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Kickback scandal darkens presidential palace

Dilma Rousseff set to become the “world’s most powerful woman.” Top minister to President Lula is sacked over bribery allegations. Ain’t No Harvard: abysmal education system could make Brazil the weakest BRIC. Brazil banker Lemann gobbles up Burger King. A clown runs for Congress.

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Candidate Dilma Rousseff is likely to become the next president of Brazil. The 52-year-old former left-wing rebel, who has never before run for office. is already being called the most powerful woman in the world. The election takes place Sunday.

Rousseff is expected to win handily despite an unfolding scandal. In mid-September, Brazilian president Luiz Inacio Lula da Silva was forced to sack his chief of staff, Erenice Guerra, after Brazil’s leading newsmagazine, Veja, published a damning expose of official corruption inside the presidential palace. The alleged scheme, complete with drawers full of cash, was classic pay-to-play: companies seeking government business were advised to pay millions in “fees” to a consulting company run by Guerra’s son.

And Erenice Guerra wasn’t merely some bureaucratic cipher. For years she acted as right-hand aide to Rousseff. In April, Guerra took over as chief minister when Rousseff stepped down from the job to run for president as Da Silva’s hand-picked successor.

The “September Surprise” scandal hits at the heart of Brasilia’s political machine and could complicate Rousseff’s victory. Although Rousseff retains a commanding lead, some polls show her ratings have slipped below 50 percent. Without an absolute majority in the three-way race, Rousseff would have to face voters in a run-off election a month later. That may provide an unwanted window for new revelations, such as whether the payoffs illegally funded political campaigns.

Brazil’s economic boom is a source of elation. But the country’s broken public education system could limit growth in the future. Brazilian test scores are abysmal—the country’s 15-year-olds know as much as 9-year olds in Denmark, the New York Times reports. Despite big spending on new education programs, Brazil’s primary education system is the “secret shame of a rising power” according to Global Post reporter Seth Kugel. Read part 1 and 2 of his series.

Some believe the education gap makes Brazil the weakest of the BRIC countries. And the worries extend to higher education. According to the US News & World Report rankings of the world’s best universities, no Brazilian school ranks in the top 200. Brazil’s top-rated school, University of Sao Paulo, comes in 254th in the survey. Of the top 10 universities in Latin America, three are Brazilian, but a Mexican university holds the top spot. Analysis by the CS Monitor is here.

A helicopter flight north of Rio de Janeiro, construction has begun on the Superporto do Açu, a $2.5 billion mega-port and industrial complex nicknamed the “Highway to China.” The Guardian calls the super-port “one of the most visible symbols of China's rapidly accelerating drive into Brazil.” Chinese will use the port to embark “millions of tonnes of iron ore, grain, soy and millions of barrels of oil” that their economy needs. The port is being built by Brazilian logistics company LLX, owned by billionaire entrepreneur Eike Batista.

Money:

Who will protect American junk food from financier Jorge Paulo Lemann? First the Brazilian billionaire engineered the take-over of Aunheuser Busch, maker of Budweiser. Now his 3G Capital will pay $3.3 billion to buy Burger King. The New York Times calls the deal one of those “emblematic transactions that seem to herald the emergence of a new global business player.” Bloomberg has a profile of Lemann, who also owns shares in Coca-Cola and Kraft Foods, maker of Cool Whip and Cheez Whiz.

Brazilian oil giant Petrobras sold $70 billion in new shares in what is being called thelargest ever stock offer in history. Following the transaction, Petrobras now ranks as the world’s fourth largest company by market value, trailing Exxon Mobil Corp., Apple Inc. and PetroChina Co.About $43 billion of the shares were traded to Brazil’s government in exchange for oil development rights. That will greatly increase government control over Petrobras. In fact, Bloomberg termed the transaction a “reverse privatization.” Investors don’t like the increasing government role. Petrobras shares are down more than 20 perccent this year.

Vale, the planet’s largest miner of iron ore—the main ingredient in steel--plans to list on the Hong Kong stock exchange. The WSJ reports the move “brings it closer to investors who are already familiar with the Chinese growth story.”  Vale’s profits depend increasingly on China’s booming construction market. Having Asian investors may also help cool off politically tense price negotiations with Chinese steel mills. For more on Vale, The Economist provides a detailed look.

Elsewhere:

Is Brazil a serious country? According to voters, the answer is “not necessarily.” Wacky candidates abound among the 6,000 hopefuls from 27 parties running for public office. They include “Grumpy” the clown (check out his political ad here) and a sexy 22-year-old known as “Pear Woman” (see her ad). Both hope to win seats in Congress by appealing to voters sick of official corruption.

A Roy Lichtenstein painting worth more than $1 million will be shipped back to Brazil and sold. The former boss of Banco Santos (sentenced to 21 years in prison for a financial scam) had managed to spirit it out of the country. More stolen treasure: a U.S. lawsuit will try to determine who really owns the world’s largest emerald. The Brazilian stone is worth over $300 million.

Dramatic video shows a bleacher collapse in Southern Brazil. More than 100 people were injured, many seriously. 

http://www.globalpost.com/passport/brazil/100929/kickback-scandal-darkens-presidential-palace