumlai's arrest last Tuesday (Nov. 24). Deputy Marcos Rotta, chair of the CPI, said he agreed with Sérgio Moro, the judge presiding over Operation Car Wash, that Bumlai would give testimony at the Chamber of Deputies next week.

Translated by Mayra Borges