Exclusive-UnitedHealth eyes $1 billion deal to exit Latin America as insurer refocuses on US, sources say
NEW YORK (Reuters) -UnitedHealth Group is weighing multiple bids for its Latin American operations, according to two people with direct knowledge of the matter, as the insurer buckles down after a series of unprecedented missteps that include the ouster of its CEO and a reported criminal accounting probe.
The largest U.S. health insurer has been trying to exit Latin America since 2022, but the sale of Banmedica has taken on increasing urgency in recent months as the insurer took hits on multiple fronts, according to one of the people.
New CEO Steve Hemsley told shareholders last week that he was determined to earn back their trust after an earnings miss and a Wall Street Journal report that the company was under criminal investigation for alleged Medicare fraud. UnitedHealth has said it was not notified by the Department of Justice and that it stands by the integrity of its operations.
Hemsley replaced Andrew Witty as CEO, who had been in the post for only a matter of months following the murder of his predecessor, Brian Thompson, in New York in December while on his way to a meeting with investors.
The company has four non-binding bids for its Banmedica subsidiary, which operates in Colombia and Chile, for about $1 billion, according to both people, who asked not to be identified because the talks are private.
UnitedHealth's shares tumbled 25.5% in May alone and year-to-date are down 40%. UnitedHealth left Brazil in 2023 and Peru in March. It's aiming to get around $1 billion for Banmedica's operations in Colombia and Chile, the people said.
The two people said the company expects to set a deadline for binding proposals as soon as July.
UnitedHealth received bids from Washington, D.C.-based private equity firm Acon Investments; Sao Paulo-based private equity firm Patria Investments; Texas non-profit health firm Christus Health; and Lima-based healthcare and insurance provider Auna, the people said. Auna is in talks with a financial partner, one of the sources added.
Banmedica's annual earnings before income taxes, depreciation and amortization, or EBITDA, is more than $200 million a year.
Patria and Christus Health declined to comment. UnitedHealth, Acon and Auna did not respond to requests for comment.
FAILED EXPANSION PLANS
UnitedHealth bought Banmedica in 2018, with CEO David Scott saying he was "establishing a foundation for growth in South America for the next decades."
At the time, UnitedHealth paid around 12 times Banmedica's EBITDA, according to one of the people. Three years later, the insurer decided to leave Latin America as it grappled with losses in its largest operation in the region, Brazil's Amil, which had been acquired a decade earlier. It divested from its Brazilian operations in late 2023.
Banmedica is currently profitable, but is considered too small by UnitedHealth. It serves over 2.1 million consumers through its health insurance programs and has around 4 million patient visits annually across its network of 13 hospitals and 143 medical centers.
UnitedHealth booked an $8.3 billion loss last year related to the sale of its South American operations - $7.1 billion stemming from the Brazil exit and $1.2 billion from Banmedica.
"These losses relate to our strategic exit of South American markets and include significant losses related to foreign currency translation effects," the company said in a February filing.
Brazilian investment bank BTG Pactual is advising UnitedHealth on the sale.
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Volkswagen kept a dark secret in the Amazon. Then a priest made a call.
History forgot the horrors endured by laborers on the automaker's massive cattle ranch in the Brazilian Amazon. But a priest had recorded it all. SANTANA DO ARAGUAIA, Brazil When Ricardo Rezende Figueira saw the headline, he felt a chill run through him. It was about Volkswagen. The company said it was finally ready to atone for its past. After admitting that its staff had cooperated with Brazil's military dictatorship to target workers for political persecution, the automaker had begun to negotiate reparations. Rezende read to the bottom of the article, then sat for a moment, quiet. The story didn't say anything about the Volkswagen cattle ranch. Nor a word about the Amazon rainforest, where the company's leadership had once presided over a property nearly twice the size of New York City. It sometimes seemed to Rezende as if no one still remembered what had happened there — the forced labor and privation, torture and violence, deception and horror. But Rezende did. He'd recorded it all. Perhaps it wasn't too late, he recalled thinking. Story continues below advertisement It was early 2019. Rezende left his small apartment and walked across the street to Rio de Janeiro's federal university, where he taught human rights and coordinates a commission to study modern slave labor. At 73, gray-haired and bespectacled, he no longer resembled the shaggy Catholic priest who had led an investigation into alleged atrocities at the Vale do Rio Cristalino Ranch, owned by an eponymous subsidiary of Volkswagen Brazil. But the documentary evidence he'd gathered during that time was still with him, inside a filing cabinet. It had sat there for years. Rezende called Rafael Garcia, who prosecutes slave labor cases for Brazil's Labor Ministry. 'Did you see that Volks is recognizing what it did?' Rezende recalled asking him. Maybe, he continued, it was time to investigate the Volkswagen cattle ranch, as well. The road leading to the former Volkswagen cattle ranch, in Santana do Araguaia, Brazil. A photograph of workers on the Volkswagen cattle ranch. Garcia didn't know what he was talking about. He had no idea Volkswagen had participated in one of the world's first grand experiments in globalization half a century ago, when multinational corporations partnered with Brazil's authoritarian regime to develop the Amazon — pressing poor, unwitting workers into service in the distant rainforest. But Garcia trusted the aging priest and admired his work. He asked Rezende for his files. They ran to more than 1,000 pages; it took Rezende days to photocopy them. But by late February 2019, Garcia was paging through the dossier. The attorney remembered his pulse quickening as he scanned the records. He'd never seen such a rich trove so carefully collected and preserved. The scope was enormous. There were detailed testimonies from dozens of workers and their families. 'We were inside a prison,' said a worker who had escaped. 'I never heard from my son again,' said the mother of a worker who hadn't. Garcia called his colleague, Christiane Nogueira. 'Hey, Chris,' he recalled saying in a rush, 'you've got to see what's in these files.' Priest and human rights researcher Ricardo Rezende Figueira, 73, spent years documenting the alleged abuses at the Volkswagen ranch. The papers were yellowed by time and humidity. The print was small and faded, rendered by typewriter or Rezende's jagged penmanship. But the stories were clear and consistent. The dossier identified 69 alleged victims, with testimonies spanning 1977 to 1987. There were notarized declarations, police statements, court filings and lawmaker reports, alongside decades-old press clippings in Portuguese, French and German. Page after page, the documents recounted how labor recruiters contracted by Vale do Rio Cristalino Co., the Volkswagen Brazil subsidiary, had lured hundreds of seasonal and informal workers to the Amazonian property in Santana do Araguaia with the promise of good pay and a better life. But once on the farm, the workers said, they were trapped — geographically isolated, ensnared by debt, sickened by malaria and forced to toil under threat of violence. Their job was to destroy the forest and make room for cattle. 'We worked Monday to Monday, often without eating,' one man said. 'They promised to kill us.' Raimundo Batista de Souza, 55, told of being trapped on the ranch along with his two brothers, Raul and Juldemar. The labor contractors, known as Chicô and Abilão, were among the Amazon frontier's most notorious and brutal figures, according to contemporaneous records. Under their command was an armed cadre of 'inspectors' who used any means necessary, the records allege, to force the men to work. 'They stomped on [a laborer], broke his teeth, brought him to the hospital and put him back to work in the jungle,' said José Camilo da Silva, 29, of Anápolis, Goiás. 'They tied up a man and beat him in the forest, leaving him naked there,' alleged a 1983 account by three men who managed to escape. 'They have a cave where they kill people and throw the bodies in,' said Edivan Dias Alencar, a recruit from Porto Nacional, Tocantins. Story continues below advertisement Advertisement Volkswagen Brazil didn't respond to an interview request for this article. In a statement to The Washington Post, the company said it 'categorically refutes and rejects all allegations' of abuses at the Vale do Rio Cristalino Ranch and 'remains committed to the pursuit of justice.' Volkswagen's headquarters in Germany did not respond to requests for comment. In early March, Rezende granted The Post access to his archives. Reporters spent weeks reviewing the files, as well as contemporaneous records found in court documents and Brazil's national archives. The Post also interviewed 29 people with knowledge of the Volkswagen ranch — 16 worked on the property and nine alleged they had been enslaved. Abílio Dias de Araújo, known as 'Abilão,' pictured in July 1983, was contracted by Volkswagen's ranch to recruit laborers to perform deforestation on the property, records show. (Clovis Cranchi/Estadão Conteúdo) Labor recruiter Francisco Andrade Chagas, known as 'Chicô,' was accused multiple times by authorities of using slave labor, including on the Volkswagen ranch, records show. (Clovis Cranchi/Estadão Conteúdo) During two trips into the southeastern Amazon, including a visit to the remains of the ranch, The Post was able to find workers who had never spoken with authorities. Their stories closely mirrored those of other survivors. One man, Valdeci Alves Fumeiro, 74, said he went to the ranch in pursuit of a lost lover and was pressed into unpaid service. He said he spent seven years on the property, never once allowed to leave, even when he fell atop barbed wire and ripped open his face. Instead of being taken to the hospital, he said, he was stitched up on the farm and put back to work. Today he lives alone at the end of a dirt path in the misty hills of the former Volkswagen ranch. His house is barren. His face is marked by scars. 'I have nightmares about what I went through to this day,' he said. The records and testimonies offer a devastating portrait — not only of what transpired on the property but of a legal and political system that abetted the alleged abuses. State authorities affirmed the existence of forced labor on the ranch four times, records show. But The Post could find no record of any worker being freed or any of the alleged tormentors being charged with a crime. Only now, decades later, has there come a reckoning. For Garcia, reading Rezende's dossier was like tumbling into a lost and violent chapter of Brazil's conquest of the Amazon. The military dictatorship, which ruled the country from 1964 to 1985, built highways, encouraged mass migration, and offered tax breaks and public funds to national and multinational corporations, hoping they would invest in what seemed at the time like a quixotic venture: cattle ranching in the world's most forbidding rainforest. Volkswagen Brazil, then the largest carmaker in Latin America, accepted the challenge. In the untamed municipality of Santana do Araguaia, the Vale do Rio Cristalino Co. — a subsidiary whose leadership included Volkswagen Brazil's president, Wolfgang Sauer, and human resources director, Admon Ganem — obtained a large parcel of land. Executives back in Germany envisioned a herd of more than 100,000 cattle and an answer to world hunger. 'This world not only needs cars,' Volkswagen President Rudolf Leiding declared in 1974, 'but also meat.' The forests of southeastern Pará state were remade in short order. To tear down the trees, companies hired local labor recruiters — called 'gatos' — to find informal workers, truck them into the jungle and put a machete in their hands. Many of those lured to the area were subjected to what Brazilian law defines as modern slavery, characterized by forced labor, 'degrading' conditions and restricted freedom of movement. Brazilian sociologist José de Souza Martins has put the number of victims at 85,000, 'at minimum.' Other estimates are far higher. Because the region was so remote, and so many of the workers were itinerant and illiterate, no one knows for sure. Much of the story will probably never be told. A 1985 Volkswagen Beetle is raffled off in April during an agricultural fair near Volkswagen's former cattle ranch. Reaching back across the lost decades was Rezende's dossier. Garcia and Nogueira decided to open an inquiry, launching a multistate quest to find the lost laborers and locate additional archives. In December, their efforts culminated in a federal lawsuit against Volkswagen Brazil that alleged 'hundreds' of victims. During the ranch's years of operation, from 1974 to 1986, Volkswagen exploited slave labor and human trafficking on a scale that was 'generalized and systemic,' the federal attorneys said. Because the alleged abuses occurred on a property owned by a Volkswagen subsidiary, prosecutors contend that the parent company bears ultimate responsibility. In its statement to The Post, Volkswagen Brazil denied the allegations and said it had been a driver of the country's 'economic and social development.' The company said it has 'consistently defended the principles of human dignity and rigorously complies with all applicable labor laws and regulations.' In court filings, Volkswagen's lawyers have characterized the company's role as that of a shareholder in an independent business that contracted other firms to develop the property. Brazil's government is wrongfully pursuing a case against an uninvolved party, the company claims, while giving a pass to the labor recruiters who oversaw the deforestation camps. 'In sum, no responsibility can be attributed to Volkswagen [Brazil],' the company's attorneys wrote in response to the government's complaint, which is awaiting adjudication in a federal labor court in the Amazon. Story continues below advertisement Advertisement One of the contracted labor recruiters, Chicô, whose full name was Francisco Andrade Chagas, died in 2014, according to a Brazilian registry of death notices. The other notorious recruiter, Abilão, whose full name is Abílio Dias Araujo, 82, declined to answer questions from The Post. 'I'm an old man,' he said. 'I don't remember anything.' Police reports and declassified records show that the men were accused of using 'slave labor' at least three times, in June 1983 at the Volkswagen ranch and twice in September 1984 at other area farms. 'The fact exists,' said a report by the Brazilian intelligence service. Police investigated Chicô again in July 1986, in nearby São Félix do Xingu. But The Post could find no record of criminal charges against either man. In a region where impunity is often the rule, the government's case against Volkswagen marks the first time Brazil has sought to hold anyone to account for the human suffering incurred in its rush to develop the Amazon. The case has also rekindled a decades-old feud between two familiar adversaries. On one side, the second-largest automaker in the world. On the other, a Catholic priest. Rezende at his apartment in Rio de Janeiro. Ricardo Rezende isn't an ordinary man of the cloth. He doesn't wear a clerical collar. He doesn't live in a rectory. He has devoted much of his professional life to studying not religion but modern slavery, writing four books animated by the same urgent, probing questions: How could so many have been enslaved in the modern Amazon? And how was it kept a secret for so long? 'The number of victims who have disappeared is massive,' he said, 'and shocking.' Some died on the ranches and were buried in clandestine cemeteries, according to discoveries of human remains. Others were too ashamed to return home 'poorer than they'd left,' Rezende said, and built new lives elsewhere. Many more, he believes, didn't see themselves as victims, but debtors. They never said a word to anyone. Rezende has dedicated his life to cataloguing their stories in spite of, or perhaps because of, what he calls 'a defect.' He has always struggled with details, with remembering dates, names and numbers. The only way he could function, he said, first in the seminary, then while getting his philosophy degree and finally after his ordination as a priest, was to write everything down. The habit instilled in him an abiding reverence for documents and written records. Memories fade and blur, he says. But a document makes an official imprint. It can be disputed, but it does not change. In 1977, he moved to the Araguaia region in Pará state and began working for the Pastoral Land Commission, a Catholic human rights organization. The Latin American church was being swept by a new creed called liberation theology, which called for people's emancipation from all forms of social and economic oppression. Its converts were flocking to the Amazon to defend the rural poor, and many took positions at the commission, where Rezende soon became a field director in the municipality of Conceição do Araguaia. Rezende teaches a class on human rights in social work at Rio de Janeiro's federal university. A delegation of observers — including Ricardo Rezende Figueira, center in striped T-shirt — listens to Paulo Dutra, a senior Volkswagen Brazil official, at the automaker's ranch in 1983. (Clovis Cranchi/Estadão Conteúdo) Rezende placed notepads next to every phone at the office so that a record was made of all incoming calls. If a reported human rights violation seemed legitimate, he would invite the alleged victim to the office to take a statement — always in the presence of witnesses. If the allegations were particularly egregious, he would take the laborer to a notary's office or police station to render an official account. Almost none of the cases ever resulted in an investigation. But a record had been made, he told himself, 'and maybe one day we'd be able to use it.' It was during this time that he started hearing about Volkswagen in the Amazon. The first complaint, in 1977, came from union organizer Natal Viana Ribeiro, who said he'd been denied payment and threatened by the ranch's management. The farm was patrolled by 'professional pistoleiros' who terrorized workers, a state labor union alleged one month later. In 1981, Rezende conducted one of his first interviews with an escaped laborer, Edivan Dias Alencar. 'A man tried to flee and was caught by Chicô,' the worker told Rezende. 'Chicô beat him with a beam." 'I saw many workers being beaten by Chicô and his gang," Alencar recalled in a recent interview with The Post, and 'many of these workers disappeared.' One day, he said, Chicô and his fellow gatos set fire to a patch of forest where men were laboring. Many, he believed, were burned alive. Rezende finished his report and, placing Alencar's allegation along with the others, began the dossier that he would guard for the next four decades. The ruins of an old security checkpoint at the former Volkswagen cattle ranch. With each passing year, the priest's preoccupation with the Volkswagen ranch deepened. He made timelines and sketched diagrams of its organizational structure in his notes. Each interview filled in more of the blank spaces. The property operated according to a strict social hierarchy. Executives slept in opulent, well-ventilated homes. Staffers, which included drivers, cooks and herdsmen, lived near the ranch's headquarters, where goods were sold at discounted prices, and their children attended the Wolfgang Sauer School, named after Volkswagen Brazil's president. Out in the forest, dozens of kilometers removed, informal workers slept beneath plastic sheets, drank untreated water and lived under the watch of armed guards. Almost all of the laborers came from provincial villages, where recruiters had promised good pay and lent money to men who'd never had enough of it. But after being trucked to the remote ranch, and passing through an armed checkpoint, the workers learned they'd been deceived. The pay was far less than advertised. They would never work off their debts. And they were marooned in the middle of the Amazon. Many who tried to run were hunted and returned, workers told Rezende. Inside an abandoned house on the grounds of the former Volkswagen cattle ranch. Rezende described the area for executives, which had a swimming pool, club and restaurant, as a 'paradise in the Amazonian immensity.' While workers were forced to toil in the forest, company executives were surrounded by luxury. Inside the ruins of a security checkpoint on the former Volkswagen cattle ranch. 'They fled through the forest, because if they'd taken the road, the gatos would have killed them,' Rezende wrote in July 1981 of one woman's story. 'They walked 155 kilometers.' Rezende considered himself a skeptical investigator. He knew he was being closely watched. The military government had placed him under surveillance and labeled him a 'subversive' and a communist 'sympathizer,' according to declassified reports reviewed by The Post. Rezende said he was always worried about a trap. And these were extraordinary allegations involving a powerful company collaborating with an authoritarian regime. Over time, though, he came to believe the stories. They aligned with other abuses in the region. They came from multiple, unrelated sources. And they were so similar, down to the most minute details. Still, Rezende wanted more. Months went by. Then in April 1983, his phone rang. He was told five young men had just fled the ranch. Rezende remembers hanging up the phone and packing his bags. He booked a plane ticket and headed south, to the state of Mato Grosso. The priest found the men in the impoverished village of Canabrava do Norte, little more than a collection of hovels and a few dirt roads. He remembers being struck by how young they were. One was only 18, another 17. Several had just delivered a written declaration of their experiences, witnessed by 12 people, records show, including a local mayor. Now, facing Rezende, they told their story again. The young men — Pedro Valdo Pereira Vasconcelos, José Libório Desidério, Francisco Rezende de Souza, José Pereira de Souza and José Ribamar Viana Nunes — said they'd been close childhood friends. They loved to play soccer together. One day in early 1983, a pal of theirs named Batista said he was looking for men to go work on the Volkswagen ranch. They would get good pay, enough to help their families. Even better, Batista said, the ranch had a soccer field. The men never played a game in their three months at Rio Cristalino. Instead, they said, they were 'sold' to Chicô, who placed them under the supervision of four armed inspectors. In the forest labor camps, they stuck close to one another. One man sick with malaria perished of malnutrition, they recounted; another was shot in the leg; a woman was raped as punishment for her husband's attempted escape. Pedro Valdo Pereira Vasconcelos, 60, was a minor when he was taken to the Volkswagen ranch. José Ribamar Viana Nunes, 60, said he and his friends were 'sold' to Chicô, one of the Amazon's most notorious labor recruiters. Once, Vasconcelos came upon a dead man in the middle of the forest. He'd been tied up and beaten. 'I saw it with my own eyes,' he told The Post in March, his memory of the day still vivid. The men told Rezende that more than 600 laborers were still out there. Hoping that would be enough for the authorities, he sought a meeting with the Pará state governor, Jader Barbalho, but was rebuffed. So he flew to Brasília alongside one of the young men and took the story to the media. Stepping before a group of reporters at the National Bishops Conference of Brazil, he considered his words. Academics debate what constitutes slavery. Some have argued that the term refers only to chattel slavery, in which people are owned as private property. But Rezende's years in the Amazon had taught him that there were other forms of human bondage, and he now said what he believed. 'Priest says there are slaves on Volks farm,' read the headline the next day, May 7, 1983, in Correio Braziliense. German media was soon running with the story. Volkswagen denied the allegations and, in an attempt to 'shed light on the truth,' according to company documents reviewed by The Post, invited a delegation of its critics to visit the Rio Cristalino ranch. The contingent included Expedito Soares, a state lawmaker from São Paulo, where Volkswagen's first car factories in Brazil were located, and Rezende. A herd of cattle near the former Volkswagen ranch. Arriving at Santana do Araguaia in July 1983, Rezende found a vast municipality covered by forest and choked by poverty. Roads were rare, electricity rarer and modern conveniences basically nonexistent. But down an unmarked dirt path, on the grounds of the Volkswagen ranch, Rezende found what he described in one book as a 'paradise in the Amazonian immensity.' There were gardens, good roads and brick houses, a club, a restaurant and a pool. 'This was something like Brasília in miniature,' he recalled. The delegation was greeted by a pair of tall White men. One was Volkswagen's public relations manager, Paulo Dutra de Castro. And the other, Friedrich Georg Brügger, was the ranch's Swiss director. He touted its commitment to social service, according to an account by a reporter who accompanied the delegation, saying the farm's 328 direct employees and their families had it great: discounted food, free medical care, quality schooling. Rezende began compiling his research on the Volkswagen ranch in the 1970s while working for a Catholic human rights organization in the Amazon. The delegation, Rezende said, was not permitted to visit the deforestation camps. One day, though, one of its laborers managed to find them. He went straight to Rezende, according to the priest's notes, and touched his arm. The man's hand was hot with fever. 'You have to save me,' Rezende recorded him saying. 'Save you from what?' 'I've worked here for nine months, and I can't leave,' the man said. 'I have malaria and am sick, padre … I want to leave.' Rezende confronted Brügger. 'There's a problem,' Rezende said, according to a report written by Soares, the São Paulo lawmaker. 'You're hiding something.' 'This isn't my problem,' Soares quoted Brügger as saying. It was the gatos' problem, he told them. An old photograph of Valdeci Alves Fumeiro, left, and other workers at the Volkswagen ranch. Old photos and documents from the collection of Fumeiro, who still lives on the grounds of the former Volkswagen ranch. Fumeiro said he followed a former lover to the ranch and then realized he was trapped. In an interview years later, Brügger would affirm his position, saying that the Volkswagen employees frequently checked on the camps to monitor the progress of the work but that it wasn't their role to step in. 'The brutality that happened, of course, doesn't surprise me at all; the Brazilian is a bad person,' he said in the 2017 interview with German reporter Stefanie Dodt. He blamed the laborers for their own debts and defended the gatos' alleged use of violence: 'To keep a crowd under control, they have to show a certain amount of strength,' he said. The Post was unable to reach Dutra or Brügger for comment. Story continues below advertisement Advertisement Before their delegation departed, Rezende and Soares chanced upon one of the gatos. It was Abilão, driving down a dirt road in a white Chevrolet truck, wearing a cross necklace and cowboy hat. Asked about the allegations of mistreatment, the labor recruiter said he didn't use violence but 'energy' to keep the workers in line. 'They're nasty goats and vagabonds that take my money, then disappear into the forest,' Abilão was quoted as saying by Soares's report. He boasted that only 16 of his 408 workers on the Volkswagen ranch had successfully fled that year, according to the newspaper account. One of the captured fugitives sat in the back of Abilão's truck. He'd been accused of eating more than he could pay for, Soares recalled in an interview with The Post. 'I owe money,' the newspaper quoted the worker as saying. 'I have to pay up.' The hand of former ranch worker Raimundo Batista de Souza. Days after their visit, the Pará state police opened an investigation into the Volkswagen ranch. Officers interviewed laborers, Abilão and one of his inspectors, then sent their findings to the state security chief. In August 1983, the official wrote a letter to Barbalho, the state's governor, that confirmed Rezende's allegations: The gatos 'treat their contracted workers like slaves.' While Volkswagen did not appear 'directly' guilty of 'any criminal action,' state security chief Arnaldo Moraes Filho wrote, 'its responsibility by omission was clear, as it's impossible that everything investigated inside the limits of its property occurred without any knowledge or action on its part.' Weeks later, the governor met with Rezende and several bishops at his residence in the state capital, Belém. In the conversation, Rezende said, Barbalho affirmed that the government had identified slave labor on the Volkswagen ranch. He said the case would go to the prosecutor's office, according to O Liberal, the state's largest newspaper. But a year later, no action had been taken. When state labor officials visited the Rio Cristalino property in August 1984, according to a declassified report reviewed by The Post, little had changed. Workers continued to toil, indebted and held against their will. The ranch, the labor officials said, was 'a snapshot of all the other farms in the region, where humble and illiterate laborers were easy prey for unscrupulous recruiters eyeing profits, often with the complacency of the farms' owners.' Still, no visible action was taken. State prosecutors could not confirm whether Barbalho had ever alerted their office about the Volkswagen ranch. Barbalho, now a federal senator, declined an interview request. He said he didn't remember the case. In September 1984, police arrested Abilão after finding 107 workers enslaved on two unrelated farms in Santana do Araguaia, according to a declassified report by the Brazilian intelligence service. The report said authorities also planned to arrest Chicô — described as 'one of the principal enticers of manual laborers in all of southern Pará' — but could not find him. Rezende felt increasingly powerless. He didn't know what more he could do. So he put his faith in the records. 'We had proof,' he said. 'One day, I knew this would come back to the surface.' After escaping the Volkswagen ranch, Francisco Rezende de Souza, now 62, spiraled into alcoholism, his friends say. After weeks of scrutinizing the files in 2019, prosecutor Rafael Garcia believed he had the makings of a solid case. As the national coordinator of the federal slave labor division, he knew such prosecutions rested largely on documentary evidence. And he had the key information: dates, names, ages. He wasn't worried about how much time had passed. In Brazil, the crime of 'reducing someone to conditions analogous to slavery' has no statute of limitations. But the documents weren't enough, Garcia told Rezende: They needed to find the victims the priest had interviewed all those years ago. Both recognized this wouldn't be simple. People die and disappear. And the geographic dispersion had been immense. The gatos had often taken laborers across state lines — and some much farther. Rezende got in touch with graduate student Matheus Faustino — whom he described as 'the perfect person for this job, smart and ethical' — and described the challenge. Faustino, already interested in researching the Volkswagen ranch for an academic study, agreed to help and began paging through the dossier. He highlighted the dozens of names in the documents but soon realized many were so common that public databases would be little help. Story continues below advertisement Advertisement He narrowed his search to the municipalities where the gatos had focused their recruitment efforts and, in 2020, traveling by bus, went from one distant community to another. He leaned on Rezende's regional contacts, but the work was exhausting and largely fruitless. In São Geraldo do Araguaia, nothing. In Araguaína, nothing. Even in Santana do Araguaia, where the brick homes and old guard posts of the Volkswagen ranch were still standing, there was little trace of the workers who once toiled there. Finally, in Canabrava do Norte, where Rezende had interviewed the five escaped laborers, a breakthrough. The men were still alive and wanted to talk. Their stories had not changed, but their bodies had. They now looked like old men. Francisco Rezende de Souza, 62, could barely walk. When he spoke, it was little more than a murmur. His months on the Volkswagen ranch, his friends said, had broken him. After his escape, he had begun to drink heavily, always the Brazilian liquor cachaça. 'He was never able to hold down a job,' friend Antônio Eliseo Gobatto, 75, told The Post in April. 'Never had a girlfriend, never married. He always felt diminished in everything.' Raimundo Batista de Souza says he was held at the Vokswagen ranch with his brothers, Raul and Juldemar. Centuries after their ancestors came to Brazil as enslaved people, said Raul Batista de Souza, 67, he and his brothers were returned to bondage. Juldemar Batista de Souza, 54, the third brother, who his family says has receded into his trauma and no longer speaks. Two states away, in Tocantins, Faustino found three brothers, Raul, Raimundo and Juldemar Batista de Souza. Their three months on the ranch had been enough to change them. When Volkswagen's subsidiary gave up control of the property in 1986, the gatos didn't let them go. The brothers said they were sold and separated. 'I can still see my brothers being put onto the back of a truck and taken away from me,' Raul told The Post in April, weeping. Centuries after his ancestors had been brought to Brazil as enslaved people, he said, his family had been returned to bondage. Raul said he spent the next four months captive, until a farmer helped him escape. He found his way back home, to his brothers, who had also managed to flee. But Raul discovered that Juldemar was not the same. Over the years, his brother receded ever further into his trauma. Today, Juldemar no longer speaks. He only nods and sways. After more than a month of searching, Faustino had located 14 of the 69 victims identified in Rezende's dossier. He hoped it would be enough. In 2022, he told the men about the Labor Ministry investigation and the developing case against Volkswagen. Their voices would be critical. Would they be willing to testify? 'They were interested,' Faustino said. 'They were all interested.' A former farmworker who was among hundreds of men allegedly pressed into unpaid labor at the Volkswagen ranch in the 1970s and '80s. The laborers set out shortly after dawn one day in late May, driving more than eight hours, back through the undulating terrain of Pará state. The frontier they'd once helped clear, no longer recognizable, was a vision of everything Brazil's military generals had wanted. The forest was gone, replaced by farmland, busy towns, paved highways — and a small courthouse where the men prepared to face Volkswagen's representatives for the first time. After months of negotiations, Volkswagen had declined to continue talks with Brazil's Labor Ministry. And now the first hearing in the government's lawsuit against the company — which demanded $30 million in reparations — was beginning. Inside the courthouse in Redenção, 120 miles north of Santana do Araguaia, the gallery was filled with spectators. The first person to testify was Volkswagen's representative, José Antonio Tiro. He said that the company didn't monitor human rights as rigidly in those days, but that it had investigated the allegations at the time and didn't identify any 'irregularity.' Then, one by one, the laborers came to the stand: 'We were sold,' said Raul Batista de Souza. 'We slept under a black plastic sheet,' said Pedro Vasconcelos. 'They were all armed; we had to work,' said José Ribamar Viana Nunes. Finally, Rezende, who'd come from across the country, rose to testify. The priest hadn't slept much the night before and had woken angry. 'How could they have permitted this crime,' he'd vented that morning, 'and continued to have permitted it?' Story continues below advertisement Advertisement Now, looking straight at the judge, Rezende said that he'd heard complaints of what he called a 'concentration camp' inside the ranch since 1977, but that no one had stopped it. 'I received more complaints against these same gatos in the years afterward,' he said. 'The problem did not end.' Then he stepped down, and the judge ended the hearing, promising a decision in the coming weeks. Exhausted, Rezende returned to Rio de Janeiro, where, in the days after the hearing, the case still dominated his thoughts. 'So much history,' he said. 'Nothing can ever repair it.' The workers had turned into old men. So had he. A flock of birds near Volkswagen's former cattle ranch. But one recent morning, as he ascended the stairs to his university office, he moved like a younger man. He pulled open a shelf, revealing reams of dossiers. Each one detailed allegations of slavery on a rural property in the Amazon. None of the companies behind them had been held to account. This case against Volkswagen, he hoped, would only be the first. He removed his file on Rio Cristalino and plopped it on the table with a gentle thud. More than 1,000 pages, yet still incomplete. He had heard only the stories of those courageous enough to flee, and then to speak out. But there were so many others. Men who never came forward. Who were they? he wondered. What had they endured? Would he ever know? One day, he hoped to return to the misty hills of Santana do Araguaia to finish what he started.
WIRED
a minute ago
- WIRED
The Great Crypto Re-Banking Has Begun
Jul 23, 2025 6:18 AM For years, crypto firms complained about being 'debanked' in the US. Under the Trump administration, a group of fintechs is rolling out the red carpet. Photo-Illustration: Getty Images All products featured on WIRED are independently selected by our editors. However, we may receive compensation from retailers and/or from purchases of products through these links. Early last year, New York-based crypto entrepreneur Azeem Khan had just raised $19 million in seed funding for his startup, Morph, and needed somewhere to keep it. Before going in search of a US bank account, he asked his attorney for advice. 'You have a zero percent chance of having zero issues,' Khan recalls being told. If anything, this dour assessment proved overly optimistic: After six months and a multitude of rejections from US banks, Khan gave up. He settled for housing some of the funds with a bank in the Cayman Islands, which offered no interest, and converting the rest into crypto assets, managed by a third-party custodian. Crypto founders have long traded similar stories in which US banks either refuse to supply them with loans or checking accounts, or withdraw their accounts suddenly. Without a banking partner, crypto firms are hamstrung: They cannot readily accept dollars in exchange for services, store and earn interest on funds raised from investors, nor pay employees or vendors. 'All around, it was an understood thing,' says Khan. Little more than a year later, that picture has changed. Since president Donald Trump returned to the White House in January, promising to end the alleged discrimination against crypto firms, a field of US-based fintechs—among them Meow, Mercury and Brex—has competed to furnish crypto firms with bank accounts. Khan, who recently raised $25 million for his latest crypto startup, Miden, claims to have been among those courted by the fintechs. The change stands to make it far easier for crypto firms to set up, hire, and do business in the US, in line with Trump's plan to turn the country into the 'crypto capital of the planet.' Yet they remain at the mercy of the political tide; there has been a vibe change under Trump, but no change in law that would guarantee continued access to banking into the distant future. 'Even though there is a more friendly administration in place at the moment, there still hasn't been anything codified into law—new laws that allow us to be sure the pendulum won't swing based on who is sitting in the chair,' says Khan. During the Biden administration, frustrated by their treatment by the banks, members of the crypto industry began to cry conspiracy. The federal government was deliberately trying to destroy crypto businesses by surreptitiously cutting them out of the banking system, they alleged. Leading the chorus was crypto venture capitalist Nic Carter, who labelled the alleged discrimination campaign Operation Chokepoint 2.0, in reference to an Obama-era antifraud program under which US officials reportedly discouraged banks from dealing with pornography, payday lending, and other disfavored industries. Under the Trump administration, congressional subcommittees have held multiple hearings on the purported Operation Chokepoint 2.0. Subsequently, in March, Republican members of the Senate presented the FIRM Act, aiming to curb alleged discrimination by preventing banks from factoring in 'reputational risk' when fielding account applications. The bill has not yet faced a vote. For crypto firms, the vibe-shift is a blessing. Although they have comparatively few problems accessing overseas bank accounts—often in the Cayman Islands or Switzerland—in lieu of a US bank account, they are often unable to earn yield on deposits or transact seamlessly with US-based counterparties, and sometimes incur high account fees. Neither do they benefit from deposit insurance under the US Federal Deposit Insurance Corporation, which guarantees up to $250,000 per account holder. Though some of the big-name banks, like JP Morgan, are trialling crypto technologies for internal use, many remain reluctant to supply accounts to crypto businesses, sources say. 'The banks that John Doe has heard of have nothing to do with crypto,' claims David McIntyre, COO at DoubleZero, a startup developing networking infrastructure specific to crypto networks. But that has created an opening for smaller fintechs to expand their deposit bases by scooping up clients in the crypto industry. 'Basically, founders these days are going with a Mercury or Meow,' claims Khan. 'Meow has been super aggressive in terms of reaching out to founders anytime they see a fundraising announcement.' These fintechs tend to market themselves as crypto-forward—providing integrated services like stablecoin transfers—and far less stuffy than their traditional counterparts; Meow's roughly 30-year-old CEO, Brandon Arvanaghi, runs his LinkedIn profile a bit like a TikTok account, complete with video skits. 'These American fintechs have much better technology than random bank X in the Cayman Islands or Switzerland. They have better platforms, better support—better everything,' says McIntyre. Mercury declined to provide an interview to WIRED for this story. Meow and Brex did not respond to interview requests. In practice, these fintechs act as a software layer on top of a traditional bank that holds a US license; they handle the user interface and customer acquisition, while the partner bank manages the deposits. Meow partners with Grasshopper Bank; Brex and Mercury partner with several banks. This model was adopted widely in the US during the COVID-19 pandemic, which forced banks to find ways to reach customers digitally. 'In its best form, it's a way for banks to get access to better technology,' says Craig Timm, senior director of anti-money laundering at ACAMS, which runs finance-related certification programs. Timm worked previously as a financial crime specialist at Bank of America and the US Department of Justice. 'For the fintechs, it lets them focus on the things they're good at—building, marketing, reaching new customers—without having to get a banking license, which can be difficult and expensive.' But the arrangement also typically requires the fintech to follow ground rules set by the partner bank, including parameters around the types of client they are allowed to serve. Mercury, for instance, is unable to provide accounts to crypto companies that take custody of customer funds, including exchanges, a spokesperson told WIRED. 'They're putting a skin on top of someone else's bank,' says McIntyre, who previously worked at Brex. 'They have to abide by the bank's underwriting requirements, regulations, and determination about what customers to accept.' In the past, says Timm, expansion into new lines of business—say, crypto—has been a source of friction between fintechs, for whom explosive growth is the priority, and their partner banks, who bear ultimate accountability for upholding the conditions of their licenses, including strict AML controls. 'Often where these things fall apart, it's when there's not a common understanding,' says Timm. Sometimes, he adds, 'risk appetites diverge.' That leaves crypto firms in a position where, although the fintechs are glad to offer them a US bank account at present, the underlying partner banks could in future choose to revoke permission. Meow and Brex did not respond when asked whether their partner banks have promised long-term access to banking services for crypto clients. Nic Corpora, a Mercury spokesperson, said the company works closely with partner banks 'to ensure risk appetites are appropriately calibrated so when we onboard a customer we can support them in the best way and for the long-term. ' Under a president who has installed pro-crypto regulators and pledged to end the alleged Operation Chokepoint 2.0, that risk feels remote. But what about after Trump? 'From a risk management point of view, I don't think it's prudent for a company like ours to have solely accounts with American fintechs,' says McIntyre. 'There has been a change of administration and change in the interpretation of the law. The law has not changed.'
Bloomberg
a minute ago
- Bloomberg
Malawi Faces $2 Billion Reserves Hole on Debt Arrears, IMF Says
Malawi's debt bill this year will be $2 billion more than what it holds in foreign reserves, according to the International Monetary Fund — an amount that's equivalent to almost a fifth of the nation's total economy. The Washington-based lender expects the southern African nation's gross reserves to slide to $118 million this year. Subtracting outstanding foreign-currency debt arrears, payments and what the fund labeled foreign currency drains leaves the balance deep in the red, projections published by the IMF on Tuesday showed.
