The Brazilian Connection

When a payment of $2 billion is received for a political favor, it is generally considered a bribe. When the United States government hands out a $2 billion loan as a political favor, it is business as usual. But it is no less corrupt. Witness a little transaction I shall refer to as "The Brazilian Connection".

The first player in the Brazilian Connection is The Export-Import Bank of the United States (better known as the Ex-Im Bank).

It was founded by FDR back in 1934, and has been changed over the years. From Wikipedia:

It was established in 1934 by an executive order, and made an independent agency in the Executive branch by Congress in 1945, for the purposes of financing and insuring foreign purchases of United States goods for customers unable or unwilling to accept credit risk. The mission of the Bank is to create and sustain U.S. jobs by financing sales of U.S. exports to international buyers. The Bank is chartered as a government corporation by the Congress of the United States; it was last chartered for a five year term in 2006.

The Ex-Im Bank's current stated mission, from the Ex-Im Bank's website:

The Export-Import Bank of the United States (Ex-Im Bank) is the official export credit agency of the United States. Ex-Im Bank's mission is to assist in financing the export of U.S. goods and services to international markets.

Ex-Im Bank enables U.S. companies — large and small — to turn export opportunities into real sales that help to maintain and create U.S. jobs and contribute to a stronger national economy.

But who owns the Ex-Im Bank? The second player in the Brazilian Connection: President Barack Obama. From Section 4 of the bank's charter:

The Export-Import Bank of the United States shall have a capital stock of $1,000,000,000 subscribed by the United States. Certificates evidencing stock ownership of the United States shall be issued by the Bank to the President of the United States, or to such other person or persons as the President may designate from time to time, to the extent of payments made for the capital stock of the Bank.

In case you doubt that Barack Obama is running the show at Ex-Im, consider that Fred Hochberg is currently the Chairman and President of the Ex-Im Bank. Mr. Hochberg was also a member of Obama's transition team. Mr. Hochberg gained his position at Ex-IM Bank in January 2009. Mr. Hochberg is also the third player in the Brazilian Connection.

This leads to the fourth player: Petrobras, a Brazilian oil company. From an Ex-Im Bank press release:

In May [of 2009], Ex-Im Bank approved a $2 billion preliminary commitment to encourage purchases of U.S. goods and services by Petroleo Brasileiro S.A. (Petrobras), Brazil's national oil company. The amount of a final commitment may be increased above the $2 billion preliminary amount. Petrobras anticipates that it will invest $174 billion in development over the next five years.

Who stands to benefit from that investment in Petrobras? Anyone invested in Petrobras will. I personally hold 100 shares in my retirement portfolio. But that is nothing compared to what George Soros, our fifth player, holds (from Bloomberg.com from August 15, 2008):

Billionaire investor George Soros bought an $811 million stake in Petroleo Brasileiro SA in the second quarter, making the Brazilian state-controlled oil company his investment fund's largest holding.

As of June 30, the stake in Petrobras, as the Rio de Janeiro-based oil producer is known, made up 22 percent of the $3.68 billion of stocks and American depositary receipts held by Soros Fund Management LLC, according to a filing with the U.S. Securities and Exchange Commission.

Soros still holds that stock.

It is also common knowledge that Soros has personally contributed to Barack Obama's presidential campaign, as well as supporting Obama via third party groups such as Moveon.org.

According to the Petrobras Form 6-K, filed with the SEC for the month of May 2009, the Ex-Im Bank's financing was approved on April 29, 2009.

First unanswered question: When did Ex-Im Bank begin negotiations with Petrobras for the financing? If the negotiations began this year, then it is probable that Hochberg MIGHT have initiated them at Obama's direction.

The final unanswered questions: Did Soros and Obama, either directly or through intermediaries, ever discuss the Petrobras deal with Ex-Im Bank? If not, then this is an amazing coincidence. If so, when? The answer to this question is the difference between insider trading and political favoritism, of which one is illegal and the other is despicable.