Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Brazil fines pension fund for breaching Petrobras board vote rules

Published 12/03/2014, 06:47 AM
Updated 12/03/2014, 05:50 AM
© Reuters. People walk in front of Brazilian oil company Petrobras's headquarters in Rio de Janeiro

© Reuters. People walk in front of Brazilian oil company Petrobras's headquarters in Rio de Janeiro

SAO PAULO (Reuters) - Brazil's securities industry watchdog CVM fined late on Tuesday the pension fund owned by workers of state-controlled oil producer Petróleo Brasileiro SA (SA:PETR4) for participating on the election of board and fiscal council members that was reserved only for minority shareholders.

In a statement, the CVM imposed total fines of 800,000 reais ($311,700) on Petros, as the fund is known. The watchdog also issued warnings to but did not fine the workers' pension funds of state-run banks Banco do Brasil SA (SA:BBAS3) and Caixa Econômica Federal SA (CEF.UL) for the same cases.

The decision underpins the mounting conflict of interest between pension funds like Petros and the government, which joined forces in recent years to boost their decision-making power in Petrobras, as the oil producer is known, at the expense of minority shareholders.

Shares of Petrobras have shed half their value since a government-sponsored capital injection that drew fierce opposition from minority shareholders in 2010.

While funds belong to workers in those state-run companies, their management is usually tapped among union members with strong ties to the government.

The hefty stakes that Previ, Petros and other funds in state companies have amassed in a handful of Brazilian companies for years allow them to appoint board members and key personnel.

© Reuters. People walk in front of Brazilian oil company Petrobras's headquarters in Rio de Janeiro

Petros and the other two funds, known as Previ and Funcef, respectively, can appeal the CVM decision before the National Monetary Council - which is Brazil's highest economic policy-making body.

(Reporting by Guillermo Parra-Bernal Editing by W Simon)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.