TCU removes responsibility from BNDES for irregularities in the works export policy

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According to the Federal Court of Auditors, of the US$ 2.1 billion in financing analyzed, US$ 1.07 billion was spent in other countries, but, according to the financing rules, this was prohibited. The Federal Court of Auditors (TCU) decided, this Tuesday (5), to remove the responsibility of the managers of the National Bank for Economic and Social Development (BNDES) for irregularities in the export policy of engineering services for works in other countries . The TCU analyzed 67 service export financing operations, from 2005 to 2014, and concluded that part of the value of these financings was used to purchase products and contract services in the countries where the works were taking place, which violated the rules of financing. According to the rules, the disbursement of BNDES resources can only occur in Brazil and be directed to Brazilian companies (read more below). President of BNDES responds to criticism of the government’s industrial policy measures. According to the report, of the US$ 2.1 billion in financing analyzed, US$ 1.07 billion was directed to local spending, that is, in foreign countries. Works abroad financed with money from BNDES were part of the bank’s strategy during the first Lula governments and those of former president Dilma Rousseff. These works are a frequent target of criticism from the opposition, who allege that PT governments choose to develop other countries, instead of Brazil. For the PT, the financing returns money to the bank and to Brazil. Voting details There were two opposing positions among the Court’s ministers. The rapporteur, Minister Augusto Sherman, voted to impose individual fines on 36 BNDES employees and disqualify six from working in public administration due to irregularities. This position, however, was defeated by the vote of minister Benjamin Zymler. For Zymler, it would not be possible to penalize BNDES managers individually, since there was a widespread culture in the bank of not carrying out analyzes of the viability of projects. “I understand that the subjective element of conduct, gross error or intent are not present in the present case and my proposal is to remove all fines from all employees of the operational, tactical and strategic plan [do BNDES]”, he declared. This position was followed by other ministers who had asked for more time to analyze the process. For minister Jorge Oliveira, the irregularities identified by the technical area of ​​the TCU and by the rapporteur of the process occurred in all financing operations in this modality, which indicates that the inclusion of local expenses was an “institutionalized practice” at the bank. Overdue vote For the case’s rapporteur, minister Augusto Sherman, there was a misuse of purpose in the execution of BNDES loans. “I have no doubt that there was a misappropriation of a significant portion of public resources that should have been, but were not, applied to the export of engineering services. The main indicator of this misappropriation is the financing by BNDES of an average of 80% of the road work, there are cases of unbelievable 100% financing”, he highlighted. For the minister, as road works naturally involve local costs — such as moving land and hiring local labor, for example —, high amounts of financing would imply a misuse of purpose. The minister states that the TCU’s technical area concluded that this type of work would only accommodate the financing of 20% to 45% of the costs. This is because the purchase of goods and the contracting of services in the importing country were prohibited by the program. Sherman states that The participation of the entire BNDES chain would be responsible for the irregularities found in the granting of loans, which would explain the application of fines to 36 people and the disqualification of six, proposed by the minister. “The narrative of imputing the technical teams, this rapporteur and the Court to exaggerate the number of responsible parties is unfair and diversionary. This is my opinion,” said Sherman. How did the loans work? The program provided for the disbursement of BNDES resources to companies in Brazil, in reais. The Brazilian company received the money and carried out its exports. The importing country was responsible for contracting the engineering works and paying the loan debt to BNDES, with interest. Payment must be made in dollars or euros. According to BNDES data, US$10.5 billion were disbursed, of which 98% of the amounts were allocated to the five largest construction companies: Odebrecht (now Novonor), Andrade Gutierrez, Queiroz Galvão, Camargo Correa and OAS. TCU’s determinations The TCU notified the BNDES that financing a portion higher than expected in market practices “contravenes the bank’s internal regulations”. The Court of Auditors recommended that BNDES reformulate the bank’s resolution, which deals with financing, so that technical examinations of financeable items for export can be carried out. The TCU decided not to apply penalties to BNDES managers, only listing a series of recommendations to the bank. What does BNDES say? In a statement, the president of BNDES, Aloizio Mercadante, said that the TCU’s decision “reinforces legal certainty regarding these operations and sheds light on a topic that is the target of a widespread defamatory campaign”. Mercadante, who was a minister in the government of former president Dilma Rousseff, declared that the BNDES does not support foreign works or projects in other countries. “BNDES’s role in financing the export of goods and services is exclusively for Brazilian companies, generating jobs and income in Brazil,” he declared.

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