Brazil’s Mines and Energy Minister Alexandre Silveira on Thursday said President Luiz Inácio Lula da Silva was not involved in a decision by Petrobras to retain the state-controlled company’s so-called extraordinary dividends, directly contradicting the oil giant’s CEO Jean Paul Prates.
The move upset investors when it was announced in mid-March, and Petrobras shares dropped.
Days later, Mr. Prates said on social media that it was “legitimate” for the Petrobras board “to position itself guided by the president” and his cabinet. He argued, however, that this did not constitute political interference in the company, but that it was a legitimate act by board members.
Answering a question posed by The Brazilian Report, Mr. Silveira said “the claim that President Lula participated in this decision is unfounded.” He added the caveat that it is “natural” for the government-appointed board members to “listen” to the administration.
Mr. Silveira also said that it is “uncommon” for heads of state-controlled companies such as Petrobras to speak on social media rather than through statements to the market.
Mr. Prates has publicly opposed the retention of the dividends, and abstained from a vote in which government-appointed board members rejected a proposal to pay extraordinary dividends shareholders were expecting. The disagreement between Mr. Prates and members of the Lula administration led to a dispute over his job and speculation that he could be fired.
The representative of minority shareholders in the board said in an interview that there’s a “political dispute” between groups inside the government about the fate of Petrobras investment — a perception that has spread across financial markets.
Goldman Sachs recently told clients to bet against the performance of Brazilian state-controlled companies’ stocks. Instead, the bank told them to invest in private rivals of these companies, citing fears of political interference by the Lula administration.
Since Lula took office, his administration has raised eyebrows as markets see a push to lower the governance bar in state-controlled companies, using strategic positions in these firms as political bargaining chips.
More recently, a federal court in São Paulo temporarily removed a Lula-appointed member of the Petrobras board.
The decision resulted from a request by São Paulo state lawmaker Leonardo Siqueira, of the libertarian Novo party, who claimed the appointment violated the state-controlled company’s rules. Petrobras said it will appeal the decision.
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