In order to build harbors and railroads in the early XX century, Brazil has borrowed money from citizens and banks in Europe issuing bearer bonds that now, a hundred years later and belonging to Brazilians, can be used as guarantee on public tenders and on infrastructure constructions, ironically for the same purpose they were once issued.

These bonds can also be used as surety or credit guarantee towards the National Treasury, as part of a strategy to inhibit legal actions aiming the withdrawal before the courts of London, Hamburg, Amsterdam, Geneva and Brussels – as well as the courts of Florida (USA).

The opportunity is open through the edition of the Legislative Decree n. 20 of 1962 – still not published on the Union Daily Journal – which had the “effect of making the Union’s, States’ and Counties’ bonds valid for charging”, according to the jurist Hermes Lima, former minister of the Foreign Ministry, and to the Brazilian Supreme Court.

In order to solve the conflict in regard to the currency which should be used to make the payments, whether gold franc or franc paper, Brazil was invited (and accepted) to take the matter into the Permanent Court of International Justice, in Hague. In 1929 the Court decided that the principal and interests of the bonds with gold payment pledge must be paid according to French monetary legislation at that time, being the standard of gold value provided for in the law of the 17th Germinal, Year Eleven (a single gold franc would be the twentieth part of a piece of gold weighing “6 gr. 45161, au titre de 900/1000 d’or fin”). All agreements were frustrated, whether by the First World War, the 1930 Revolution, the Second World War, by Getúlio Vargas’ death or by institutional exceptions.

In the “New Republic”, initiated by the 1930 Revolution, an economic plan is established (“Plano Aranha”) in order to create filters to protect the “Old Republic” supporters’ bond owners, due to their credit potential to bankroll a counterrevolution. Following the plan, which had also aimed at negotiating with bankers than with bonds’ holders, in May 4th, 1956 the Brazilian ambassador sealed a deal “for exchange of notes” with the French consul and the “Association Nacionale des Porteus Français de Valeurs Mobiliéres”, setting and initiating the payments of 26 gold franc loans issued by the Union, States and Counties.

The problem is that those bonds weren’t issued only in France, but also in London, Brussels, Geneva, Rio de Janeiro, Hamburg, Amsterdam, acquired by citizens all over the world, which weren’t embraced on the “agreement”.

Despite of the fact that this deal was approved by the Congress through the Legislative Decree n. 13 of 1959, published on the Union Daily Journal of Oct. 09th (1959), in January of 1960 the opposing party presents the Decree Project n. 36/60, which intends to proclaim its invalidation due to many errors, specially its unconstitutionality – because it wasn’t performed nor signed by the President.

In 1962, just before the voting of the Decree Project n. 36/60, Hermes Lima, minister of the Foreign Ministry back then, was called in to present some explanations. He informed the Senate that payment of those bonds related to the “agreement” “was performed in an irregular and deficient way”, and that “its revoking would put the Government into a sui generis situation, because the ‘agreement’ had already been partially executed. It would also make the Union’s, States’ and Counties’ bonds valid again.

The Senate approved the annulment through the Legislative Decree n. 20 of 1962, published on the Union Daily Journal of Dec. 18th, 1962. Its text reveals the political-institutional seriousness back then. Despite what was voted, the decree establishes on its first article that “the Legislative Decree n. 13 of Oct. 6th, 1959, which approved the Withdrawal Agreement signed in Rio de Janeiro on May 4th, 1956, had been approved”. The news traveled.

The data computerization made it possible to acknowledge that the approved and spread text isn’t the one which was in the Union Daily Journal, but the one re-edited on the Jan. 17th, 1963 Congress Journal. This, indeed, annuls the Legislative Decree n. 13 of 1959 (which approved the “agreement”). A worldwide interest text spread only at the Congress, in Brasília, in January of 1963? While all congressmen were on vacation? While the city was just under construction? Deliberate or not, there’s no doubt about the error and its purpose to deceive citizens all over the world who own these bonds.

The 1964 coup and the post-dictatorship annulment of the “agreement” overwhelmed rights and responsibilities – that now emerge through the re-democratization, the greater access to knowledge, through the internet. At National Treasury’s website there’s no reference whatsoever to the gold franc bonds. The briefing “Apólices emitidas em francos franceses – Acordo Brasil-França” is a summary of the Report PGFN/COF n. 1.652 of 1992, in which Banco do Brasil (Portugal Agency) consulted Brazil’s Central Bank about an European who wanted to withdrawal a gold franc bond.

This Report does not inform the citizen that his bond was among those related in this agreement – later revoked. It is acceptable that in 1992 the National Treasury wasn’t aware of the republished text of the Legislative Decree n. 20 of 1962. The same can’t be said about the Attorney General’s Office, which since 1948 took a stand against the constitutionality of those 1941 and 1946 agreements (in “exchange of notes” as well).


Jurisprudence on this matter, so far, has been built over precarious knowledge due to omissions of the Union itself.


Rights exercise, Brazil’s consolidation as a Democratic Rule of Law State, the internet, better (and free) access to knowledge and the acquisition of state documents reflect on new basis to make a plea and to provide new answers as well.

Concerning the gold franc bonds, these answers can also come from London, Amsterdam, Hamburg, Geneva and Brussels’ courts. Florida Federal Court recently decided on behalf of its jurisdiction to judge the 1920’s German bonds’ withdrawal plea.

The plea and admission of the judicial order for the purpose of using the bonds as surety on public tenders, on PAC’s construction contracts and towards the National Treasury are perfectly realistic. The bonds will be applied in reversible and non-risky situations, which will stimulate the bonds to be on Brazilian citizens’ or companies’ hands until further decision. There is a danger in delay running against the National Treasury itself.

(*) Uarian Ferreira – uarian@uarianferreira.com.br – is one of the senior associates at the law firm Uarian Ferreira Advogados SS. He holds a master’s degree in Company Management; he studies ancient bonds’ use and withdrawal and he is a chart member of the NGO Amarbrasil.


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