Waiting for payment

PEC-12, which has passed the Brazilian Senate and is now in the lower house, also allows governments to change the order in which debts are paid. Governments could use one chunk of the allocated money to pay the smallest precatorios, regardless of what year they were issued. Holders of the remaining, higher-value precatorios could enter a reverse auction, in which they offer to accept a partial payment. Those offering the state or city the greatest savings “win.”

Critics, of which there are many, mock the amendment by saying it would legalize government “calote” (ka-LOW-chee) a colorful Portuguese word meaning non-payment of debt. Marcal calls it an “insane solution,” and said he would like to see federal intervention lead to a responsible plan that would pay off all debts in 10 years or less. (The federal government is currently up to date on its own precatorio payments.)

But the senate passed the proposal unanimously, and many governors and mayors support it as well, seeing it as a way to protect their governments against potentially crippling debts for which they blame their predecessors. Sao Paulo Governor Jose Serra — who polls show to be the leading pre-candidate for next year’s presidential elections — has made statements in the past implying he supports the amendment, but despite repeated requests from GlobalPost, his press office did not respond to questions about his position or the state’s precatorio debt.

Politicians, pensioners and victims like Vera Alice de Oliveira are not the only people with a stake in the proposed amendment. A sophisticated market has developed for investors to buy precatorios from citizens at a fraction of their current worth, sometimes as little as 10 percent or 20 percent. When — and if — the government pays, they cash in. You can see the process at work in the 12th floor of a nondescript high-rise building in the center of Sao Paulo, where records of 42,000 unpaid state and city cases are overseen by five full-time judges. The lawsuits are matters of public record, so precatorio-buying companies send workers armed with digital cameras to request and snap photos of the files; they then contact the precatorio holders to make an offer.

Sometimes, the companies have other plans in mind for the precatorios they buy. In one random unpaid case picked from the shelves, a group of police widows had sued the state in the 1990s when they hadn’t received pensions they were owed. Documents inserted in the file showed that several widows had since sold their precatorios to a petrochemical company in Rio de Janeiro. According to one of the judges, companies with unpaid tax bills to the state of Sao Paulo buy precatorios at cut rates and attempt to turn them in to the state for a tax credit for the full value, thus saving a tidy sum.

Both Marques and Oliveira have been offered cash for their precatorios. In Marques' case, two different companies called to offer him around $10,000 — about a quarter of what he is owed. Oliveira, whose precatorio is older and thus closer to being paid (under the current chronological payment system), was offered about half.

They refused. “I don’t accept these things,” Marques said. “I think we need to fight more.”

But he has the advantage of being financially secure. That’s not the case with the 51-year-old Oliveira, a former housecleaner and babysitter who, after her son was killed, moved with her other three children into her sister’s modest home in the city’s working-class Capao Redondo neighborhood. Oliveira almost accepted an offer for her precatorio when a grandson was born in 2006 with a cleft lip and palate and required surgery. These days, she herself has been putting off a needed operation. And just last Monday, she was laid off from her latest job in a candy factory. But she still said she would hold out for the full payment.

Meanwhile, as PEC-12 advances, Austin Ratings, a Brazilian credit classification company, recently threatened to lower Sao Paulo state’s credit rating if the constitutional amendment is passed. That caused Jose Serra to lash out against the company in the local press.

But credit ratings and constitutional amendments seem a world away from the crowded home where Oliveira lives, on a run-down block where neighborhood dogs play under jerry-rigged power lines.

“The guys with ties never go to jail,” she said. “They are the worst thieves. Meanwhile, honest people lose their children because of stupidity.

“Sometimes I’m embarrassed to say I’m Brazilian.”

More GlobalPost dispatches from Brazil:

Where "Survivor" contestants battled

How much do you know about Brazil?

Adventures in Brazilian bureaucracy 

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