The downfall last week of former finance minister Antonio Palocci, for three years the strongman of the Brazilian government, came as a shock to the banking community, leading bankers told Emerging Markets. Executives have expressed saudade – a very Brazilian feeling combining sadness with fond nostalgia – at the demise of Palocci, who faces criminal charges after his interrogation tomorrow by federal police following the violation of banking secrecy laws during a corruption investigation. “Unfortunately, people have not managed to separate the economy from [Palocci’s] private life,” said Marcio Cypriano, president of Bradesco, Brazil’s largest private bank. “As far as the economy is concerned, he has done a brilliant job, and really, he will be missed.”
“Even though he was a trained doctor, he had become one of the best finance ministers in Brazilian history,” said Bernard Mencier, president of the local subsidiary of BNP Paribas.
Brazilian political history is rich in spectacular reversals of fortunes, but no one had anticipated such a precipitous fall for one who had become the darling of the business community thanks to his performance over the past three years.
Unfortunately, the success story proved too good to be true. It turned sour as Palocci’s past came back to haunt him, said Mencier. “He was really caught red-handed, so to speak. So I really don’t know what is going to happen to him now,” said another European banker.
Shortly before his resignation, Palocci himself confessed that he was amazed how quickly he had gone from “plain sailing on the economic front to Dante’s hell.”
The former politician is likely to be charged for using the state machine to his own benefit. Two senior justice ministry officials said that they had been called to his house for a midnight meeting in mid-March. Palocci himself ordered banking secrecy violation, they say.