Multinationals seem as convinced as ever that "Brazil is the country of the future"—as it always has been. Foreign direct investment was a record $31 billion last year (among emerging economies, only China got more) and the government expects a similar amount this year. Much of the money is goingon snapping upexisting companies. But several recent cases show that buyers must watch out for nasty surprises. Consider Spain's Banco Santander. In January it agreed to buy Bozano, Simonsen, an investment bank. Then it emerged that the Brazilian bank had been routing money through offshore "fiscal paradises" to avoid taxes. If the tax authorities judge the scheme inadmissible, Bozano, Simonsen will have to pay perhaps 1 billion reais ($550m) in back taxes and fines, equivalent to more than half its market value. Fortunately for Santander, this bad news emerged in time for it to insist that the bank's seller, Julio Bozano, deposit enough money in an escrow account to cover the possible tax bill.
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