It was literally like realizing Santa Claus does not exist. For years, I would arrive at the facts by checking Snopes.com and mindlessly following their pronouncements of “true” or “false.” It was easy and socially acceptable.



But no longer.

The Snopes article in question debunks Glenn Beck’s June 21, 2010 program, in which Beck details a conspiracy tying President Barack Obama’s moratorium to George Soros’s bank account.



(Beck does a nice introduction on the general conservative view of George Soros, in case you’re wondering who the dude is. In a nutshell, Soros is the root of all evil to the Right, for he uses his multinational wallet to fund organizations, campaigns, think tanks, etc. on the Left.)



THE ISSUE



The order of events goes as follows: Soros buys tons of stock in national Brazilian oil company Petrobras in 2008 >>> Obama loans tons more money to Petrobras in 2009 >>> Obama establishes his Gulf oil drilling moratorium >>> Petrobras stands to profit >>> George Soros stands to profit.



Pretty simple to follow. Assiduous news hounds with impeccable memories wouldn’t be surprised by this, but, fortunately or unfortunately for us lazy folk, there’s Glenn Beck’s show.



Immediately after Beck’s show on the matter, Snopes, MediaMatters, and FactCheck came out with their own versions of generally similar myth-busting information: Soros had been decreasing his Petrobras holdings within the year before Obama’s loan; it wasn’t even “Obama’s loan,” in that it was made by Bush appointees at the Export-Import (Ex-Im) Bank; Petrobras can only use the loaned money to buy American products, so this move is there to help American jobs. …It’s not evil. It’s strictly business.



I am not interested in MediaMatters or FactCheck, because they have long ago proven their selectivity and partisanship.



But Snopes…??



The cognitive dissonance was too much, so I did my own sniffing around.



THE FACTS – SOROS’S PETROBRAS HOLDINGS



The first, most important detail to acknowledge is that Soros’s stake in Petrobras is currently his single largest stake.



Snopes claims that Soros sold off 5 million Petrobras shares in May 2009 (just after the Ex-Im loan). But according to information from the end of June 2009, these were his holdings:



Petroleo Brasileiro S.A.Petrobras (PBR) – 9,818,323 shares, 15.42% of the total portfolio

Hess Corp. (HES) – 5,123,198 shares, 10.56% of the total portfolio

Petroleo Brasileiro S.A.Petrobras (PBR-A) – 5,884,700 shares, 7.53% of the total portfolio

Potash Corp. of Saskatchewan Inc. (POT) – 1,978,053 shares, 7.06% of the total portfolio

Plains Exploration & Production Company (PXP) – 6,526,400 shares, 6.84% of the total portfolio



This means that the loan was made when Petrobras was dominating Soros’s portfolio.



Snopes also claims that Soros sold 22 million more stocks in August 2009. Something about the math seems fuzzy to this finance amateur, given all the above figures, but regardless! After all is said and done, by the end of September 2009, Petrobras still filled 7.7% (7.4 million shares) of Soros’s portfolio, maintaining it as his largest investment.



[Tickerspy looks like it has the most recent information. At the time of this writing, it seems Soros has increased his holdings in Petrobras to 9.1 million shares, though it is now his second largest investment (after SPDR Gold Trust). I do not know, however, if this is Soros’s only fund, and I’m probably missing some nuances here; again, finance is not my specialty. If someone could handle these details and let me know, I will update this post.]



Additionally, Snopes does not mention that the latter transaction (and the link that Snopes provides) distinguishes between the 22 million common shares that Soros sold and the 5.8 shares of preferred stock that he bought (preferred stock pays higher dividends, is less expensive, is safer, and in this case allows Soros to diversify his portfolio). Besides not making this relevant distinction, Snopes does not even mention the 5.8 million preferred shares that were bought, nor does Snopes indicate the proper perspective: Soros’s total interest in Petrobras, which is, by all accounts, substantial.



THE FACTS – SNOPES’S PREDOMINANT SOURCE IS THE EX-IM BANK



Indeed, the Export-Import Bank’s press releases and the words of the head of the bank dominate the Snopes article. This is certainly not the most trustworthy source, particularly if they are trying to cover up something as egregious as the accusation of our government colluding with a financier at the expense of a struggling economy. But you decide…



The Chairman and President of the bank, Fred P. Hochberg, made the case that “Ex-Im Bank does not make U.S. policy. In fact, our charter prohibits us from turning down financing for either nonfinancial or noncommercial reasons, except in rare circumstances including failure to meet our environmental standards.”



This is not relevant. The Petrobras loan is of a fully financial and commercial nature. Therefore, Ex-Im could have turned the loan down for any reason. Of course, they did not. They did, however, turn down a different loan recently:



Earlier this year, Ex-Im was asked to loan the development of a plant in India, which would use the products of Wisconsin jobs. $600 million and 1000 jobs were on the line, according to the Wall Street Journal. The reasoning behind the loan denial was that the coal mine used to build the plant was environmentally unfriendly.



Yet the Petrobras loan subsidized an oil company. Additionally, the Petrobras deal was worth $2 billion (with a “B”; read below for actual figure at $10 billion). Furthermore, the Petrobras loan was in exchange for jobs and products that had not yet been agreed to. This means that no American jobs or economic help was really guaranteed at the time of the loan approval, as opposed to the $600-million/1000-job Wisconsin/India deal. Yet despite both deals being similarly environmentally unfriendly, only one is turned down by the bank for environmental concerns.



All this means is that any statement by the Ex-Im Bank about environmental obligations and criteria to support loans — financial or otherwise — is merely inconsistent posturing. It is this source that is quoted extensively by Snopes.



(To be fair, it must be noted that Hochberg took his position as head of the Bank after the loan was approved. Still, the criteria he uses to justify the Petrobras loan does not seem to comport with the Ex-Im Bank’s decision under his purview in this Wisconsin/India deal.)



THE FACTS – THE DEAL ITSELF



The Ex-Im/Petrobras deal has not been finalized. According to Hochberg in July of 2009, “Final approval follows receipt of a final commitment application, review by Ex-Im Bank staff and final action by the Bank’s board of directors. ”



Hochberg justifies the transaction, so we know that he is ostensibly in favor of it and likely will not overturn the final approval when Petrobras sends in its final commitment application(s) (if they have yet to do so). What is important to note is that Ex-Im’s press release that claims Bush appointees approved the loan is misleading, because it hides the fact that Hochberg’s bank could still deny final approval. Snopes does not mention this.



Additionally, Obama can call the whole thing off. No matter how politically isolated the Ex-Im Bank might be painted, revisit the Wisconsin/India case for a quick foray into Obama’s influence over the bank’s decision to approve the loan:



“The reversal came just in time for a visit by President Barack Obama Wednesday to Wisconsin, the home base of Bucyrus International Inc. [Wisconsin company], which hopes to sell the mining equipment to Reliance [Indian company] with the help of loan guarantees.”



But instead of preventing the Petrobras deal from going through, the Ex-Im bank raised the value of the preliminary loan from $2 billion to $10 billion (that is still with a “B”). According to the Latin American Herald Tribune:



The U.S. government is preparing to provide up to $10 billion in loans to finance the development of massive hydrocarbon reserves off Brazil’s coast thought to contain 80 billion barrels of high-quality crude, an amount that could lead to a six-fold increase in Brazil’s current proven reserves and transform that nation into one of the world’s 10 largest oil producers. [my emphasis]



So this loan is meant to help Petrobras become an oil powerhouse. And…



President Barack Obama’s national security adviser, Gen. James Jones, discussed the matter with officials this week [August 2009] during a visit to the South American country, Brazilian Planning Minister Paulo Bernardo da Silva told reporters.



…In case you were still wondering how much control or oversight the Obama administration had over any of this.



The $10 billion figure, by the by, matches the Chinese government’s loan to Brazil, which, Snopes makes sure to point out, was five times the amount of the Ex-Im loan.

Totally. False.



Snopes also discusses Glenn Beck’s statement that “The Chinese government is under contract to purchase all the oil that this oil field will produce, which is hundreds of millions of barrels of oil.” But then they do the following lackluster myth-busting:



China does have an agreement to buy Brazilian oil from Petrobras, but not literally to purchase the entire output of Brazilian offshore oil fields. In May 2009, the China Development Bank (CDB) agreed to lend Petrobras $10 billion (five times the amount of the Ex-Im loan); in exchange, “the two sides agreed to increase actual crude oil exports from Brazil to China.” At the same time, Petrobras and Sinopec (the China Petroleum and Chemical Corporation) signed a separate long-term export agreement providing for Petrobras to export 200,000 barrels of oil to China per day from 2010 to 2019.



Was this an attempt to try to disprove Beck? This literally amounts to an admission that China stands to profit much more from their Petrobras deal than the United States does. In fact, the U.S. did not receive any guarantees of oil from their loan transaction.



THE FACTS – THE GOOD NEWS, AND THEN THE BAD NEWS



It seems safe to take Ex-Im Bank’s word for the fact that U.S. jobs stand to profit from the Petrobras loan. The Bank claims that the money will only be given to Petrobras for products that they buy from the United States. I see no reason to disbelieve this.



Additionally, Ex-Im Bank claims, “the bank is self-sustaining and does not receive any appropriated funds from Congress.” Just above, Ex-Im notes, “The vast majority of our financing consists of guarantees of loans made by commercial lenders.” I don’t know what they mean by “vast majority,” or from where the rest of the (possibly taxpayer-subsidized?) money might arise, but I do not have any concrete reason for serious doubt.



Furthermore, I have found no hard evidence to establish that Obama spearheaded this decision. However it would be irresponsible to discount this as a possibility. Either way, I have shown above the influence he wields over the loan (at least) after the initial approval.



The bad news is that which remains public knowledge:



(a) George Soros’s largest holding at the time of the initial loan and currently is invested in Petrobras;



(b) $10bil from the U.S. federal government are on the table to help Petrobras explore potentially lucrative oil mines;



(c) Petrobras has been salivating for Gulf drilling rigs since the spill in April, so much so that it is looking for more financing to expand its drilling operations;



(d) The U.S. government’s Gulf oil moratorium has effectively given the drilling rigs an incentive to go elsewhere (at the time of this writing, two rigs have already migrated to Egypt and the Congo). Drilling rigs that leave are not expected to return for years, leaving the Gulf with less rigs and potentially older and more dangerous models;



(e) Tens of thousands of jobs are currently in limbo in the Gulf oil industry, as are tens of millions of barrels of oil. The fishing industry in the Gulf is stalled, and the tourism industry has taken a hit.



THE CONCLUSION



This administration has proven that it is deathly against U.S. oil drilling (especially after the BP spill), particularly when it comes to deepwater drilling. And yet, they are willing to send money to Brazil to drill even deeper. Whether or not this move helps U.S. jobs, the irony is too great to write it off as merely an employment booster.



The irony only becomes sinister when we consider that this loan is meant to boost the capabilities of a company that, until just recently, had been George Soros’s greatest asset for two years. It is now his second largest asset.



Final pronouncement on Snopes: Disappointingly False.



(For the record, I remain unabashedly loyal to Wikipedia.)

for serious doubt