Americanas, the fall of a Brazilian colossus through the hole that the CEO revealed nine days after arriving

The Brazilian Sérgio Rial had been in charge of Americanas, a network of lifelong stores with 1,700 establishments throughout Brazil, for nine days when he resigned on Wednesday, January 11. They sell everything, mobile phones, washing machines, notebooks… The newly arrived CEO, a former head of Banco de Santander who had been booked months before, had dived into the company’s accounts and what he saw scared him enough to decide to get off right there. ship’s. He announced that he was resigning. And he revealed the reason: he had detected “accounting inconsistencies” worth 20,000 million reais (3,800 million dollars). His resignation was like detonating a bomb on the São Paulo Stock Exchange and in economic circles. Suddenly, the 45,000 employees and thousands of investors found themselves on the edge of a precipice. But political Brazil was on to something else, with its heart still heavy from the coup assault in Brasilia two days before.

The company, which was listed on a specific index of the São Paulo Stock Exchange for companies with good governance, plummeted (78%) as soon as the markets opened. Since then, it has acknowledged a debt of $8.8 billion with nearly 8,000 creditors, led by various banks. And the courts have accepted his petition to file for bankruptcy.

American stores, and their red and white signs, have been part of the Brazilian urban landscape for many decades; It also has a powerful online sales business. It is one of the largest retail networks in Latin America. They are called because it was the emigrants who founded it in 1929. They were five Americans who were going to open a business in Buenos Aires and when they docked in Rio, then the capital, they discovered that there was a clientele of officials with fixed pay that nobody attended to.

And, furthermore, its current reference shareholders —billionaires Jorge Paulo Lemann, Marcel Telles and Carlos Alberto Sicupir— are among the wealthiest men in Brazil. Lemann, 83 years old and residing in Switzerland, leads the national wealth list. The disaster plunged them into a silence that took eleven days to break. “We never knew nor would we admit accounting maneuvers or simulations” in Americanas, they said last Sunday in a joint note. They add that they, like the rest of the shareholders, creditors, clients and employees, thought that “everything was correct”. In recent years they gave twice as many dividends as the competition.

As always in these cases, those who are unaware of the meanders of corporate accounting wonder how the hell such a hole went unnoticed by the stock market authorities, the external auditors, led by PwC, and the board of directors.

The fleeting CEO, Rial, 62, told the newspaper or globe the dilemma that assailed him and how he resolved it: “I had Sofia’s decision before me: do I speak or not? Do I wait for the audit or not? I thought it was better to make a mistake now than try to wait. Always with him disclaimer [descargo de responsabilidad] That’s what we were able to see for nine days, as there was no external audit validation.” This was not one of the coups that made him famous in Brazil, like swimming among sharks in an aquarium in Rio de Janeiro or arriving at an event with the Santander squad rappelling dressed in red, the color of the bank.

There were those who bought shares with an eye on the arrival of a new CEO after two decades led by the same executive, Miguel Gutiérrez, on whom all eyes are now.

Black Rock, the largest investment fund in the world, increased its portfolio days less than a week before the arrival of Rial. But the most unlucky candidate firm is a small shareholder, André Krizak, 48. This business administrator told Folha de S.Paulo that on Wednesday, January 11, at around four in the afternoon, he decided to expand his stock portfolio and chose Americans. A company that had just started a promising phase at the hands of a CEO who had arrived only nine days before he came from presiding over Banco de Santander. And besides, it was public that Black Rock had bought a good package on December 28. Krizak closed the purchase: he spent $7,600 to increase his share package six times

Three hours later, a relevant event of Americanas, signed by Rial, arrived at the São Paulo Stock Exchange, the executive resigned due to an accounting mismatch to which he had already given a figure. The investor, who had bought the share at 12 reais that same afternoon, was livid because he was certain of what was coming next. His money evaporated. The share is worth less than one real, 0.7. “Americanas made January 11 my 9/11,” he told Folha.

The origin of the problem could be in inequality, the persistent evil that corrodes Brazil so much, points out this Tuesday in his column or globe Mariana Barbosa. She points to the top three shareholders and links the meltdown to “a culture that exhibits huge pay disparities between the CEO and the average employee.” She details that in Americanas the first one earned 400 times more; when the average in listed companies in São Paulo is one hundred; and in the United Kingdom, 40. The stores are still open and dispatching, but they are soulless. And employees have already been warned that they may be out of a job.

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