In the late 1970s, Brazil and Iraq became major commercial partners. The South American nation, then ruled by military dictator Ernesto Geisel, needed oil to run its industrial machine, which was booming at the time. Meanwhile, Iraq needed food, technical support, appliances, automobiles and, perhaps most importantly, engineering services to build and improve its infrastructure, all of these things that the Brazilians were not only able but eager to offer. It seemed only natural that the two countries began trading so feverishly with one another, and a lot of people got rich off of that relationship.

One of those people was the former construction tycoon Jesus Murillo Valle Mendes, whose construction empire – Mendes Junior – was once the third-largest privately-held conglomerate in Brazil. In 1978, Mendes' companies headed to Iraq backed by the military government and with the approval of Saddam Hussein. Mendes Junior projects in Iraq included the constructions of the Baghdad-Al Qaim-Akashat railway, the Iraq Expressway Number One (the largest controlled-access highway in the Middle East) and a pumping station on the Euphrates River. In total, these projects were estimated to be worth more than $3bn, and were responsible for the creation of 10,000 direct jobs for Brazilian workers who were recruited to work in Iraq.

As a result of such workforce migration, Mendes Junior took huge costs to build an entire city in order to accommodate its workers abroad, which included a hospital, schools, supermarkets, leisure and fitness clubs and some 725 houses. But it was all worth it, according to Mendes. "Saddam paid up in advance when he had money," the businessman remembered, in an exclusive interview with this month's Brazil's PODER Joyce Pascowitch magazine.

But the glorious times of Mendes' companies in the Middle East were strongly affected by the political turbulences that hit the region in the late 1970s and throughout the 1980s. First there was the Imposed War between Iran and Iraq, which lasted from 1980 to 1988. Then it came the seven-month long Iraqi occupation of Kuwait that subsequently resulted in direct military intervention by U.S.-led forces in the Gulf War. At the same time, Brazil itself was going through major political and economic upheavals, with a new president and its government taking office under a debt crisis and the failure of Plano Cruzado to abate chronic inflation.

In 1985, Mendes Junior took its first notable leg down, when Saddam Hussein defaulted on payment for the services provided by the company in Iraq. After two years of failed negotiations, Mendes Junior brought the case to the ICC - International Chamber of Commerce in Paris. The deadlock was resolved in favor of the Brazilians in 1989, but only briefly. In response to the verdict, Saddam threatened to cut oil supplies to Brazil, something the country could not afford, since nearly 35% of its oil imports were coming from Iraq.

To avoid an oil crisis and to tackle the situation of Mendes Junior, the Brazilian government authorized an 11th-hour loan from the state-controlled Banco do Brasil to the company, so it could meet its financing commitments and wouldn't be entirely in havoc. The lull didn't last long, though, as the situation in Iraq was worsening gradually, with Mendes Junior unable to access its equipments and to proceed with its projects in the country. The company failed to pay the loan, and by 1995 the government was taking legal action against Mendes Junior and its shareholders, whom counter-attacked with a lawsuit against Banco do Brasil, asking for $2bn for moral and material damages.

To make things even worse, Mendes Junior was also involved in another bickering mess with the state-owned CHESF, a regional power utility and a major subsidiary of Eletrobras, Latin America's biggest power utility company – it accused it of missing payment on a contract from the early 1980s. The lawsuit is still pending, and Mendes Junior is seeking for R$ 1.2tn (roughly $755bn) in damages against Brazil's Union, which controls both Banco do Brasil and Eletrobras, one of the largest (if not the largest) reparations sought in history. To come up with such an unparalleled sum, Mendes' lawyers took into account the high inflation rates in Brazil during the 1980s and the early 1990s, which reached a record 5,000% in 1993.

Both cases marked the beginning of the fall of Mendes' empire. Although his companies are still in operation, with revenues of nearly $1bn in 2010, they no longer resemble the powerhouses of the past. Besides, his quarrels with Banco do Brasil and CHESF have led Mendes to be "blacklisted" by the Brazilian authorities, resulting in Mendes Junior constantly being left out of most of the major projects scheduled to take place in Brazil for the preparations of the 2014 FIFA World Cup and the 2016 Summer Olympics in Rio de Janeiro, the cream of the crop among the country's construction companies.

In spite of such a David against Goliath struggle against the world's 7th largest economy that he currently finds himself in, the 85-year-old Mendes remains optimistic about the case. "I am a patient man when it comes to be beaten out," he told PODER Joyce Pascowitch magazine. "And my nature is much more like the one of a rottweiler."

(Published by Forbes - August 30, 2011)