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Government changes analysis of conflicts of interest at Petrobras.

Written by Paulo S. Nogueira
Published 01/12/2023 às 04:40
Compliance, Board of Directors, Efrain da Cruz, Bylaws, Lula Government, Ivo Timbó, Sergio Rezende, Federal Supreme Court (STF), TCU
Facade of Petrobras, on Avenida Chile, in Rio de Janeiro (Photo: Reproduction/SBT News)

The Union's proposal aims to change the company's statute, however, it still needs to be submitted to the Federal Audit Court (TCU) for approval. This process is fundamental to the transparency and legality of the company's actions.

Today, changes to the statute of the Petrobras which also include the establishment of a capital reserve for the distribution of dividends.

Last week, during a press conference, the financial and investor relations director, Sérgio Caetano Leite, highlighted that the creation of the reserve would be beneficial for the company, guaranteeing payment to shareholders in times of mismatch between net profit and the company's cashier. He emphasized that 'It's a modernization of governance. Large companies listed on B3 have this reserve'.

As the choice is the responsibility of the assembly, with a predominance of the Union, the representatives appointed by Lula were all appointed, provoking criticism regarding the weakening of the company's administrative control. Similar decisions were adopted during President Jair Bolsonaro's term.

The issue could be definitively decided next week and is under the responsibility of Cristiano Zanin, who took over as a member of the court this year and previously worked as Lula's defense lawyer.

Preliminary Decision of the STF on Prohibition of Party Leaders

Efrain da Cruz, executive secretary of the Ministry of Mines and Energy (MME), and Sergio Machado Rezende, former minister and former leader of the PSB, were affected by preliminary decision. In this context, the prohibition would be in accordance with the law.

The determination of the Federal Supreme Court, issued this year in an action filed by the PCdoB, made certain articles of the Law of State-owned unconstitutional. Internally, the company's legal team Petrobras stated at the beginning of the year that, as it is a preliminary decision, the internal committees should follow what was established in the statute, which reflected the legislation. This decision had a major impact on company operations state-owned and in the appointments of its leaders.

A similar situation occurred with Pietro Mendes, now during Lula's government. The secretary would be responsible for “having strategic information and proposing public policies that are directly related to the activities carried out by the company”.

The restrictions were suggested without consensus, due to the different interpretations of the company's internal governance. Petrobras.

According to the company, the changes aim to “ensure that the Bylaws da Petrobras be kept up to date, regardless of court decisions on the matter”.

In Jair Bolsonaro's government, the federal government chose Jonathas de Castro and Ricardo Soriano de Alencar, who had been considered ineligible by the internal committees from the company.

Castro held the position of executive secretary of the Civil House of Ciro Nogueira (PP), while Soriano served as Attorney General of the National Treasury (PGFN), a body linked to the Attorney General's Office (AGU), within the scope of the former Ministry of Economy, by Paulo Guedes.

The Securities and Exchange Commission (CVM) initiated two investigations this year regarding the abusive use of voting power by the Union, but so far it has not reached any conclusion.

O Administrative Council current proposed changing the statute in October, which provoked a negative reaction in the market. In response, the company clarified that there would be no reduction in the requirements established by the Law on State-owned.

Reformulation of the Company's Writing

“The wording proposed by the company seemed a little confusing. To make it clear that the potential conflict of interests of a material nature, the Union is adjusting the text to be discussed”, stated Timbó. With this change, the government hopes to obtain approval from the TCU.

To the original proposal, which stated that “the company will only consider situations of conflict of interests in cases specifically provided for by law”, “material conflict situations” were added, covering the options (formal and material) that must be considered when choosing company administrators. **This change aims to ensure greater transparency and responsibility in business management**.

Minister Jorge Oliveira stated that the Petrobras proposed the modification without proper basis – “absent legal opinions or positions from the company’s technical area that would support this proposal”, according to the report. The internal process “demonstrates haste on the part of the state-owned company and a formal failure in its analysis”, he added.

During Extraordinary General Assembly, the attorney general Ivo Timbo, on behalf of the Union, suggested a change in the new statute, aiming to specify that the company considers as conflict of interests material cases, in addition to formal cases that are expressly provided for by law.

Shareholders with voting rights present at the EGM approved the proposals with a majority of 54,98%. The Union was responsible for the majority of votes in favor. 31,96% of shareholders voted against the changes and 13,06% abstained. In total, 93,27% of shareholders entitled to vote participated in the meeting.

O statute social of Petrobras had incorporated the Law of State-owned, which includes a 36-month quarantine for party leaders, such as advisor Sérgio Rezende, a former minister who left the PSB at the end of the year. Furthermore, the statute prevented the accumulation of management positions in the government and in the council by agents who do not have a permanent link with the public administration, as is the case of the executive secretary of the Ministry of Mines and Energy (MME), Efrain da Cruz. The second modification, unrelated to the STF, dealt with conflicts of interest, which caused differences in the appointment of Pietro Mendes, president of the board and secretary of Oil and Gas at the MME.

The precautionary measure TCU ruled out the issue that depends on the STF, but considers that there are possible irregularities in the application of the hypotheses of conflict of interest, with the risk of “undue interference in the interpretation of the legal concept”.

Different doubts were raised by the Federal Audit Court (TCU), which will need to confirm the changes made.

With regard to the selection of board members with political involvement, the situation remains the same. If the ban is reaffirmed by the Federal Supreme Court (STF), will be effective again. Regardless of internal regulations, the company is subject to the laws in force.

Another approved modification was the elimination of protection insurance for directors in cases of intentional actions or negligence. The creation of a reserve fund for the payment of profits to shareholders was also established.

Union decision on Extraordinary General Assembly da Petrobras

O Lula government approved in extraordinary general meeting (AGE), on Thursday afternoon (30/11), the proposals for the appointment of counselors and administrators of the Petrobras.

With this decision, the government seeks to end an internal conflict related to possible conflicts of interest, especially in the case of public agents appointed to the Administrative Council (HERE).

Some minority shareholders tried to postpone the decision due to pending issues in the Federal Supreme Court (STF), which invalidated parts of the Law on State-owned with a provisional decision by former minister Ricardo Lewandowski.

O Lula government With this, he hopes to end a dispute that occurs internally in the fences due to conflicts of interest, especially in the case of public agents appointed to the CA.

Source: EPBR

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Paulo S. Nogueira

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