CVM fines former boss of Oi in BRL 170 million for illegal bonus – 05/30/2023 – Market

The CVM (Comissão de Valores Mobiliários) condemned this Tuesday (30) former executives and directors of the operator Oi for authorizing the payment of irregular bonuses after the approval of the merger with Portugal Telecom, in 2014.

Sponsored by the PT government, the merger started the downfall of Oi, which in March filed its second judicial recovery process. The business began to sink after the discovery of billionaire liabilities of Portugal Telecom with an affiliated company.

President of Oi at the time, Zeinal Bava received the highest fine, R$ 169.5 million, in addition to being barred from operating in the Brazilian financial market for ten years. The amount corresponds to 2.5 times the bonus he received at the time, in an amount corrected for inflation.

The report was unable to contact the defenses of the executives until the publication of this text. In the process, they allege that they received the values ​​for the extraordinary dedication to the merger process, which would have exceeded their attributions in the company.

According to the CVM, Bavard not only decided for his own benefit, but also determined the payment of bonuses to the company’s then financial director, Bayard Gontijo, to the then chairman of the board of directors, José Mauro Ferreira, and to an alternate director, José Augusto Figueira .

The indictment says that the bonuses were approved in email exchanges, without approval from the board of directors or the shareholders’ meeting, which is responsible for approving executive compensation.

In addition, the values ​​exceeded the ceiling established for the compensation of the company’s managers for that year.

Gontijo was fined R$ 24.2 million for the transaction bonus, another bonus related to the successful debt renegotiations of Portugal Telecom’s controllers and for having approved the disclosure of the company’s balance sheet without identifying payments.

José Mauro Cunha was fined R$4.1 million for receiving an irregular bonus, approving payment to directors and financial statements; and Figueira, at R$ 1.7 million for irregular receipts.

Then members of the board of directors, Renato Torres de Faria and Fernando Magalhães Portella received fines of R$700,000 for approving bonus payments and financial statements with incorrect information.

The counselors’ defenses claimed in the process that they expected Zeinal to comply with the bureaucratic procedures for approving the payments. None of the arguments was accepted by the CVM collegiate.

Investigations began in 2016 and the prosecution report was released only in 2019. Bava tried to reach an agreement to end the process, proposing to pay R$ 300,000, but the proposal was not accepted.

The CVM director who reported the case, Alexandre Rangel, classified the executive’s conduct as “extremely serious”. “Acting beyond his powers, passing by the sidelines of the assembly, he himself determined the payment [dos bônus]”, he stated.

Still this Tuesday, the CVM judges another process related to abuse of control power in the approval of the merger. The indictment calls for the conviction of 21 executives and eight companies and foundations that formed the controlling block.

The two largest shareholders, Andrade Gutierrez, Jereissati Telecom, and Portugal Telecom itself (today Pharol), would have been the biggest beneficiaries, according to investigations.

It also accuses the BNDES and pension funds of employees of Banco do Brasil, Petrobras, Caixa Econômica Federal, which were part of the control block, for being part of the abusive structure and voting for the benefit of the controllers.

In addition, says the CVM, the leadership of Oi was aware of Portugal Telecom’s bad liabilities and did not alert the other shareholders. Part of the assets were securities of companies owned by the Portuguese telephone company, the Espírito Santo group, which ended up filing for bankruptcy shortly after the operation, pushing new debts onto Oi’s balance sheet.

The merger between the two companies was sold by the government as a transnational supertele creation, with businesses in Brazil, Portugal and Africa. Three years later, the company filed its first request for judicial recovery, with a debt of R$ 65 billion, in values ​​at the time.