In the latest twist of the incredible saga of SMAR, the largest automation company in Brazil, and the company that produces a large percentage of the fieldbus chips for Foundation fieldbus, once again the directors and officers of the company have run afoul of the law. This has been going on since 1984, and apparently, according to observers, has its roots based in Brazilian presidential politics. It also has its basis in Brazil’s labyrinthine tax laws, which, according to many Brazilians, are impossible to obey. “There’s always some part of the tax law that you’ll be caught up by, if the authorities want to get you,” I was told, 10 years ago, when I visited Brazil and SMAR, just before all this mess originally surfaced.
Edmundo Rocha Gorini, the co-founder and Chairman of SMAR is in detention in Ribeirão Preto, Brazil and the other seven directors of the company are being sought by the law.
Gorini and the directors are charged with tax evasion, fraud, and using shell companies to operate abroad and to evade excise taxes, to the tune of R$1.6 billion (about US$682 million), according to the investigators, dating back to at least 1984.
In 2004, SMAR’s former President and Managing Director, Carlos Liboni, (who was, at the time, a candidate for President of ISA) was charged with the similar crimes, and was convicted and served time in Brazilian prison. At the time, observers said that Liboni and SMAR were singled out because of Liboni’s vocal support for the losing candidate in the Brazilian presidential election that brought Lula da Silva to power. Fines were levied against the corporation by the Lula Administration that were so large that they exceeded the annual revenue of the company. Forced to give up any ownership in SMAR, Liboni is now Secretary of Industry and Trade for the city of Sertaozinho, where SMAR’s headquarters are.
These fines have been the main reason that, although SMAR has been quietly for sale for years, no other automation company had any interest in purchasing it. According to the Brazilian government, whoever buys SMAR must also pay the fines and all the penalties.
The guilt or innocence of Gorini and the other directors and owners of SMAR really doesn’t matter as much as the situation illustrates the sometimes surprising difficulty of doing business Western-style in a country that only has a veneer of First World economy, law and culture.
It is assumed that the SMAR division located in the United States, SMAR Research, which makes most of the fieldbus chips for Foundation fieldbus, is protected from the fate of its parent company.
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