Brazils Scandals Are A Boon For Crisis Management

Recent scandals and tragedies involving Brazilian companies, banks and public-sector agencies are turning into an opportunity for local public-relations firms.

At a time of persistent recession in the country, Brazil’s PR business income increased 6.7% last year, according to the Yearbook of Corporate Communications. Most of this gain came from increased demand by companies facing serious challenges.

“Our perspective was a negative or neutral income result for 2016. In a time of decreasing of editorial space, the crisis management has given a great opportunity for the PR firms in Brazil,” says Carlos Henrique Carvalho, executive president of Abracom, the Brazilian association of PR firms. “Until now, there is nothing changing our good expectations for 2017.”

Historically, crisis management in Brazil has been sought by industries that dealt directly with the final consumer, like airline and telephone companies, logistics and transportation industries, and the food and pharmaceutical sectors. Since 2005, the boom of social media, aviation accidents and investigations of scandals in the federal government have expanded the demand for professional assistance.

Since 2014, with the “Operation Car Wash” bribery scandal and other crises, demand has grown even more robust. Odebrecht, JBS and 41 other companies were involved in schemes of corruption detected by federal police in the Car Wash investigation. Samarco, a subsidiary of mining giants Vale and BHP Billiton, was responsible for a dam collapse that became the biggest environmental tragedy in the country’s history. Banks and financial institutions were caught in another corruption case, called Zealots (Zelotes). There were also crises at food companies JBS and BRF, both targeted for irregularities in their meat production facilities.

Crisis management is one of the main segments for FSB Communication, which was working for BTG bank last year, also investigated in Operation Car Wash, and is now working for JBS. Another big Brazilian PR firm, CDN Communications, already had a contract with Odebrecht when the construction giant became one of the main targets of Car Wash.

According to Carvalho, the recent investment of foreign PR firms in Brazil is not concentrated on the crisis-management area, despite this booming segment. Most of them are focusing on the growing general demand for PR services in the country.