Sunday, February 28, 2021

Petrobras: changing president requires taking down all council first

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All the attention of the market is, at this moment, turned to the board of directors of Petrobras. As in any publicly-held company, it is the body that has the power to elect or remove the executive board, regardless of any indication by the President of the Republic, Jair Messias Bolsonaro.

Any appointment must, at the very least, be endorsed by the board. And there is no clarity that the collegiate of the oil company, with its current composition, will simply follow what comes from the Planalto Palace. Obviously undisputed votes, aligned with Brasilia, are from the chairman of the board, Admiral of the Squadron of the Reserve Eduardo Bacellar Leal Ferreira and from Ruy Schneider.

Except that Petrobras’ statute has an issue that, in practice, gives the Union more power – and not less. Practically a trap whose scope is only now clear. To be appointed as president, an executive must be BEFORE a company director. It’s all in Article 20 of the company’s bylaws.

And changing the board of the state-owned company – elected by multiple vote – requires the overthrow of the current collegiate. Therefore, call a new election. The fight will be good. It will be the time and the moment for the market to give its message.

The current collegiate body consists of 11 members, one of whom is Roberto Castello Branco himself, yesterday removed from the position of executive president by the Ministry of Mines and Energy. The director-general of Itaipu, General Joaquim Silva e Luna, who is not an adviser, was appointed to his post.

The noise around the subject, therefore, only tends to increase and not to decrease. Since the steps to place Silva and Luna are bigger than a simple pen from the Plateau.

The mere expectation that Bolsonaro could intervene in the company melted a wealth of R $ 28 billion. The market value of the state-owned company went from R $ 383 billion to R $ 355 billion in a single trading session.

Minority shareholders hold three vacancies on the Petrobras board – held by Marcelo Mesquista, Rodrigo de Mesquita Pereira and Leonardo Antonelli. In addition, there is a workers’ representative in the composition, Rosangela Buzanelli Torres.

João Cox is also an advisor to the state-owned company. Although appointed by the controlling shareholder, Cox has a long-standing reputation as an independent director, working in Embraer, Linx (he was one of the independents in the eye of the hurricane of the purchase by Stone), Braskem and Vivara.

Just in this brief count, Bolsonaro’s will would need to convince no less than five councilors – which is already a draw risk, since Castello Branco can declare himself prevented by conflict, which would reduce the decision to ten participants.

To call a new council election, it is the current collegiate body that must make the call – which requires a majority. Alternatively, the resignation of any member would lead to a complete new election or a formal request from the controlling shareholder. Even if the current board resisted calling a new meeting, any shareholder with more than 5% can call the meeting alone.

It is not at all obvious that the collegiate will simply bow its head to the whims of the Plateau. But, so far, silence. The current council could, for example, speak out to say that it will work on the composition of a list of names for a possible new election. Anyway, mechanisms are not lacking to at least send a message that current professionals are committed to good practices.

In other state-owned companies, boards of directors have recently acted to hold back the desire to interfere with Bolsonaro’s appointments and defend good governance practices. At the very least, to create more embarrassment.

The council of Bank of Brazil he acted in defense of André Brandão, when the President of the Republic suggested that he could fire him after the announcement of a voluntary dismissal program, which can reach 5,000 employees.

Then, the board of directors of Eletrobras, without giving the government time to act, he quickly assumed his role, when Wilson Ferreira announced that he would step down to assume the presidency of BR Distribuidora. The collegiate announced that it will carry out an organized process, with the help of consultants specialized in recruiting executives, in search of a technically qualified name for the position.

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Petrobras: changing president requires taking down all council first