Aim is to open more room for allies and non-elected politicians in boards

01/18/2023

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Luiz Inácio Lula da Silva — Foto: Eraldo Peres/AP

Less than a month after the beginning of its term, President Luiz Inácio Lula da Silva’s team is preparing a clean bill that aims to change the State-owned Companies Law. The goal is to open more space for allies and non-elected politicians in board positions of state-run companies run by the federal government or states. The effort is seen with suspicion by market agents and specialists, who highlighted risks of setbacks in the governance of these companies.

Valor has learned that the draft is being prepared by the Chief of Staff Office’s Secretariat of Legal Affairs (SAJ), with the support of the Federal Attorney General’s Office (AGU). After that, the government plans to ask an allied senator to accept the suggestions and introduce a draft to replace the proposal already passed by the Chamber of Deputies at the end of last year, which was put on hold in the Senate after the issue generated negative reactions in the financial market. If passed, it would have to go back to the Chamber before being signed into law by the president.

At the time it was passed by the lower house, the presidential transition’s team did not want to leave its fingerprints on the bill. The idea was criticized by economic agents due to the possibility of appointing former lawmakers and union members to management positions in companies such as Petrobras, Caixa Econômica Federal, and the Brazilian Development Bank (BNDES), which is forbidden by law today. Now, however, the draft may move forward with the support of the government, which will seek to consolidate its governing coalition in Congress.

It has not yet been defined whether the flexibilization will be total or partial in terms of access to positions that are currently restricted to civil servants. Mr. Lula’s aides say that, for now, the idea is that the government’s clean bill opens space for allies of the Lula administration only in boards. This means, in practice, a space of 317 positions on the boards of directors of these companies for the president to appoint, with greater freedom, in his new term.

But, in case the clean bill proposes a flexibilization also for the management positions, this number increases by 272 positions. In all, there would be 589 prominent posts available. These numbers exclude, however, Eletrobras and Codesa, which were privatized recently. The list of positions is included in the latest annual report of the Special Secretariat for Privatization of the former Ministry of Economy.

After the draft is ready, the government’s allies are expected to take the proposal to Senate President Rodrigo Pacheco. The proposal is at the upper house at the moment. Last year, however, the presidential transition team was not able to convince senators and the matter was put on the back burner.

One reason for this objection from some lawmakers is the fact that the proposal now being considered reduces to just 30 days from 36 months the quarantine period for people who held party decision-making structures or participated in electoral campaigns to serve as CEOs or executives in state-owned companies or advisors to regulatory agencies.

In this battle, on the other hand, the federal government has the support of the so-called “Centrão” — a cluster of center-to-right parties — and Chamber Speaker Arthur Lira, who backed the advancement of the matter when it was still under analysis in the lower house. Mr. Lira and the lawmakers see in the measure a way to appoint allies in strategic positions that have already served parties known for cronyism.

“The Law of State-Owned Companies, in its origin, was thought to guarantee a more specialized profile for the leaders of the state-run companies and regulatory agencies,” said Pedro Henrique Costódio Rodrigues, a lawyer specializing in administrative law. “The changes proposed make the criteria and requirements more flexible, and this leaves room precisely for political appointments and the occupation of these management positions by lawmakers,” added the lawyer, for whom a more flexible approach would increase the possibility of political influence in the state-owned companies.

*By Renan Truffi, Fabio Murakawa, Fernando Exman — Brasília

Source: Valor International

https://valorinternational.globo.com/