State Law: government wants compromise in flexibility – 02/15/2023 – Market

Different members of the government of Luiz Inácio Lula da Silva (PT) defend changes in the project that alters the Law of State Companies to make it less “permissive” in the appointment of politicians to command posts in public companies.

The intention is to set criteria for evaluating the resumes of candidates for positions, as well as reaching a compromise within the quarantine period required in these cases.

In December 2022, the Chamber of Deputies approved, in a lightning vote, a project that drastically reduced the interval required for a person who participated in an electoral campaign or party decision-making structure to assume a position on the board or board of directors of a state-owned company.

The State-owned Law, approved in the first weeks of the Michel Temer (MDB) government, provided for a 36-month quarantine for these cases. The House proposal cut that deadline to just 30 days.

The bad repercussion of the measure caused the discussion of the text to be interrupted in the Senate. There is still no forecast for discussion of the topic in the House.

At the time, the vote on the change in the Chamber coincided with the nomination, which took place on the same day, of Aloizio Mercadante for the presidency of BNDES (National Bank for Economic and Social Development). He had been Lula’s campaign coordinator in 2022.

The former senator’s advisory, however, denied that the change took place to benefit him and said that he never held a paid position on the current president’s electoral committee. Mercadante took office at the BNDES without any change in the law.

Behind the scenes, the articulation was conducted by the Centrão parties, which are interested in nominating political sponsors for key positions in state-owned companies. The amendment was presented by deputy Felipe Carreras (PSB-PE), ally of the mayor, Arthur Lira (PP-AL).

The proposal had supra-party support for allowing non-reelected congressmen to occupy positions in the federal administration or even in their electoral domiciles.

Within the government, the assessment is that the law, as it is in force, is not all bad and has its merits. Therefore, making it more flexible along the lines of the text approved by the Chamber would end up leaving the current management more vulnerable to Centrão’s attempts to increase participation in strategic government positions.

In an interview with Sheet, the Minister of Management and Innovation in Public Services, Esther Dweck, said that the change in the State-owned Law was motivated by Congress, not by the transitional government. However, once the debate is set, the Executive will evaluate the proposal and eventually suggest changes.

“We don’t think that what is there is ideal,” said the minister. “They are proposing a deadline for something very specific. Whether that deadline is reasonable or not, we are evaluating it,” she said.

According to her, it is necessary “to think about the logic of the law”. “She has some questions there that were asked at that time, and at that specific point she needs to understand why she had a 36-month deadline and why [querem mudar para] 30 days,” he said.

Dweck stressed, however, that there is still no decision on the subject.

Other members of the government heard by the Sheet under reservation, they also criticize the text approved in the Chamber, doubt its approval in the Senate and, therefore, defend changes.

Members of the Planalto Palace call the project “permissive”. The problem, they claim, is not restricted to the reduction of the quarantine period, but the absence of filters in the selection of names to occupy command positions in public companies.

The government’s idea is to set criteria for evaluating the resumes of candidates for office, which may include the existence or not of campaign debts and the status of accountability.

The screening would also include a careful analysis of functions previously performed by the nominees, in order to avoid possible conflicts of interest.

The State-owned Law (13,303/2016) was approved by Congress and sanctioned by then-president Michel Temer in 2016. The objective was to strengthen the governance of state-owned companies, shielding them against political interference.

Its approval came in the wake of a series of investigations that pointed to the political use of companies in previous administrations, with diversion of public resources. For governance experts, weakening the law can make fighting corruption more difficult.

Civil House and AGU (Attorney-General of the Union) discuss the wording of a substitute for the bill in progress in the Senate.

The presentation of this new text is linked, however, to a judgment by the STF (Supreme Federal Court) that may end up, by itself, easing the quarantine imposed for the appointment of politicians.

The State-owned Law has also been the target of attacks during the Jair Bolsonaro (PL) government. The former president tried to change the president of Petrobras due to dissatisfaction with a fuel price adjustment and its impact on his electoral intentions.

On the occasion, members of the centrão defended the easing of the law to facilitate changes in command of the state-owned company.

The proposal has also been defended by the mayor, who had asked for changes in the legislation after the resignation of the then president of the oil company made by Bolsonaro in April. At the time, Lira stated that the established rules were made to stop Petrobras.

UNDERSTAND THE CHANGE

State-owned law and law on the management of regulatory agencies today:

• Person who has acted, in the last 36 months, as a participant in the decision-making structure of a political party or in work linked to the organization, structuring and carrying out of an electoral campaign cannot occupy the board of directors or the board of directors of state-owned companies nor the board of directors or the collegiate board of regulatory agencies.

How both laws stand with amendments via bill under discussion in the Senate:

• These cases are now allowed, provided that the person who has acted in these situations proves that he or she has withdrawn from the activity at least 30 days before taking office.

What the government discusses articulating and inserting in the bill:

• Establish criteria for evaluating the resumes of candidates for positions, as well as reaching a compromise within the quarantine period required in these cases.