It’s worth remembering that this was the same state-owned company and under the same political party where the Mensalão corruption scandal first erupted, exposed by a photo on a magazine cover showing a not-so-republican cash exchange caught on hidden camera.

What came next, with Petrobras and Eletrobras, made that modest bundle of cash seem almost nostalgic, revealing what looked like a recurring pattern of public-sector governance.

This time, as far as is known, there has been no illicit transaction, just sheer incompetence, albeit of a highly destructive kind.

Under normal circumstances, a company posting billions of reais in recurring losses would have long ago undergone a drastic internal restructuring to avert disaster. But these are far from normal circumstances. As usual, the priority hasn’t been to ensure the company’s financial health, but to use its structure for political accommodation.

The “governance” of Correios essentially boiled down to splitting its executive board between Brazil Union and Workers’ Party (PT). Fabiano Silva dos Santos, a lawyer linked to Prerrogativas, a group of left-leaning jurists known for opposing the Car Wash corruption investigation, was appointed to the helm by President Lula. Though he listed a specialization in “strategic business management” on his résumé, he had no experience running a company. He took over in February 2023, a month after Mr. Lula ordered Correios to be removed from the privatization program. Mr. Santos resigned in July after two and a half years of disastrous management.

To clean up the mess, the government appointed a “technical profile,” as reported by the press: Emmanoel Rondon, a longtime executive from Banco do Brasil. Better late than never, even if the move was politically motivated—perhaps by someone realizing the company was a ticking time bomb heading into an election year.

The long delay in addressing the problem explains the R$20 billion cost of the rescue operation—naturally guaranteed by the Treasury. The steep price tag is the result of reckless public asset management, a classic PT trademark, followed by the usual invocation of the “cursed inheritance” from the previous administration, in true Homer Simpson style: “It’s my fault, and I’ll blame whoever I want.”

Record deficits across federal state-owned companies—excluding Petrobras and public banks—illustrate that Brazil’s state-run loss-making machine is running at full speed. And the pace is expected to accelerate as the government expands subsidies and giveaways.

Correios has been hemorrhaging publicly ever since the new management began releasing quarterly balance sheets, adopting the same disclosure model as publicly traded firms. By the end of June, the company had posted an operational loss of R$3.80 billion and a net loss of R$4.37 billion in the first half of 2025—up 60% and 70%, respectively, from total losses in all of last year.

These are by far the worst results in recent history. Since 2009, when Valor Data’s records begin, Correios has reported losses in seven years, the largest until now being last year’s—soon to be surpassed by this year’s figures—and the second largest in 2015, during the recession. The unprecedented collapse has left the company’s net equity—its assets minus liabilities, the amount owed to its sole shareholder, the federal government—in negative territory, amounting to an uncovered liability of R$8.72 billion.

If Correios were listed on the stock exchange, its first-half revenue would place it alongside companies like CSN Mineração and auto parts maker Iochpe-Maxion. In terms of total assets (R$17.34 billion), it would sit between trailer manufacturer Randon and agricultural producer SLC Agrícola. But by net worth—or rather, lack thereof—it would be among less illustrious peers such as the Refinaria de Manguinhos (Refit), recently shut down by the National Petroleum Agency and Federal Revenue Service, and the once-dominant telecom operator Oi, now in bankruptcy protection.

Surrounded by much larger competitors and weakened internally by “the managerial decay of extractive political appointments,” as this newspaper’s editorial aptly put it, Correios can only survive, in the view of economist Marcio Holland of Fundação Getulio Vargas’s São Paulo School of Economics, if it changes both its business and corporate model—bringing in private partners.

The obstacle to that solution, however, may no longer be the PT’s long-standing resistance to giving up control of “its” companies. The bigger challenge now is finding an investor willing to put money into a business that may already have lost its viability.

*By Nelson Niero — São Paulo

Source: ValorInternational

https://valorinternational.globo.com/