Buying Brazil (Buying Brazil Trilogy Book 1)

by Arthur Rawl

  Robin marched into my daydream, “I’m back, let’s call Juan. Hey, are they business thoughts you’re lost in? They better be, we don’t have time for anything else.”

  “Just thinking about my stepfather’s house … my house in England.”

  “It would be a great place for a honeymoon. Now let’s call Juan and start earning the rest of our money.”

  “Honeymoon …?”

  “That’s your damned problem. You spend so much time mentally walking back and forth over ground that started out as a paradise it ends up a barren wilderness. Stop it and marry her, hide in your old pile for several months, get her pregnant before you get too old and start living like a human being again. In all your dreams, you couldn’t do any better than her. My only question is what the hell she sees in you.”

  “She probably thinks I’m manageable.”

  “What’s new about that? Any woman worth the name can see that in under ten seconds.”

  “Thanks, I’ll call Juan before this gets out of hand.”

  Chapter 33

  The next morning Dieter’s information request concerning the sold real estate generated two answers, one via email and the other an invitation for me from the Senator for coffee that afternoon. The email contained a list of four properties with their location, size and the improvements built on them. A fifth property in Vila Lobos was also listed as unimproved. The email also said appraisal of the five properties was too large for email and copies would be hand delivered later this morning along with the requested schedule of carrying value and selling price for each property.

  When Robin and I called Juan to discuss the list he said the reason for the sale was the parcels were surplus and no longer in use by BrasTel. Two had been neighborhood mechanical switching stations that had been removed from service a number of years ago when the system was upgraded to electronic switching. The other two with buildings on them had been used as parts and service depots and were now vacant. The last property, the vacant land, was acquired as part of a plan, never executed, to expand the mechanical switching service to the northwest to meet demand that did not materialize until after electronic switching was in place.

  “After we get the appraisals Juan we will have another talk with Dieter to see where we would like to go from here.”

  “By the way, I suggest you have afternoon coffee before you speak to Dieter.”

  “Naturally, it will give Robin more time to look over the appraisals.”

  “Good, she should have them right after lunch. We will talk later, ciao.”

  “I’m quite sure we will, goodbye.”

  Turning to Robin while rubbing my chin, “Well, what do you think?”

  “Unconsciously, people in this sort of circumstance always put the most important thing last as a ‘by the way’ comment. That and your coffee invitation are about what they want to hide.”

  “Maybe it’s time to tell you something I didn’t tell you.”

  “Just one thing?”

  “One for now because it’s probably relevant but not here just to be safe. Tell Jóse Carlos I’d like to go somewhere simple for lunch. Somewhere we haven’t been before. He can tell us about the place when we are in the car on the way there.”

  “We should get out of here quickly if you plan to make your coffee invitation on time.”

  “I need five minutes.”

  “I’ll have him waiting in the garage and I’ll let the front desk know we’ll be out. The rules must be followed.”

  Closing the car door behind us ten minutes later, “Where are we going?”

  “There is a small café in Pinheiros no more than five minutes away. It is where I eat my lunch most days. No one there will know you, either of you and the light is very low so people pay no attention to other people. My mother’s sister runs it and no one speaks English so I will go in and help if you want.”

  “Sounds just right. What is the food like?”

  “Brazilian, some meat, some vegetables and some salad. You serve yourself but the waitress gets you drinks. The fruit drinks they make the are best.”

  About five minutes straight up the road from the office Jóse turned left into a poorly paved narrow side street just wide enough for two small cars to pass each other. The first block was small open-fronted businesses on both sides with the narrow sidewalks in front filled with splashes of color from whatever they were selling. The second block had modest two story stucco-covered cinderblock houses pushed close against the sidewalk. On the corner of the third block was a café with a covered front patio filled with tables, chairs and small groups of old men. We pulled into an unpaved lot just beyond the café and stopped next to a side entrance.”

  Robin looked around, “Great atmosphere, I’m glad you two nice big strong men are here.”

  “It is very comfortable inside and there is air conditioning on hot days”

  “Is today hot enough?”

  “The fans will be working.”

  Outside the last bits of paint were clinging to weathered wood. Inside there was polished dark wood paneling and neat tables with comfortable chairs. Yes, the lights were low but just enough to create a sense of intimacy the popular, big brassy restaurants in São Paulo sorely lacked.

  “Very nice Jóse, your mother’s sister has good taste.”

  Leading us to a secluded alcove with two small tables, “She will be pleased to hear your comments the next time I am here. You will have privacy. It is far away from the buffet table where most people try to sit so they can easily refill their plates.

  Robin and I sat down and Jóse Carlos moved the chairs away from the other table in the alcove, “I will tell the waitress you are here and then I will sit there close to the wall so I can keep people out of your corner.”

  The low hum of large overhead fans slowly moving the air filled with enticing aromas from cooking meat heavy with spices added warmth and hominess to the surprisingly large room. “I never would have imagined a place like this was literally around the corner from the office.”

  Robin chuckled, “Damned right on that one. I guess the worker bees have to eat someplace. All I want to know is when the food is ready.”

  Jóse Carlos reappeared followed by a young waitress sporting a crisp white apron over her jeans, “They just finished making limeade from ripe fruit that came from the Amazon this morning. It is tart and sweet at the same time. Should I order some for you?”

  Robin and I looked at each other and nodded at the same time, “Order two tall ones … when will lunch be ready?”

  “The salads are out now and the meats in five or ten minutes. I’ll show you and we can all get started.”

  We went around a corner and back toward where the smell of meat cooking was coming from. Along the wall was a twelve or fifteen-foot-long salad bar piled high with every imaginable kind of ingredient. There were even some that both Robin and I had never seen before however that didn’t stop us from piling our plates high and guessing which of the eight or nine available dressings to use.

  “Wow, what an opener.”

  Jóse Carlos started laughing, “Miss Robin, I thought you understood business. In Brasil salad costs less than meat and is very filling. The salad bar is a way for restaurants to control the cost providing a price fixed lunch to working people without a lot of money. Maybe you did not notice the meat serving table is much smaller than the salad table. It is for the same reason.”

  About half way through our salads we understood his economic lesson. Neither of us had interest in or room for the meat course and even decided to skip the small fresh fruit table that not long before looked so enticing.

  Finishing my explanation of my night trio to Villa Lobos, “You should have a better understanding why the interest in the Villa Lobos parcel. Perhaps more important, you have some insight into what this game is all about. It’s not about money. It’s about control and being sure whoever is in power has the information to exercise it when necessary. Who knows, some
day in the future the civil government will be under attack by one group or another and the dark glow of anarchy once again begins to rise above the horizon. Perhaps then we will see the Brazilian Military step in at the critical moment and bring calm as it did in nineteen sixty-four.”

  “Carl, it sounds like some dark fairy tale but yes, I see how you could piece it together from what’s happened. And they want us to stay here …”

  “Yes they do. They want us to help them work inside the system in ways that don’t call attention to certain people or groups. Whether true or not, they see themselves as the insurer of Brazil’s future political and economic stability. Someone told me an old anecdote ‘Brazil is the country of the future and always will be’. I think the General and his friends believe Brazil has the potential to become the country of today and they want it to happen even if they have to give it a nudge here and there along the way.”

  “This game is above the major leagues. Yeah it could be exciting to play but we both know when one team gets buried it’s not just a figure of speech, it’s for real. I’m not sure I’m up for this.”

  “You said when this deal is done you wanted to take time to think about what comes next. I wanted you to do it with the full picture in mind. Playing can be very rewarding but will require great sensitivity and care every minute. Jóse, I want to pay the bill. You can have them pack up some meat and anything else you want. We’re stuffed. We will start with the meat the next time.”

  “You will be missing the best part of the meal.”

  “I know … we’re not Brazilians and are used to the big meal at night.”

  “We eat a big meal at night sometime.”

  “Yes I know, in the middle of the night when we’re normally going to sleep.”

  “You have to become more Brazilian Sr. Carl if you are going to stay here.”

  “Oh really. Maybe I will continue to do some work here but I don’t think I will be here enough to become a good Brasiliero.”

  “I was hoping to have worked with you Senhor.”

  “You will, but you may enjoy more paid holidays than you are used to.”

  “Maybe when you are not here Sra. Robin will be.”

  “We have not planned that far in advance Jóse. We will see how things work out.”

  Robin stood up, walked over to Jóse and put her hand on his shoulder, “Don’t worry, whether we are here or not you will have work with us. It seems there will be a lot of things that could require attention.”

  We left Robin at the guarded front door of the office building and waited until she went in. Then we were off to the Jardims for my invitation to coffee with the General and a conversation I was having trouble imagining he and I having. However, it all became clear when I stepped off the elevator from the General’s underground garage and found Juan Batista standing there with an outstretched hand, “Hello Juan, it’s good to see you.”

  “Hello Carl, the General apologizes, he will be a few minutes late. We can take a walk around the garden while he is finishing his business.”

  “Certainly, I got the list of properties you sent over, thank you.”

  We walked in the opposite direction from the General’s office with Juan remaining uncharacteristically quiet. When out of sight of both the house and the office Juan stopped, “It seems like we are lost in the jungle instead of being in the middle of a city. Another Brazilian paradox. I’m sure you noticed the Vila Lobos property when you reviewed the list of properties. Let me confirm it is the location of the ‘technical center’ you visited.”

  “I assumed it was.”

  “Naturally … Perhaps you will recall during your visit you were told the equipment does not belong to BrasTel. Therefore, the equipment appears nowhere in BrasTel’s books and was not part of the assets acquired by the buyer.”

  “Yes, I remember being told the land and building belonged to BrasTel but the equipment did not.”

  “You requested information about the buyers of each parcel of land as well as how the selling prices were determined. The price of that parcel was set by an appraiser and was considered surprisingly high when the appraisal report arrived but the buyer decided not to negotiate. Its price is more than half of the value of all the properties being sold. Both the report and the appraiser can be made available if you wish to see them.”

  “Who is the buyer?”

  “A Brazilian corporation that was founded in Parana State for the purpose of purchasing the land and building in Vila Lobos from BrasTel. And before you ask, the shareholder of that corporation is another corporation from the same State.”

  “How many layers are there?”

  “We really do not know. What we do know is the buyer has certified that it and its affiliated entities are in no way, either directly or indirectly, connected to BrasTel or the Federal Government of Brazil.”

  “I would like a copy of the appraisal please and the buyer’s certification regarding affiliation.”

  “They are in Portuguese.”

  “I will have certified translations made. If it is as you say, and I have no reason to think otherwise, that is all I will need for due diligence on that property.”

  “You will have the originals waiting for you when you get back to the office when you return after meeting with the General. The courier will wait while you make your own copies and return them to BrasTel’s files where they are already the legal property of the buyer.”

  “That seems easy enough. Do you think coffee is ready?”

  Juan looked at his watch, “I would believe it is. Shall we go around to the office.”

  Robin leaned on the doorway waiting for me to get settled, “No one called while you were out except for BrasTel. They said a courier would be here before four-thirty with the documents you wanted to copy.”

  “That was fast. Call downstairs and tell them I want some certified translations done from copies of originals we are going to make here. I want the copies certified as ‘true copies’ so could the notary be ready to come up about four-thirty.”

  “I’ll do that first and then you can tell me what the General said. Right back …”

  “That was quick. To continue, I can certainly tell you what the General said. Nothing but small talk. Juan Batista delivered the message while the General was supposed to be finishing a meeting.”

  “The old fox … no fingerprints. What did Batista say?”

  “Remember I told you I was taken for an evening ride to Villa Lobos?”

  “Yeah, by some kid who thinks he’s a grand prix driver.”

  “The warehouse that was our destination that night is one of the properties that changed hands just before the closing. In money terms it represents more than the rest of the parcels combined. Batista’s message was we will get whatever we ask for about the Villa Lobos property as part of the post-closing review but we shouldn’t get too curious.”

  “The 4:30 papers are what you asked for?”

  “I think so. Our only concern is valuation so that was what I asked for. That and who the buyer was and who are its principals. The only resistance I got was about the principals.”

  “I guess you got a little too curious.”

  “Maybe, I settled for management’s representation that the principals in the bulk purchase are independent of the other entities in the BrasTel deal. Their ‘rep’ letter will look good in the review files.”

  “Yeah, it’ll look fine as long as the appraisal I assume is what you asked for holds up.”

  “Batista assures me it will. He’s been straight with us so far and until I learn something otherwise I’ll believe him.”

  “If you ask me, the tenant is buying the place and you know who that is.”

  “Perhaps Robin, perhaps not. We haven’t been told who the tenant is and I am not going to ask because that would surely fall into the too curious category. But, I’m guessing it will show up in the appraisal as a line item.”

  “If you’re right we’ll know in
fifteen or twenty minutes plus translation time.”

  But we didn’t know when I got the translation of the appraisal for the Villa Lobos parcel. The occupant line said nothing more than ‘under lease - unoccupied’ with the R$15,000 per month rent being paid up to date disclosed on the next line. The discussion in the appraisal said there was a high vacancy rate in Villa Lobos and lower average rents for similar size properties in the area putting the stated rent in the top ten percent of registered leases in the area. The property itself carried a high tax assessment but far below the highest in the area based on the prior year’s city’s tax rolls. The appraisal concluded that in the absence of comparable sales during the prior thirty-six-month period a valuation of fifteen to twenty percent above the rent-based tax assessment represented fair value.

  In the tables supplied as support for the appraisal were copies of the tax rolls, a calculation of building value using the internal rate of return in the lease and a calculation showing the buyer was paying a significant premium above its fair value. All in all, the document contained anything and everything to support BrasTel received fair value in the sale and that’s all I was interested in.

  Giving the appraisal to Robin, “We should be happy with this. They used all the traditional approaches and did what looks like a creditable job. The same appraiser prepared the reports on all of the properties and they all contain the same level of detail. Where there were recent comparable sales they used those to develop fair value. Since most of the parcels have been vacant for years they even applied a discount for condition and renovation costs to bring them up to current building codes. Lastly, all of the appraisals are dated two months before the BrasTel deal’s closing date.”