Government runs over Petrobras and insists on electing those rejected by the council

The government decided to disregard Petrobras’ internal position and will insist on nominating the two rejected names for the next composition of the company’s board of directors, which will be elected at a meeting on August 19.

The decision is unprecedented after tightening the governance rules established by the State-Owned Companies Law and should be questioned by private investors at the CVM (Securities Commission).

In a note, the MME (Ministry of Mines and Energy) says it has not seen “the necessary legal support” for the sealing of the names of Jhonatas Assunção and Ricardo Soriano, both by an internal committee that evaluates nominations for the state-owned company and by the current council of the company.

Assunção is number two of the Civil House Minister, Ciro Nogueira (PP). Soriano is the Attorney General of the National Treasury. For Petrobras’ governance bodies, their appointments would create a conflict of interest.

The rejection of the names was confirmed by the Petrobras board of directors this Monday (18). On Tuesday, the company released the call for the meeting without both names on the ballot.

“The Ministry of Mines and Energy informs that it did not find the alleged impediments pointed out by the Petrobras Eligibility Committee, as they did not find the necessary legal support”, said the MME this Wednesday (20). “Consequently, it will forward the same names.”

Petrobras’ board of directors has 11 seats. Currently, the government occupies six, as it lost two to the company’s largest private shareholder, Banco Clássico, at the last shareholders’ meeting.

Another two are occupied by representatives of minority shareholders and the last one, by representatives of employees of the state-owned company. For the next assembly, the government has nominated eight names, in a list made up mostly of public office holders.

Criticized by private investors and unions, the list was seen as part of an effort to have a more aligned command at Petrobras, reducing resistance to interventions by the controlling shareholder in the company’s management.

In this sense, the government and allies came to propose changes in the Law on State-Owned Companies, with the objective of reducing the constraints against political appointments in companies controlled by the federal government. The proposal generated reactions from entities linked to the capital market and anti-corruption movements.

For the first time since the Dilma Rousseff government, the government appoints an occupant of the Planalto Palace to the state-owned company’s board of directors. For the company’s internal committee, the appointment of Assunção would result “in the possibility of a wide range of divergent interests between Petrobras and the State”.

Regarding Soriano, he said that his appointment represents “an undeniable and insurmountable conflict of interest between the nominee and the exercise of the intended position, since the latter represents one of Organs most important bodies of the political-administrative person controlling the mixed capital company.”

The other six nominees by the government received approval from the committee and the council. Among them is the company’s current president, Caio Paes de Andrade, who took office on June 28 with the mission of keeping fuel prices in check during the election period.

Its mission has been facilitated by the drop in international oil prices in recent weeks, which justified a 4.9% cut in the price of gasoline sold by the state-owned refineries on Wednesday, the first negative fuel readjustment in 2022.