Meet My Brazilian Friends: Roads I Have Traveled ... Transition Journal

Dr. Heraldo Neves: 

One day, quite separate and apart from Lorena’s family activities, I visited a little doctor in an area just outside Rio de Janeiro called Mesquite. I had met the fellow earlier and he had invited me to come and see what he was doing to help the people in a populated area of about 300,000. Previously, there had not been any health-care facility in the whole area, but Dr. Heraldo Neves and his friends had purchased an old house and had converted it into a very humble clinic. 

When I arrived, I was startled at what I saw. There were hordes of people gathered in the hot sun crowding their way toward the front door of the old house. Mothers were holding crying babies, and old ladies were waiting their turn to get in by resting up against the building, where they could find a splinter of shade. Many people had been there since early morning waiting to see the doctor. He was their only hope for medical attention for their babies and for themselves. 

Dr. Neves would try to persuade his other doctor and nurse friends in Rio to volunteer and come out to his clinic and help him meet the overwhelming need. As I approached the front porch area of the old house, I saw an ancient dental chair and drilling apparatus that was run by foot pedals and frazzled cables. That was Dr. Neves’s dental clinic. 

As I entered the door, I looked to the right at a room that had once been the front bedroom. It was now painted a light blue color and had a poster of a baby pinned to the wall. On a rickety old table there was an old rusty set of baby scales. That was Dr. Neves’s pediatrics ward. What had once been a kitchen was now the emergency room that consisted of a canvas cot, an empty canister of oxygen, and a small metal cabinet with a glass front. I could see that re-rolled, grayish bandages were stacked inside the cabinet. That was it. That was Dr. Neves’s health clinic. 

“I don’t get it, Dr. Neves,” I said. “What is your problem here? You have all these people outside in lines that seem to stretch for a city block. They have come here thinking that you can help them, but when I come inside I can see that you have literally nothing in here to help them. Please tell me in your own words, what is your problem? Don’t you have anyone who comes here and comes along side of you and helps you? Doesn’t your government help you?” 

Dr. Neves was a short man with a high energy level and dark penetrating eyes. He looked straight at me and said, “Meester Jackson, you are the economista, you should know that we are experiencing inflation that is running over three thousand percent. I have no money, but even if I did I could not buy anything from the US or Great Britain or Japan. We are not allowed to buy anything outside Brazil, since our cruseiros currency would then flow out of our country and into the other country, causing more hyperinflation for us. And the government infrastructure here is not strong enough to help us. So, we are doing the best we can with what we have.” 

“Dr. Neves,” I confessed, “I do not know what I am talking about when I say this to you. But, I think I could go back to where I live in Colorado and get some medical supplies donated to help you.” Then I quickly added, “But if I were able to send some things to your clinic, you would have to guarantee to me that the goods would not get into the black market. I have been here in Brazil now long enough to know that I want to be part of the solution and not part of your problem.” 

The intensity of Dr. Neves’s countenance softened and he said to me with a little smirk to his smile, “Well, Meester Jackson, you are working directly with President Sarney in Brasilia; why don’t you get the guarantees directly from him?” 

Dr. Mauro Corbellini and President Sarney: 

I got on the airplane and flew back to the capital. I took Lorena with me to do the translating so that there would be no misunderstanding. There I began working on a medical donation concept with the President and Dr. Mauro Corbellini, Brazil’s Minister of Health. In our meetings the Minister of Health said to me, “if you will go back to the US and obtain donated medical goods for Brazil, I will see to it that you can import the things on a tax exempt basis. And, further, I will give you a large storage space on the University Medical School campus where Lorena attends in the city of Campinas. You will have the key to the storage area and you can decide where the medical goods should go based on your assessments.” 

I told the Minister of Health, “Thank you. That is all the assurance I need.” We shook hands and we parted. When I got back on the airplane, I slumped down in my seat and put my hands to my forehead and thought, Oh, my goodness, what have I just done to my life? I don’t even know where to go get a Band-Aid. 

I made two trips to Brazil in 1987. Our first load of donated medical goods was shipped in August of that year, along with a $5,500 cash donation from Anna Marie and me to Dr. Neves’s clinic. My trip to Brazil in March of 1987 had certainly changed my life. Dr. Neves could not afford to pay any money for medical goods. I would have to find a way to get the items donated. Additionally, the shipping costs to deliver the donations could be a humanitarian deal-killer. 

How would we develop a model that could be sustainable? Perhaps pursuing the idea of financial consulting with foreign governments like Brazil would help finance the possibility of additional gifting. There certainly appeared the possibility of creating some revenue stream from trying to develop the concepts of debt-for-equity swaps and other financial ideas that could assist the Brazilian government in their financial crisis. I would push to see if the US banks would be agreeable to pursue those kinds of ideas. 

The years of 1984 through 1988 were extremely busy and a bit complicated. I was not only getting more involved in Africa and South America, but I was still speaking regularly and conducting seminars with the What’cha Gonna Do With What’cha Got? project in the US. Now I had even been asked to hold two of the financial seminars in Brazil. 

It didn’t take any time at all for word to get out that we had begun to donate high-quality medical goods to Brazil. Before the end of 1987, I was also approached by contacts from Guatemala, wondering if we could include them in our donations. From those early days in Brazil the growth of Project C.U.R.E. has not slowed down. Twenty-eight years later we are shipping into over 135 countries and have well over seventeen thousand volunteers helping us just in the United States. But I will hold dear to my heart forever those early days where God directed my heart, ambitions, and efforts to help the beautiful people of Brazil. 

© Dr. James W. Jackson   

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Meet My Brazilian Friends: Roads I Have Traveled ... Transition Journal

The next time I flew into Sao Paulo, Sostenez and his wife Miriam met me at the airport. They brought along with them the medical student, Lorena. She was a real winner, and for the rest of the many times I visited Brazil, Lorena translated for me. Little did I know at that time the importance and providence of that meeting at the airport in Sao Paulo. 

Lorena was from a medical family. They had moved to Brazil from Chile during the repressive regime of Pinochet. Lorena’s mother, Natalia, was one of the best known gynecologists in the whole Sao Paulo area. Her sister, Natasha, was a dentist, and Paulo, Lorena’s fiancé, was a doctor already well known for his outstanding work in infectious diseases. I was totally surrounded by medical people. They would invite me to go to their church with them and then would insist that I come to their home for Sunday dinner. Following dinner, I would be expected to accompany them on their hospital rounds. I got a real introduction to Brazil’s health-care system. 

At times they would insist that I join them as they visited the poorest of the poor favelas, or shantytowns, to perform free medical service to the desperate dwellers. It was so dangerous in some of the favelas that the police or military would not even enter the areas. Then, the family would tell me how every October they would fly in small airplanes into the remote villages of the Amazon region and perform free clinics for the native people, who would have an opportunity to see a doctor only once a year. I began to truly admire the members of the family and all the acts of goodness in which they were involved. 

I was fully engaged with my economic consulting work with President Jose Sarney and his chief economist, Antonio Bacelar on our plan that came to be known as the “Libra Proposal.” I was also becoming extremely sensitized to the urgent need in the Lesser Developed Countries for someone to go and help them with their health-care delivery systems. Even just the simplest of medical help was not available to millions of poor, but good, people. 

NOTE: Lorena and her family became a strategic keystone to what would eventually become Project C.U.R.E. (Commission on Urgent Relief and Equipment), the largest handler of donated medical supplies and pieces of medical equipment in the world. Over the years Anna Marie and I totally adopted Lorena and her family. We told our sons, Douglas and Jay,that Lorena and Paulo were as close as they would ever get to having a brother and sister. Eventually, I began working directly with the two medical universities in Sao Paulo state where Lorena and Paulo were affiliated. We visited them many times and had them come to our home in Colorado. In recent years Paulo and Lorena even came to the mountains of Colorado with their teen-age sons to spend Christmas with us in our home on the creek. We also brought them from Brazil to Colorado to meet all our friends when we celebrated the launching of my book The Happiest Man in the World. 

Over the ensuing years Lorena and Paulo have become very influential medical doctors in Brazil. Lorena and her mother, Dr. Natalia, now have their own successful medical clinic. Paulo is highly decorated as a researcher and professor at the university in the areas of dermatology and infectious diseases. Little did we know what God had in store for us when Sostenez and Miriam introduced me to Lorena at the Sao Paulo airport that day in 1987. 

© Dr. James W. Jackson   

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Meet My Brazilizn Friends: Roads I Have Traveled. . . Transition Journal

Sostenez Pimentel: 

By 1986, I was being recognized as a knowledgeable international economic player, and people began to contact me for my help and opinions. I had thoroughly enjoyed what I had been doing in helping people in an area that was comfortable to me. But in my quiet times I would keep asking why I was being taken on a trip to strange parts of the world where I was meeting and working with people of influence and high position. It wasn’t going to be very long, however, until I discovered the next installment of revelation on the quest. Then I would know just why I had been taken on such an adventure. 

When I arrived in Brazil, I was introduced to some very powerful people who had considerable influence in the capital, Brasilia. My credentials included letters of recommendation from US Senator John McCain and Senator Bill Armstrong. The Brazilian government had requested that I come to Brasilia, and our US Ambassador Shlackman, US Consul on Economic Affairs, Michael J. Delaney, and US Economic Minister to Brazil, John Bowen, would formally introduce me to Brazil’s Minister of Finance and Minister of Foreign Affairs. 

I endeavored to pick up some key phrases in the Portuguese language, but there was no way that I was going to become proficient in the language in time to adequately participate in high level talks. I was fortunate enough to make some friends in the British Embassy in Brasilia, and they were more than happy to help me. If they were not available to help me, there was a fine missionary gentleman in the Brasilia area who had volunteered to help me with the translating. 

Soon I met a young, ambitious man named Sostenez Pimentel. He also was an economist and had been employed by the Brazilian government. He was married to a lovely young schoolteacher, named Miriam. They wanted to get ahead financially, so they decided that Sostenez would quit his government job and become an entrepreneur. They both asked me if I would help them get involved in the import/export business. I agreed that I would help them, and in exchange they could help me with translating when I was away from Brasilia. 


The only problem with the deal was that Sostenez’s English was about as good as my Portuguese. We really had to work hard at communicating with each other. Portuguese was just enough different from Spanish to get things all mixed up, even though both languages were derived from the Latin root.  

One day we had time as we were traveling across Brazil by car for me to approach the language subject with tact. “Sostenez,” I said, “when I am in business or government meetings in Brasilia I can do very well. But when I need to travel to Rio or Sao Paulo or Belo Horizonte or Goiania and I have meetings, I really need to have someone to help me who can speak better English. I mean absolutely no offence to you, but do you know of someone who might be able to help me?”  

To my delight he was not offended, and quickly went on to try to make me understand that there was a very sharp medical student who knew English very well. In fact, she was coming over to Sostenez and Miriam’s house every Saturday morning and teaching them English. Sostenez agreed to ask Lorena if she would help out a crazy American in distress. I assured Sostenez that I would continue helping him get into business, even though he would no longer need to translate for me.  

One of the saddest incidents that I personally encountered during all my work in Brazil was about a year later on a Sunday night when a group of young, drunk Brazilian thugs forced Sostenez off the road and tried to rob him. He resisted. They killed him and left his body crumpled by the rear wheel of his small car. I lost a dear friend and it was another wake-up call for me as to the dangers of working in developing countries where the rule of law is not well established. 

© Dr. James W. Jackson   

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Journal Highlights: Roads I Have Traveled ... Transition Journal, Excerpt # 4

(continued): Brasilia, Brazil, 1986: While I was still working with Zimbabwe, the embassy in Quito, Ecuador, heard what I was doing, and I went there at their request. I had a great opportunity to research and study the concept of the debt swaps or debt-for-equity exchanges. By this time I was working under my newly formed company, International Market Exchange, (IMX).

From Quito I went to Lima, Peru, then to Caracas, Venezuela, and finally I traveled to Brazil, where I worked for nearly three years with President Jose Sarney and his chief economist, Antonio Bacelar. Our plan became known as the “Libra Proposal,” and we were joined in the effort by Mr. Dilson Funaro, the outgoing Minister of Finance, the incoming Minister of Finance, Mr. Bressler, and William Canvallo, the Secretary of the Federal District of Brazil. 

My involvement with the financial leadership in Brazil ultimately included my leading a delegation to Washington D.C. of Brazilian leaders to meet with Honorable James Baker, Secretary of the US Treasury. That was before James Baker had assumed the position of Secretary of State for the US. 

The Libra Proposal was a plan that made it possible for the repayment of Brazil’s debt back to the American banks. Brazil’s economy was at that time experiencing runaway inflation of three thousand percent. By the time the money would get into their system there was nothing left to pay the debts. 

While working on the necessary research for writing the economic sections of the book, What’cha Gonna Do with What’cha Got ?, I had run into an interesting concept. Many of the US banks had been coerced by our government, the World Bank, and United Nations to make sizable loans to foreign countries as economic relief measures. Instead of our government simply handing over large sums of additional monies to the United Nations, who in turn would hand out the monies to foreign countries, especially in Central and South America, they pressured our banks to make the loans directly to those needy countries. That sounded like a great strategy to bypass the corruption of the United Nations and the World Bank. But there was a big problem. 

The banks insisted that the sovereign countries sign legitimate promissory notes guaranteeing the repayment of the loans. Perhaps the United Nations or the World Bank could allow the foreign countries to default on the loans and just write them off as bad debts. But individual banks in America were under the tight scrutiny of the US Federal Bank Examiners and Federal agencies like FDIC. 

It was true that under the Nixon administration in the 1970s, when the US economy was cut loose from the gold standard, banks were allowed to use foreign sovereign debt instruments as credits toward their necessary Fractional Reserves. But it was high risk to make foreign sovereign loans, and utter disaster for the US banks if those foreign loans should ever go into default. 

By the mid-1980s, many of the foreign countries were in default to the US banks. South American countries simply shrugged their shoulders and said, “Sorry, we can’t make good on our loan commitments.” That threw the US banks into a crisis. Once the loans were declared non-performing loans, the US banks had to write them off, and if they had used them as part of their fractional reserves, their assets and lending powers began to implode. 

But some creative financial folks in the US came up with a clever way to take care of the problem. That program, known as Debt Swap caught my attention. It simply utilized the common elements of the old barter system to save the banking industry in America. 

Here is a common way debt swaps worked: US bank examiners would require that a certain bank would have to declare a sovereign foreign loan as a non-performing loan. The bank could no longer use the sovereign foreign debt instrument as part of its fractional reserves, and its lending ratio would shrink by approximately twenty times the amount of the non-performing loan. That would spell really big trouble. 

At that point a group of individuals or an entity would agree to purchase the bad loan at an attractive discount from the bank, and their new note would heal the bank. Thereupon, the new holders of the foreign note would take the note to the country owing the debt and agree to swap the note for assets within the country to settle the debt. 


Those assets could include government controlled exports, natural resources like oil concessions, mineral rights, undeveloped real estate, government-owned buildings, fishing rights, rights to ports and harbors, or any other service or commodity of equally agreed-upon value. Simply, the indebted country could use its own assets to settle the debt where it could not come up with cash to make the payments. 

Many times, as was the case in Brazil, large corporations within the country would desire to purchase portions of their own government’s debt so that they could use the credits to purchase commodities from the government within the country, or apply it to their tax obligations. The sovereign countries would end up better off, the banks would be better off, and the arbitrators would be handsomely enriched for their efforts. 

Next Week: Implications of International Debt Swaps or Debt for Equity Swaps for the trillions of dollars of U.S. international debt situation. 

© Dr. James W. Jackson 

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