With a loophole in the legislation, Lula expands political nominees in state-owned companies

In an offensive to contemplate political allies, President Luiz Inácio Lula da Silva (PT) accelerated in recent weeks the nominations of political nominees for several state-owned companies. The movement comes at a time when the PT member withdrew seven public companies from the National Privatization Program (PND) and three from the Investment Partnerships Program (PPI).

All companies were included in the two programs by the government of former President Jair Bolsonaro (PL). With this, the Planalto Palace expands the space to indicate allies for strategic points of public companies.

The negotiations make room for contemplating at least 753 positions of directors, presidents and advisers of state-owned companies, according to data from the latest Aggregate Report of Federal State-Owned Companies (Raeef), prepared annually by the Special Secretariat for Privatization, of the Ministry of Economy.

These nominations gained momentum after Minister Ricardo Lewandowski, of the Federal Supreme Court (STF), granted an injunction removing the three-year quarantine for party leaders, ministers and secretaries to assume management positions in public companies. Lewandowski left the Court last Tuesday (11), and the judgment of the injunction by the plenary was suspended after a request for a review by Minister Dias Toffoli.

Among the allies, Lula nominated, for example, the former governor of Minas Gerais Fernando Pimentel for the position of president of the state-owned Emgea, linked to the Ministry of Finance. The PT member’s name was approved by the board of directors. He will receive a monthly remuneration of R$ 42,827.16, according to data available on the company’s website.

In addition, the former governor of Pernambuco Paulo Câmara (PSB) was nominated to take over Banco do Nordeste. According to the institution’s official website, the president’s minimum monthly salary is just over R$49,000. The bank’s president still has profit sharing, which is a variable amount, depending on the bank’s annual result.

At Correios, the nominee for the presidency was Fabiano Silva, lawyer and coordinator of Grupo Prerogativas, who had a strong role in the PT campaign and helped to impose defeats to Lava Jato in court. At the National Supply Company (Conab), the president nominated former state deputy Edegar Pretto, who was a candidate for the government of Rio Grande do Sul for the PT. Monthly wages will be R$52,000 and R$31,500, respectively.

Lula expands space for Lira and União Brasil nominees in state-owned companies

On another front, the Palácio do Planalto expanded the spaces for the nominees of the mayor, Arthur Lira (PP-AL), and leaders of União Brasil in several government state-owned companies. The maneuver is part of Lula’s strategy to try to expand his support base within the Chamber.

The nominations are for regional boards of the Development Company of the São Francisco and Parnaíba Valleys (Codevasf) and the National Department of Works Against Droughts (Dnocs). The two companies were already controlled by nominees from Lira and União Brasil since the Bolsonaro government, but now new boards have been assigned in negotiations with the PT.

At Codevasf, for example, the Revitalization and Sustainability department was handed over to José Vivaldo Mendonça on the recommendation of União Brasil. The acronym, which has 59 deputies, must also be contemplated with the regional superintendencies of Amapá, Sergipe and Tocantins.

The PP, Lira’s party, was awarded the appointment of the superintendence of Codevasf in Alagoas, its electoral stronghold. The acronym of the president of the Chamber still disputes the nominations for the boards of the Dnocs in Pernambuco and Sergipe.

Other parties were also contemplated, such as the Republicans with the superintendence of Codevasf in Pernambuco. The MDB placed the name of Henrique Coutinho Bernardes on the state-owned company’s Integrated Development board. The nominee is linked to former Senator Fernando Bezerra (PE), who was leader of the Bolsonaro government in the Senate. The PDT, on the other hand, was contemplated with the superintendence of Maranhão.

In common, the two bodies have capillarity, capacity to execute works that yield political dividends to deputies and senators. In addition, the two state-owned companies have robust budgets in 2023: BRL 1.8 billion for Codevasf and BRL 900 million for Dnocs.

National Congress tries to change the State Law

Appointments were accelerated after Lewandowski granted an injunction lifting the three-year quarantine for party leaders, ministers and secretaries to assume these positions. The STF minister understood that the changes to the State Law made in 2016, during the management of Michel Temer (MDB), are unconstitutional.

The approved legislation was a response to the deviations found in Operation Lava Jato, in search of better governance in public companies. For Lewandowski, the law, although well-intentioned, did not take into account technical or professional parameters.

In the decision, the now former minister stated that the State-owned Law “incorporated into our legal system numerous rules of corporate governance, indisputably positive, which contribute to providing more transparency, control, predictability and impartiality to the activities of state-owned companies submitted to it” .

Before the injunction was granted, the Chamber of Deputies also approved at the end of last year a project that provides for a reduction from 36 months (three years) to 30 days the quarantine of political appointees for state-owned companies. The proposal has been stalled in the Senate since then, but government leaders admit that the text has great possibilities of passing in the House.

Business entities from various sectors issued a note of repudiation of the approval of changes in the Law of State-owned Companies, highlighting that it harms the business environment.

“The preservation of the law is essential in generating positive impacts for the entire Brazilian society. In particular, it causes concern the way in which these retrocession efforts have been undertaken in an accelerated manner in the federal government, in the National Congress and in the STF, while there is a lack of opportunities for the participation of civil society and for holding a qualified public debate on the risks of these changes in the law”, defended, in a note, Transparência Internacional do Brasil.

Poll shows rising popular support for privatizations

The move by the Lula government comes amid growing public support for privatizations in Brazil. According to Datafolha, 38% of Brazilians support privatizations, against 45% who say they are against.

Despite not being a majority, support for privatization has been growing since 2017, when only 20% of Brazilians were in favor of the issue. The number of responses in favor of privatizations jumped since September last year, when only 26% supported the transfer of companies and public services to the private sector.

“We took the decision to suspend the companies that were included in the privatization plan. Even the Post Office workers were very satisfied that the Post Office was no longer privatized. [Correios] not be privatized, because it renders an extraordinary service to society”, said Lula when commenting on the government’s decision to withdraw companies from the privatization program.

In addition to the Post Office, the measure affected companies such as EBC (Empresa Brasil de Comunicação), and Ceitec, the state-owned chip company. “It’s no use going out selling the people’s assets to later happen like abroad, where companies are being renationalized because the services were expensive and bad”, celebrated the national president of the PT, deputy Gleisi Hoffmann (PR).