Intervention puts governance of state-owned companies at stake
Petrobras's board of directors is expected to confirm this Friday Army General Joaquim Silva e Luna as the oil giant's new CEO. This is the final chapter of a process that has put in the limelight the federal government's commitment to ensure that skilled executives - rather than politically-appointed officials - would manage Brazil's state-owned companies.
This was not a one-off case. Brazil's main power utility Eletrobras and, especially, Banco do Brasil (BB) have also felt the controlling shareholder's heavy hand in recent months - a setback for the governance of state-run companies listed on the stock exchange.
President Jair Bolsonaro's interference generated political noise, reduced the companies' market capitalization and exposed weaknesses in the system to shield these assets despite the advances brought by the State-Owned Company Law, approved in 2016, in the Temer administration. In total, eight directors of these three companies have resigned since December due to dissatisfaction with the government's meddling.
"Bolsonaro and Dilma [Rousseff], both on the ideological extremes, touch each other on this issue," says José Guimarães Monforte. He stepped down as Eletrobras chairman in December and, earlier this month, resigned as an independent board member of Banco do Brasil. For him, the situation causes a risk of damage to the companies' day-to-day operations. "It's a huge step backward."
The developments had repercussions on stocks. Banco do Brasil dropped 22.3% this year, Petrobras have retreated 15.8% and Eletrobras fell 2.32%. Ibovespa rose 1.41% in the period.
At Petrobras, the stress was caused by President Bolsonaro's decision to fire CEO Roberto Castello Branco in response to pressure from truck drivers against the readjustment of fuel prices. Mr. Silva e Luna was picked by the president despite never having worked in the oil and gas industry.
The crisis in the bank began in January, when Mr. Bolsonaro decided to fire CEO André Brandão because of a restructuring plan that included a buyout plan and branch closings. The fire was controlled, but not extinguished, as the president insisted in comment on the matter with his followers. The executive then decided to resign, and the board of directors was excluded from the process of selecting his successor. To make things worse, Fausto Ribeiro, the chosen one, was considered unsuitable for the position by the bank's independent directors. Three independent BB board members...
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