Jorge Paulo Lemann is the richest man in Brazil but his reputation is tarnished. Since the Americanas scandal, doubts have been cast about the nature of Lemann's wealth and his other businesses are also experiencing problems. Are we facing the fall of the richest man in Brazil?
Or will he solve everything and become richer and richer? A net worth of 17 billion dollars. This is the size of the colossal fortune of Jorge Paulo Lemann, owner of the company 3G Capital.
3G is the company that manages Lojas Americanas, the most controversial retail chain in Brazil. As you may remember, at the beginning of 2023, Brazil was surprised by news that bordered on absurdity from the retailer. Suddenly, a surreal accounting fraud was discovered.
Overnight, almost literally, the company had a debt of 43 billion reais after discovering 20 billion in accounting inconsistencies. It would not be an exaggeration for me to say that this was the biggest business scandal in Brazil in the last 10 years. Maybe of the century.
Someone needed to pay the price, at least on camera. Therefore, the CEO of Americanas, Sergio Rial, was fired less than 10 days after taking office. He was the one who revealed the scandal, but when everything came to light and the pressure increased, changes became inevitable.
The company's director of investor relations, André Covre, also resigned from his role. Heads needed to roll… and they did. But nothing happened to Jorge Paulo Lemann.
After all, who would accuse the richest man in the country of having committed such fraud? And if they accused, how would they prove it? It was a difficult task.
Recently, the CPI das Americanas was concluded. The National Congress dedicated itself to investigating the scandalous fraud in detail. Did they find something linking Lemann to all this?
That's what I'll show you in a moment. But, more than tarnishing his image, the fraud in Americanas made many Brazilians pay attention to two people other than Lemann, his two faithful partners: Marcel Telles and Carlos Sicupira. Together, these three built an empire.
But every empire has an end. Are we witnessing the end of this? Olimpo Jorge Paulo Lemann is a notable Brazilian businessman and investor, with a somewhat exemplary life story.
After all, he is the Brazilian who has achieved the greatest success in business, with great skill in strategic investments. Lemann makes money masterfully. He was born in 1939, in Rio de Janeiro.
The son of Swiss immigrants, he studied at the American School of Rio de Janeiro and later graduated in economics from Harvard University. With good training and origins, Lemann began his career as an intern at Credit Suisse, in Geneva, Switzerland. Throughout his life, Lemann always maintained a strong connection with Switzerland.
It is no surprise that even though he is the richest Brazilian today, he lives in the European country. After working there as a youth, he returned to Brazil, where he started working as a broker at Invesco. There, he made a lot of money, but shortly afterwards Invesco went bankrupt.
Then Lemann became a partner in the Libra brokerage, of which he tried to buy control but was unable to do so. At the beginning of 1970, the businessman sold his stake in Libra for 200 thousand dollars. With good capital, in 1971 it was Lemann's turn to found Corretora Garantia.
This was one of the milestones in his career. The brokerage is notable for being one of the most innovative and successful in Brazil. There, Lemann introduced concepts of meritocratic culture and focus on results, inspired by his experiences in the United States.
One of the pillars of Lemann's business philosophy is the constant search for efficiency and cost reduction in the companies in which he invests. But this is also a very sensitive topic regarding the billionaire's image. He is constantly accused of practicing savage capitalism.
But, more notable than his success at Corretora Garantia, was the fact that it was there that Lemann met Marcel Telles and Carlos Sicupira. At the financial institution, Marcel Telles was a liquidator, a nice name for an office boy, while Sicupira was a minority partner. From a boss-employee-partner relationship, an unbreakable society emerged.
3 of the richest men in Brazil, figures in Forbes' top 10 billionaires, have maintained a partnership, which mixes with friendship, for more than 50 years. And no one can say that this friendship did not bear fruit. In 1976, five years after its foundation, Garantia stopped being a brokerage and became a bank, after authorization from the Brazilian government, at the time led by President Ernesto Geisel.
The company has established itself as one of the main investment banks in the country, being described by Forbes magazine as the Brazilian version of the legendary bank Goldman Sachs. It was exactly during the two decades at the helm of Banco Garantia that Lemann and his partners had their assets multiply exponentially. But not everything was rosy.
The institution was even accused of having collaborated with a financial pyramid scheme, in addition to being fined by the Central Bank for committing foreign exchange fraud, irregular operations and illegally sending money abroad. In 1982, Lemann and his partners purchased Lojas Americanas. Seven years later, they created São Carlos Empreendimentos, a commercial property investment and management company, from the spin-off of Lojas Americanas' real estate assets.
And these two continue to give something to talk about, as they have become a thorn in the side of the richest man in the country. In the same year that São Carlos was created, it was the trio's turn to start Brahma. Years later, this venture would give rise to AMBEV, after a merger with Antarctica.
This merger took place shortly after the sale of Banco Garantia. The financial institution was sold to Credit Suisse, for the huge sum of 655 million dollars. This sale is shrouded in controversy and conspiracy theories that you may have already heard.
If not, I'll tell you that one version of the story points to the fact that Banco Garantia was in default and without access to liquidity, forcing its partners to sell it. This version is supported by the fact that his former partners were banned from returning to work in financial institutions. However, others simply argue that the sale would allow the trio to pay attention to AMBEV and other businesses, such as Lojas Americanas itself.
From then on, Jorge Paulo Lemann and his partners began to invest in shares in companies. Thus the path was being paved for the founding of 3G Capital, the money-making machine of Lemann, Telles and Sicupira. The profits that the three made with it are simply surreal.
Under their command, a fortune of more than 185 billion reais is accommodated, the result of their large property. The company founded in 2004 controls several other giant corporations around the planet, such as AB Inbev, the largest brewery on the planet. The Brazilian beer market is in the palm of Lemann and his two partners' hands.
Furthermore, the trio controls Burger King and are partners in Kraft Heinz, a conglomerate in partnership with investor Warren Buffet. But it was not a perfect conglomerate, as Lemann was even accused in court for alleged illicit practices at Heinz. In short, 3G's objective is to use the dividends received by partners, to raise funds from other investors, and buy companies that can have their profit margins improved.
The focus of the company headed by Jorge Paulo Lemann is maximum profit , and this can be seen through the acquisitions and mergers he makes. You may not know, but you may have just realized that I said AB Inbev instead of AMBEV and that is the correct name of the beverage giant after a series of mergers. First, the Brazilian AMBEV joined the Belgian brewery Interbrew, in the same year that 3G Capital was created.
With AMBEV and Interbrew together, InBev was formed. A few years after that, in 2008, came the big merger. InBev purchased American rival Anheuser-Busch, owner of the Budweiser brand.
With the acquisition, Lemann's company became a global leader in the beer industry and one of the five largest consumer products companies in the world. The operation faced strong resistance within the United States, where Budweiser is seen as a typically national product. Patriotism could not resist money.
Even former American President Barack Obama declared that it would be "a shame if foreigners became the owners of Budweiser. " Well, foreigners became — and they were Brazilians. The richest Brazilians.
The merger created a new company, called Anheuser-Busch InBev Or simply, AB InBev. The business created, at the time, the second largest brewery in the world in terms of sales volume, second only to the British SABMiller . But guess what happened 7 years later, in 2015?
AB Inbev, owned by Jorge Paulo Lemann, simply bought SabMiller for the unbelievable value of 106 billion dollars. The aggressive stance in the market is a characteristic of the richest man in Brazil. When 3G takes control of a certain company, the triarchy of billionaires does not hesitate to carry out major restructuring in order to achieve profit.
A good example of this is Kraft Heinz. The company that exposed the wild capitalism practiced by Jorge Paulo Lemann. But also the company that caused Lemann big problems… in court.
The wild In 2015, two giants came together in a billion-dollar business, becoming a global reference in the food sector. Kraft Foods and Heinz have become one, now under the name The Kraft Heinz Company. At the time, the news had enormous repercussions.
The first reason is the fact that it was a deal between Buffett and Lemann. Warren Buffett is commonly dubbed as the Oracle of Omaha, for his great investment predictions that made him the greatest investor alive. But the merger also had repercussions because the new company would already emerge, at its birth, as the THIRD largest food company in North America and the FIFTH largest in the world.
From then on, the management of the conglomerate, which aimed to grow even further, was carried out by 3G Capital. However, the Brazilian company has a well-known characteristic, an aggressive business methodology. A wild mentality It does not hesitate to cut costs in order to optimize its resources.
Lemann fearlessly uses his vast knowledge and expertise in managing large companies, sometimes sharing machinery and even carrying out a large number of layoffs, if necessary. The Brazilian trio is characterized by making decisions of this type in favor of expanding their businesses. To expand, synergy between companies is necessary, which must be leaner, more agile and, therefore, profitable.
The future looked very promising for Kraft Heinz, and the world had bought into that idea too. After all, Warren Buffett and Jorge Paulo Lemann have always been recognized for their business mastery, so expectations were the best. Everything changed when people saw that Kraft Heinz was big, yes, but it wasn't ALL that.
The company and its controllers relied too much on their own bat. In 2019, it attracted the attention of someone it shouldn't have: the Securities and Exchange Commission, or just the SEC, the regulatory body for the United States capital markets. And this attention was not at all positive, as the SEC accused Kraft Heinz of accounting errors.
In the case in question, the accusations involved the company's purchasing area, with allegations of false contracts with suppliers and also of Heinz masking the cost it had with them, overvaluing its assets between the years 2015 and 2018. To repair this small error , Kraft Heinz had to write down its balance sheets of more than 15 billion dollars and pay a fine to the SEC of 62 million dollars. This case was remembered again when the Americanas scandal came to light, shedding light on the operations maintained by Lemann, Telles and Sicupira.
Kraft Heinz was placing costs in its financial statements as being lower than the actual values. As a result, accounting profits appeared higher, hiding the company's true situation. In addition to the fine, this inconsistency in the balance sheets caused the departure of CEO Bernardo Vieira Hees, an executive who worked for decades for Lemann, Telles and Sicupira.
After this controversy, Kraft Heinz's good image went down the drain. Its competitors became stronger and failures continued to happen. Warren Buffett even admitted that he made a mistake in his calculations when he acquired, alongside 3G Capital, the company Kraft, paying an exaggerated price.
But in 2023, Kraft Heinz's problems returned to torment Jorge Paulo Lemann, as if the Americanas scandal hadn't been enough. Last year, according to the newspaper O Globo, Austrian asset manager Erste Asset opened a lawsuit against Jorge Paulo Lemann and his main partners at 3G Capital. The manager wanted to reopen a case based on accusations that Lemann and his partners devised a scheme to sell 1.
2 billion dollars in Kraft Heinz shares based on privileged information, back in 2018. This would have happened shortly before the company released information which would make their shares plummet on the stock market. Also according to O Globo, the original action was filed by pension funds in 2019, but ended up being archived.
In 2022, a court understood that the action was unable to prove that there were ties that called into question the independence of Kraft Heinz's board of directors during the 2018 share operation. However, the Austrian manager now argues that new evidence proves that the partners of the 3G only managed to have that case closed thanks to document fraud. According to her, documents prove that a greater number of Kraft advisors had a direct relationship with 3G Capital.
Among the directors targeted by the new process is John Cahill, former CEO of Kraft Heinz and who is still on the company's board today. The Austrian manager alleged the following in a petition: “3G resolved its legal problem by causing Kraft Heinz to make false and misleading public disclosures about the compensation agreements. ” In addition to Lemann, several Brazilians are accused in the case, including Marcel Telles, one of Lemann's right-hand men and one of the richest men in Brazil, and Bernardo Hees, who was once CEO of Heinz and Burger King.
The newspaper O Globo contacted 3G Capital asking for a position, but received no response. However, the biggest thorn in Jorge Paulo Lemann's side remains one: Lojas Americanas. The scandal was so big that another of the billionaire's companies may be paying the price for its co-sister's mistakes: São Carlos Empreendimentos.
The sacrifice São Carlos Empreendimentos began operations in 1989, to support the physical expansion of Lojas Americanas throughout Brazil. Ten years later, it separated from the retailer and opened its own capital on the stock exchange, still belonging to Jorge Paulo Lemann, Marcel Telles and Carlos Alberto Sicupira. In 2011, it began investing in convenience centers and over time began to have business in the residential segment as well.
But allegations emerged last year that São Carlos could have returned to its original role: Serving as support for Americanas. These allegations began to emerge when the company began studying the possibility of getting rid of some of its main projects, such as buildings of great commercial importance in São Paulo and Rio de Janeiro. Coincidence or not, this initiative began after the Americanas scandal came to light.
From then on, São Carlos began selling its assets at an unprecedented pace. São Carlos Empreendimentos in total raised 1. 3 billion reais from the sale of several properties that were part of the company's portfolio in 2023.
This is very significant. Of the total sold in 2023, 507 million reais were obtained from sales carried out between January and the beginning of September. However, in one fell swoop, that September, São Carlos sold more than four buildings for 865 million reais.
This large wave of sales is part of a strategy that São Carlos called “selective portfolio recycling”. The company claims that this recycling aims to boost the company's results, putting an end to its debt problem – instead of supposedly saving Americanas. Experts point out that São Carlos' debts correspond to 26% of the value of the company's total portfolio.
With the real estate sale, she wants to reach the 12% mark. In the first quarter of 2023, São Carlos recorded a worrying loss of almost 35 million reais. With the commercialization of the buildings, the expected result came, as the company achieved an accounting profit of 15.
1 million reais. In any case, the company ended the second quarter of 2023 with net debt of 1. 3 billion reais.
The financial market reacted well to this strategy. The company's shares have risen nearly 60% this year. Did this serve to save the Americans?
Well, only those who speculate on the topic can answer. But where do Lojas Americanas really stand today? The 20 billion reais verdict is a difficult number to understand.
So high that it's unreal. All of this contributes to the Americanas accounting fraud scandal having had such an impact. All of Brazil knew about it.
Many then began prejudging public opinion: Was it fraud or incompetence? The most diverse popular judges gave their verdicts in bar conversations, conversations between family members, in WhatsApp groups and on the most diverse social networks. For some, it was certainly a very well-planned fraud.
Another minority group attributed this to great incompetence with a hint of bad faith. Among all of these, there were many who considered that Jorge Paulo Lemann knew all of this. After all, he was the company's reference shareholder, even if he didn't manage it or be the majority shareholder like years ago.
The inevitable happened for Americanas when she had to file for judicial recovery – which was only approved in December 2023. Seeing your debt double overnight is not something easy to bear. Even the National Congress had to get involved in this story and, thus, the CPI das Americanas was created.
But this CPI ended up deciding… nothing! The Parliamentary Commission of Inquiry simply did not propose indicting anyone. In the opinion, the CPI states that "the body of evidence, in fact, converges towards the possible involvement of people who were part of the company's management body, such as former directors and former executives".
Well, that's blaming, right? Wrong, because the text continues and says the following: "However, the elements presented so far did not prove to be sufficient to form a value judgment safe enough to attribute authorship and to support an eventual indictment. " In practice, the CPI was unable to say who organized or caused all this fraud.
The CPI lasted almost four months and even heard former directors of Americanas, as well as the lawyers responsible for the company's judicial recovery and authorities in charge of the investigations. Deputies from the most diverse parties criticized the CPI, alleging that it sought to cover up powerful businessmen. The CPI was of no use.
Today, Jorge Paulo Lemann is a reference shareholder in Lojas Americanas, as he gave up his majority stake in 2021. Still, he and his two loyal partners are the company's main shareholders. However, for the new CEO of Americanas, Leonardo Coelho, neither Lemann, nor Telles and Sicupira, have anything to do with the fraud.
This stance contrasts with that of the company's former CEO, Miguel Gutierrez, who adopts a more accusatory tone against the three billionaires by saying that they exercised 'strong control and influence' over Americanas. Who do you believe in? One way or another, Jorge Paulo Lemann is the richest man in Brazil and no scandal has been able to change that.
From the looks of it, Jorge Paulo Lemann's empire is not yet close to its end. It was for cases like this that I created this channel. Show the truth behind great businesses, understand what leads them to Mastery!
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