Tremor in the Brazilian stock market after the detection of millionaire “accounting inconsistencies” in the American company

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The scandal prompted the resignation of the company's president and could affect three of the richest men in the country

Tremor in the Brazilian stock market after the detection of millionaires “accounting inconsistencies” in the American company

People walk in front of a Lojas Americanas store in Brasilia (REUTERS/Ueslei Marcelino)

The announcement of “inconsistencies” for 3.9 billion dollars in the accounts of Americanas, one of the stores most important retailers in Brazil, rattles the stock market and could hit three of the country's richest men.

The online and brick-and-mortar retail giant said Wednesday it had found “accounting inconsistencies” related to 20,000 million reais that correspond to financing of purchases that are not “correctly reflected” in their numbers.

The firm apparently did not record debt with financial institutions contracted to pay for purchases from suppliers on its balance sheets, according to accounting expert Silas Degraf, a professor at the Santa Cruz de Curitiba University (south), on his YouTube channel.

“Everything indicates that we are facing a very well-crafted case of lack of transparency for the benefit of the company and its shareholders,” he told the agency AFP Marcello Marin, finance director of Spot Finanças, specializing in accounting and financial management. “I don't think it was a robbery, but a fraud to reduce the company's debt and consequently increase its value, with which the shareholders and the company earn more and more in the financial market”, he added.

Anand Kishore, investment manager Daycoval Asset's investment funds, assured that the situation “does not have a cash effect for American stores, but it should have an accounting effect on the balance sheet” of the company.

Tremor in the Brazilian stock market after the detection of millionaires “accounting inconsistencies” in the American company

Photo of the Lojas Americanas logo on a store in Brasilia (REUTERS/Ueslei Marcelino)

Billionaire owners

Scandal prompted resignation on Wednesday from the president of the company, Sergio Rial, and André Covre, director of Investor Relations, who had assumed their positions on January 2.

Rial said he was stepping aside because the company's numbers gave him prevented from executing its capitalization plans to pay off the firm's gross debt, which he estimated between 30,000 and 35,000 million reais (between 5,800 and 6,800 million dollars at current exchange rates).

Rial will continue as an advisor to some shareholders, including Brazilian billionaires Jorge Paulo Lemann, Marcel Telles and Beto Sicupira, who own about 30% of the company through investment company 3G Capital.

Tremor in the Brazilian stock market after the detection of millionaires “accounting inconsistencies” in the American company

Jorge Paulo Lemann (REUTERS/Lucy Nicholson)

The three are in the Top 5 richest Brazilians in 2022, according to Forbes magazine >: Lemann is the first, with a net worth of about 14,000 million dollars; Telles is the third, with 9,300 million; and Sicupira is fourth, with 7,700 million.

“It will surely impact them, but they will not stop being the richest in Brazil,” says Marin.

The scandal in Americanas led the Securities and Exchange Commission (CVM), which regulates the capital market, to open on Thursday three administrative processes “to clarify the facts” and warned of sanctions for those “possibly responsible”.

Flosh on the stock market and investigations

On behalf of the minority shareholders, the Brazilian Association of Investors (Abradin) prepares a legal complaint, because it considers that investors were “deceived”.

“This situation affects the entire national economy, because it undermines the credibility of the Brazilian capital market” , affirmed Aurelio Valporto, president of Abradin, in statements collected this Monday by the newspaper O Globo.

The Administrative Council of the company, on his side, created an independent committee “to ascertain the circumstances that caused such accounting inconsistencies.”

Tremor in the Brazilian stock market after the detection of millionaires “accounting inconsistencies” in the American company

Archive photo of a fall in the Ibovespa index on the Sao Paulo stock market, Brazil (EFE/Sebastiao Moreira)

Founded in 1929 in the city of Niterói, in the state of Rio de Janeiro (southeast) , and in the digital market since 1999, Americanas is listed on the São Paulo stock exchange.

On Thursday, a day after the inconsistency in the numbers was reported, the papers of the company, with 3,601 stores in 900 Brazilian cities, fell 77 percent.

On Friday they recovered almost 16%, but on Monday they fell 38 .41%, dragging down the Ibovespa, which lost 1.54% to 109,212 points.

“The Sao Paulo Stock Exchange was no longer in such good shape to go through that impact without suffering. It had already been falling due to instabilities, mainly due to the entry of a new government (that of the leftist Luiz Inácio Lula da Silva) with new plans and very different from the previous one (that of the far-right Jair Bolsonaro)”, explained Marin.

< p class="paragraph">(By Rodrigo Almonacid – AFP)

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