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LatAm companies spot opportunity for redemption in pandemic

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By Bryan Harris and Andres Schipani in São Paulo and Jude Webber in Mexico City

Some of Latin America’s largest companies including Vale and Grupo México have pledged hefty donations to help in the fight against coronavirus, leading to criticism from analysts that controversy-prone groups have spotted an opportunity in the crisis to burnish their image.

The donations came during a growing dispute between businesses and health officials in Brazil over the right strategy to deal with the coronavirus outbreak. Rightwing President Jair Bolsonaro has criticised lockdowns saying they impose huge costs on the Brazilian economy.

He has praised Brazilian companies for donating to the fight while drawing a contrast with the scandal-ridden history at many. “Companies that a few years ago were devalued due to administrative problems and general corruption are once again giving results to Brazilians and serving the nation,” he said.

Vale, the world’s largest iron ore miner, has donated personal protective equipment as well as 5m rapid Covid-19 test kits with the promise of more.

Petrobras, the majority state-owned oil company, gave a further 600,000 kits while JBS, the world’s largest meat packer, said it would make and donate 2m bars of soap.

All three groups have been embroiled in a series of crises and subject to public criticism in recent years.

Petrobras has been at the heart of the Lava Jato, or Car Wash, corruption probe, which implicated a large part of the country’s establishment and has led to jail sentences for senior business people and politicians across Latin America. Vale is battling a public relations crisis and looming criminal charges after the collapse of a dam at one of its mines last year killed almost 300 workers, while JBS was once ensnared in a bribery scandal that shook Brazil’s former government.

“These donations are very welcome, but in fact not surprising,” said Sérgio Lazzarini, an expert on crony capitalism at Insper business school in São Paulo. “While in some cases the desire to change and help is genuine, in others it may be a process known as ‘impact washing’, meaning the company takes social action to compensate for other deviations and to clean its reputation.”

Employees at Petrobras and JBS privately denied the donations were a public relations stunt, with some of them saying it is normal that large companies would look for ways to help.

Petrobras declined to comment. JBS did not comment beyond saying its donation was part of its “doing good does good” campaign. Vale said: “[We] offered the Brazilian government humanitarian aid, at a time when the country is getting united for the health and safety of the people . . . Vale also reiterates that it remains committed to repairing the damage caused by the rupture of the dam in Brumadinho.”

The Brazilian companies’ efforts have been mirrored by other large groups across Latin America. Grupo México — a mining and rail conglomerate that is under fire for consecutive toxic chemical spills — is constructing a hospital from scratch in the nation’s southern state of Oaxaca. The company declined to comment further.

“Some are truly altruistic and are really contributing, others are trying to use it as a means to try to clean their face,” said Luis Rubio, president of México Evalúa, a think-tank, adding that some businesses were helping but were also keeping out of the limelight.

Grupo Aval — Colombia’s biggest financial conglomerate — allowed customers at the four banks that it owns to defer the repayment of loan instalments for two months, benefiting 1.3m Colombians.

The group’s reputation has been tarnished by a corruption scandal, in which it denies involvement. It said its aim in announcing the measures was simply to help its customers get through the crisis.

“Today the main risk for companies is reputation. In the past it was credit, financing, technology, but today reputation can hurt a business the most,” said Simone Pasianotto, chief economist at Reag Investimentos in São Paulo. “Making donations does this and is beneficial for society.”