Petrobras: Government will keep names rejected in council – 04/17/2023 – Market

Echoing former president Jair Bolsonaro (PL), the government of Luiz Inácio Lula da Silva (PT) informed Petrobras that it will insist on candidates for the company’s board of directors considered ineligible by the internal governance bodies.

So far, four of the eleven names appointed by the government have already been rejected by the board of directors, due to a possible conflict of interest or based on prohibitions established by the State-Owned Companies Law and by the company’s bylaws.

In a letter sent to Petrobras at the beginning of the month, the MME (Ministry of Mines and Energy) informed that it will maintain the candidacies of the ministry’s Secretary of Oil and Gas, Pietro Mendes, and of former Minister Sérgio Machado Rezende, considered ineligible on the 28th. March.

The first was rejected due to the possibility of a conflict of interests, since it operates in a policy-making body for the sector. The second, as it is part of the decision-making structure of a political party, which is prohibited by the State-Owned Companies Law.

Another two names were rejected at later meetings. MME number two, Efrain Cruz, was considered ineligible on March 29, and lawyer Renato Campos Galuppo had his name rejected last week.

The board assessed that Cruz’s appointment creates a potential conflict of interest and because he occupies a position in public administration with no connection to public service. Galuppo participated in the decision-making structure of a political party, which is prohibited by the company’s bylaws.

The troubled renewal of Petrobras’ board by the Lula government has been generating internal resistance from government supporters and culminated in an intervention by the CVM (Securities and Exchange Commission), which last week also considered two candidates nominated by the president ineligible.

The autarchy responsible for overseeing the capital market asked the company for explanations about the maintenance of names considered ineligible in the ballot paper for the meeting that will renew the board, on the 27th.

In an opinion, the CVM’s technical area concludes that, by exercising the role of secretary of the MME and chairman of Petrobras’ board of directors, Mendes “will not be able to faithfully fulfill his attributions in all situations in which we have conflicting interests between the controlling shareholder and the company”.

Regarding Rezende, he states that, although the minister of the STF (Supreme Federal Court) Ricardo Lewandowski has made it more flexible in limiting the quarantine for party leaders, “the aforementioned prohibition is also provided for in its Bylaws, so that the present candidate could not be elected “.

Petrobras claims that the opinions of the committee that analyzes the CVs and of the board of directors “have an opinion, not a decision-making nature” and that the shareholders’ meeting is “sovereign to accept or not the recommendations of these bodies”.

The same argument was used by Bolsonaro to guarantee the election of Assunção and Soriano at the company’s last shareholders’ meeting, in a process that was considered an attack on the State-owned Law.

Petrobras’ board of directors has 11 seats, and the Union, the largest shareholder, is entitled to run for eight. Another two are reserved for representatives of minority shareholders and one, the representative of workers.

In the April 27 election, the government will once again face competition from Petrobras’ largest individual shareholder, banker João José Abdalla Filho, known as Juca Abdalla, owner of Banco Clássico. He and lawyer Marcelo Gasparino will compete for vacancies on the board.

The two are already members of the collegiate, in vacancies conquered in the last shareholders’ meetings. With the support of other minorities, the two were left with two seats that were normally occupied by Union nominees.