Economy

Rio 2016: What A Shame That Brazil Is Hosting The Olympics

When Rio de Janeiro won its Olympic bid back in 2009, Brazil was hailed as a nation on the rise. Now, it is the wrong place at the wrong time to host the 2016 Summer Games.

A boy peddles past the polluted  Rodrigo de Freitas lagoon slated to be the site of sailing events at Rio 2016.
A boy peddles past the polluted Rodrigo de Freitas lagoon slated to be the site of sailing events at Rio 2016.
Fabio Teixeira/Pacific Press/ZUMA
José Henrique Mariante

-Essay-


SAO PAULO â€" Countries come up with all sorts of justifications for wanting to host the Olympic Games: that it will promote education through sport and the coming together of people; that it will spur environmental, economic and social changes that will modernize the host city and provide a legacy that will benefit its inhabitants and future generations.

But in truth, the only real point of organizing the Olympics is to spend money â€" and lots of it. It's also true that the Games are a unique, short, expensive, complex event with improbable returns. Which raises the question of why a developing country like Brazil, with its long list of crises and unsolvable problems, suddenly decided to flex its muscles and ask to host one?

Back in 2009, when Rio de Janeiro was chosen to become the first South American city to host the event, Brazil as a whole was hungry for new solutions to longstanding issues. Then President Lula da Silva was a sort of global mascot. After all, the blue collar, nine-fingered leader created jobs and bumped up consumption for tens of millions. The country was surfing the wave of expensive commodities exports, of massive offshore oil fields, and had already secured the selection to host a second World Cup in 2014. The number of Brazilian billionaires on the Forbes 500 list, meanwhile, kept climbing.


The Olympics are always looking for the money, and this nouveau-riche Brazil, eager to show itself off to the world, had cash to spend. It was, in that sense, following in the footsteps of other host nations: Japan (Tokyo 1964), Germany (Munich 1972), South Korea (Seoul 1988), Spain (Barcelona 1992), and China (Beijing 2008). Like Brazil, they idealized events that were supposedly going to transform the host cities and through it the countries as a whole. One after the other, these cities wanted to put themselves on the map. Some have managed to stay on it, other haven’t.


For better or worse, Rio de Janeiro has always been on the world map â€" as the capital of the Brazilian Empire, of the First Republic, home to the Maracaña stadium, of bossa nova, of the Carnival, of jiu-jitsu, of easy sex, swindling and drug trafficking.


The city’s bid for the 2016 Summer Olympics was intended to show that the Walt Disney image, as the hometown of Zé Carioca, had been overtaken by reality. It was also to sell the certainty of broad, modern reforms in Brazil as a whole.

What was at the time the world’s sixth largest economy was, after all, on the verge of becoming the fifth. Christ the Redeemer, let's not forget, even made it onto the front page of The Economist â€" taking off like a rocket!


From a ripple to a tsunami

The International Olympic Committee got the message and spurned the "easy" choices amid a difficult economic situation. Chicago, Tokyo and Madrid, cities without infrastructure problems, were suffering from the global crisis of 2008-2009 â€" the same one that would provoke little more than a "ripple" in Brazil, Lula famously predicted.


Then President Lula (center) after Rio was selected in 2009. Photo: Agencia Brasil

The pragmatic officials at the International Olympic Committee (ICO), therefore, put their money on what appeared to be the right horse. It was a market necessity for the Olympics to reach South America, its final frontier. And it was the least it could do after its rival, soccer's FIFA, had awarded the 2010 World Cup to the African continent (a continent that doesn’t exist yet in the Olympic geography) before returning to Brazil.

In the IOC's recent choice for the 2022 Winter Olympics of Beijing â€" a city that’s not exactly famous for its ski slopes â€" the real news is less in the victor than in the fact that all the other viable candidates dropped their bid before the vote was even held. One after the other, Oslo, Munich and Stockholm bowed to public pressure at home. It seems the Olympics have lost their charm and glamor in the eyes of the developed world, which no longer sees the point of splashing out for such prohibitively expensive amusement.


In 2009, when it won the race for next year's Summer Games, Rio, the sexy and spectacular Brazilian showcase, was the right city at the right time. Six years later, it's very much the wrong city at the wrong time.

Rio's problems â€" the water pollution in Guanabara Bay, the rampant urban violence â€" aren't new. But they were never as obvious as they are now. A year from now, when the Games are over and done with, Rio’s Olympic legacy will simply be the fact that the event even managed to take place.

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Economy

Air Next: How A Crypto Scam Collapsed On A Single Spelling Mistake

It is today a proven fraud, nailed by the French stock market watchdog: Air Next resorted to a full range of dubious practices to raise money for a blockchain-powered e-commerce app. But the simplest of errors exposed the scam and limited the damage to investors. A cautionary tale for the crypto economy.

Sky is the crypto limit

Laurence Boisseau

PARIS — Air Next promised to use blockchain technology to revolutionize passenger transport. Should we have read something into its name? In fact, the company was talking a lot of hot air from the start. Air Next turned out to be a scam, with a fake website, false identities, fake criminal records, counterfeited bank certificates, aggressive marketing … real crooks. Thirty-five employees recruited over the summer ranked among its victims, not to mention the few investors who put money in the business.

Maud (not her real name) had always dreamed of working in a start-up. In July, she spotted an ad on Linkedin and was interviewed by videoconference — hardly unusual in the era of COVID and teleworking. She was hired very quickly and signed a permanent work contract. She resigned from her old job, happy to get started on a new adventure.


Others like Maud fell for the bait. At least ten senior managers, coming from major airlines, airports, large French and American corporations, a former police officer … all firmly believed in this project. Some quit their jobs to join; some French expats even made their way back to France.

Share capital of one billion 

The story began last February, when Air Next registered with the Paris Commercial Court. The new company stated it was developing an application that would allow the purchase of airline tickets by using cryptocurrency, at unbeatable prices and with an automatic guarantee in case of cancellation or delay, via a "smart contract" system (a computer protocol that facilitates, verifies and oversees the handling of a contract).

The firm declared a share capital of one billion euros, with offices under construction at 50, Avenue des Champs Elysées, and a president, Philippe Vincent ... which was probably a usurped identity.

Last summer, Air Next started recruiting. The company also wanted to raise money to have the assets on hand to allow passenger compensation. It organized a fundraiser using an ICO, or "Initial Coin Offering", via the issuance of digital tokens, transacted in cryptocurrencies through the blockchain.

While nothing obliged him to do so, the company owner went as far as setting up a file with the AMF, France's stock market regulator which oversees this type of transaction. Seeking the market regulator stamp is optional, but when issued, it gives guarantees to those buying tokens.

screenshot of the typo that revealed the Air Next scam

The infamous typo that brought the Air Next scam down

compta online

Raising Initial Coin Offering 

Then, on Sept. 30, the AMF issued an alert, by way of a press release, on the risks of fraud associated with the ICO, as it suspected some documents to be forgeries. A few hours before that, Air Next had just brought forward by several days the date of its tokens pre-sale.

For employees of the new company, it was a brutal wake-up call. They quickly understood that they had been duped, that they'd bet on the proverbial house of cards. On the investor side, the CEO didn't get beyond an initial fundraising of 150,000 euros. He was hoping to raise millions, but despite his failure, he didn't lose confidence. Challenged by one of his employees on Telegram, he admitted that "many documents provided were false", that "an error cost the life of this project."

What was the "error" he was referring to? A typo in the name of the would-be bank backing the startup. A very small one, at the bottom of the page of the false bank certificate, where the name "Edmond de Rothschild" is misspelled "Edemond".

Finding culprits 

Before the AMF's public alert, websites specializing in crypto-assets had already noted certain inconsistencies. The company had declared a share capital of 1 billion euros, which is an enormous amount. Air Next's CEO also boasted about having discovered bitcoin at a time when only a few geeks knew about cryptocurrency.

Employees and investors filed a complaint. Failing to find the general manager, Julien Leclerc — which might also be a fake name — they started looking for other culprits. They believe that if the Paris Commercial Court hadn't registered the company, no one would have been defrauded.

Beyond the handful of victims, this case is a plea for the implementation of more secure procedures, in an increasingly digital world, particularly following the pandemic. The much touted ICO market is itself a victim, and may find it hard to recover.

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